Anchor resume from 25 of May to 1 of June 2018
Friday, 01 of June 2018
This week focus
Albert Rivera (Cs),
European stock exchanges,
Mariano Rajoy (PP),
Pablo Iglesias (Podemos),
Partido Socialista Obrero Español,
Pedro Sánchez (PSOE),
The political situation in Italy has been carried out throughout the week, triggering strong variations in the European debt markets. The League and the 5-Star movement have closed an agreement after several days of negotiations, leaving aside the possibility of calling new elections and dispelling the concern about the strength of the monetary union; However, investors continue to pay attention to the government plan that will result from the union of the two opposing forces, especially as regards the measures to face the deficit that the country is going through.
While in Italy the political scene is clarified, the eyes are now concentrated in Spain with the motion of censure, after which the current government will give way to Pedro Sánchez of the PSOE as the new president, at the moment the markets were optimistic about the commitment of the political leader to respect current budgets.
To the political conjuncture, the expiration of the tariff exemption period by the United States to the imports of aluminum and steel from Mexico, Canada and the European Union was added, which sharpened the pessimistic sentiment in the markets, waiting for reprisals by part of the European block. The US Secretary of Commerce has indicated that his country is willing to dialogue, similar to what happened with China, it would be a measure to pressure the reduction of the American trade deficit; In any case, tensions persist as a threat to global economic growth and contribute to prudent positions on the part of investors.
Risk assets prolong sales in the midst of adversity, while German bonds and 10-year American treasuries experienced higher demand with yield of 0.34% and 2.82% respectively. In Italy, the 10-year bond reached the level of 3.10% due to the fear of elections, however at the end of the week it stood at 2.50% with significant revaluations especially in the short segments.
Spanish debt, for its part, was more influenced by the contagion effect of the Italian situation than by its own internal events; the 10-year bond ended around 1.45% without greater variation compared to the previous week.
As for European equities, we witness a bearish week with falls between 2% and 3% in the main selective ones, in addition to the setbacks of the previous weeks. Thus, for the end of May the Spanish stock market registered a fall of -5.16%, the Eurostoxx50 dropped by -3.67% while the DAX had a slight variation of -0.06%.
On Wall Street, the optimism remains, the Dow Jones ended the month of May at 24,415 points with an advance of 1.05%, the S & P500 did it at 2,705 points registering gains of 2.16%, while the NASDAQ had a monthly variation of 5.3 % consequently to the dynamic recovery of technological actions.
Different picture for the Asian markets that fell during the month of May -1.32% in the case of the Nikkei225 and -1.10% for the Hang Seng.
In terms of the macroeconomic agenda, noteworthy is the Eurozone inflation figure, which exceeded expectations and stood at 1.9% in May, as well as the reduction in unemployment for the month of April to levels of 8.5%; the foregoing would allow the ECB to advance in the normalization of monetary policy; However, the shaken political scene has weighed more on the markets that for the moment have not reacted to the possibility of withdrawal of stimuli.
On the other hand, in the United States, we have the preliminary publication of the quarterly GDP that was 2.2% slightly below expectations despite the increase in inventories and investment.
For the next week we will be attentive to the publication of the GDP of the Euro Zone and Japan as well as the leading indicators of activity. In the United States we will know the data of the trade balance of April, while we will follow the evolution of the relations with its commercial partners.