Anchor resume from 18 to 25 of May 2018

Anchor resume from 18 to 25 of May 2018


Uncertainty continues in the financial markets. The commercial and geopolitical risks are heightened after the decision of the United States to cancel the summit with North Korea and the possibility of new tariffs on imports from the automotive sector. News from the US administration has become a constant, however during the last week they were accompanied by the publication of the minutes of the FED and the ECB, which showed moderation of expectations, and weak macroeconomic data, which kept investors out of risk positions.

A week after the round of negotiations between China and the United States, after which the Asian country announced to reduce tariffs on imports of vehicles to 15% and the United States decided to suspend the imposition of 150,000 million dollars on products Chinese, a new threat falls on international trade; now the North American country would be studying a new protectionist measure in the automotive sector, which would undoubtedly affect other countries to a greater extent than China.

The swings in trade negotiations and the increase in geopolitical tensions have kept investors and economic authorities on alert, as evidenced by the ECB in the latest published minutes, where it maintains the growth outlook, warning that trade conflicts could affect the economy of the Eurozone, this concern would be given under three points of view: the risk to the trade balance of the exporting countries, the movements in the exchange rate, and the difficulty to generate domestic demand. There is also concern about the recent signs of a slowdown and the weakness in inflation, which would generate a slower pace of monetary normalization and even extend the period of asset purchases.

For its part, the FED at its May monetary policy meeting, maintained its conviction of the need for a new rate increase, it is expected that for the June meeting the FOMC made the decision, also announced that it could tolerate inflation slightly higher than the 2% target, which decreased the probability of a higher rate of increases, and with this, the 10-year Treasury yield resumed levels below 3%.

On behalf of the BOE we had statements by Governor Mark Carney, who anticipated a rate movement in August provided the indicators reveal that the weakening of the economy has been transitory. In this sense, the inflation figure was known, which fell to 2.4% in April, improving economic expectations, although uncertainty will remain regarding trade agreements.

Regarding the macro data of the Eurozone we see with attention the weakness of the composite PMI which stood at 54.1 (estimated 55.0), and the decline in the consumer confidence index (Actual 0.2, previous 0.4). On the other hand, the German business confidence index Ifo disappointed with a figure of 102.2 before an expectation of 102.7; publications that led the EUR / USD to a weekly setback of -0.59% at levels of 1.1702 dollars per euro.

For its part in Asia we have mixed publications, on the one hand the trade balance of Japan exceeded expectations, in April reached 626,000 million yen (estimated 440,000), due to a sharp fall in imports, however the Core CPI stood at 0.5% (Estimated 0.6%) and the manufacturing PMI at 52.5 (53.8 prior).

The effects on the Nikkei225 index did not wait and ended a negative week at -2.15% on 22,437 points, while the Hang Seng fell -0.93% at levels of 30,760 points.

Also the European markets ended with a bearish sentiment, the IBEX 35 lost 10,000 points, decreasing -2.1%, while the DAX30 ended the week around 12,897 points with a variation of -1.38% and the Eurostoxx50 with a drop of -1.06% up to 3,536 points. As a result, the low appetite for risk assets led the German bond to levels of 0.468 in yield (-10.8 bps), generating large movements in the debt market and increases in the risk premium in Spain, Italy and Portugal.

On the contrary, stock indexes in the United States, at the time of writing the report, maintained a slight positive weekly variation. The S & P500 at 2,727 points (+ 0.55%) and the Dow Jones at 24,811 points (+ 0.39%).

In terms of raw materials, oil closed the week at levels of 77.13USD / Barrel with a drop of -1.77% as a result of the possible easing of production cuts in order to meet the reductions on behalf of Iran. Meanwhile, gold registered an upward movement and ended the week around USD 1,304 / ounce.

For the next week we will be attentive to the data of preliminary growth and to the unemployment rate of the United States, which will set the pattern in inflation expectations; we will also have the first publication of the CPI for the Euro Zone.

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