Anchor resume from 20 al 27 of October 2017
Friday, 27 of October 2017
This week focus
The secessionist crisis in Spain had a negative impact on the European parquets, especially on the Spanish selective IBEX-35. Despite the fact that markets celebrated the position of Dovish (accommodating) that Mario Draghi took in his appearance after the meeting held by the ECB, although the tone that is taking the discomfort between the Spanish government and the Catalan stopped the advances in the equity markets.
During today’s session, the Spanish Senate is expected to approve the activation of Article 155, while the Parlament has voted DIU after Junts Pel Sí registered the proposal, in which the Popular Party, the PSOE or Ciutadans have already announced that will not participate.
Leaving aside the Catalan conflict, the vision of the economy in the Euro Zone continues being positive. During the last days, the most awaited event has been the appearance offered by Mario Draghi in which, as we have been advancing, maintained its usual accommodative positioning. Reference rates were left unchanged at +0% and deposit rates at -0,40% and as the market anticipated, it will maintain its bond repurchase program at 30.000 million euros per month from the previous 60.000 million until September 2018. The ECB staff also took the opportunity to say that a high level of stimulus is still needed, so the current EQ levels could be extended or expanded in quantitative terms.
At a macroeconomic level, the main reference has been the composite PMI data, which moderated its growth rates due to a drop in service sector activity although it has maintained strong expansion levels (56,9 current vs. 57,5 expected).
Meanwhile, the latest news we have about the UK suggests that doubts might be emerging within the Bank of England members, whether raising interest rates could be counterproductive to the UK economy. Even so, the latest GDP data beat expectations after moving up by +0,4% in contrast to the +0,3% expected. While negotiations have so far stalled, the European Union agreed to begin internal preparations for the possibility that the Brexit negotiations will not advance until December.
The US selective, for its part, boosted, especially thanks to the good results published by the technology sector among which we highlight those of Microsoft (current BPA 0,82 vs. 0,72 BPA expected), Intel (current 1,01 BPA vs. 0,80 BPA expected) and Amazon (current BPA 0.52 vs. 0.03 BPA expected). This, along with forecasts that next week the Republican party is going to present its tax reduction plan which needs to be approved by the cameras, led the leading US selective S&P-500 to score new gains up to levels of the 2.565 .
In addition, we counted with the support of good macroeconomic data which sustains the performance of the economy, especially after the data published that points a growth of the +3% in the GDP in contrast with the +2,5% expected. The effect was positive for the US dollar, which recovered ground to the 1,159 EUR/USD.
From the Asian continent we counted with two positive news that reinforced the main selectives. On one hand, as we expected, the Prime Minister Abe gained more support in the early elections held. At the head of the BOJ, again we will have Kuroda as the representative, which took the NIKKEI-225 up to the 21.739,8. While in China, the secretary general of the Central Committee of the Communist Party, was ratified as a representative a new term.
Remarkable as well the strong progress made within the price of crude oil up to levels of the 59 USD/Brent, especially motivated by the determination shown by Arabia Saudi to apply further oil inventory reductions. While the ounce of gold went down to levels of 1.266 USD/Onz due to the recent rebounds made in the Treasury TIRs following the rumors of the triumph of John Taylor as chairman of the Federal Reserve in the United States.