Anchor resume from 8 to 15 of December 2017
Friday, 15 of December 2017
This week focus
Central Bank of the Republic of China,
English Central Bank,
The meetings of the Central Banks caught the attention of investors during the last week. The decisions taken by the bankers did not take the market by surprise, meanwhile the forecasts updates for 2018 have impacted on performance of assets at a global level. The meeting agenda began with the Fed that fulfilled the script announced since the beginning of the year: three rises in interest rates during 2017, so the consensus did not expect a different result than reaching the range from 1.25% to 1.50% at the end of the year.
Although the market had already discounted the decision and the impact on the contributions was lower, this meeting is a turning point at the present time. In the first place, because it was the last one presided by Janet Yellen, who will be replaced by Jerome Powell, which does not presuppose changes in the current policy, but it does raise questions regarding the speed of the hardening. Secondly, because in a favorable macro environment like the current one for the US economy and with stock indexes at maximum levels, the markets are considerably sensitive to the changes in the discourse of the FED.
The announcement of an uptick in interest rate came together with a better growth forecast for 2018, in which GDP would be 2.5%. Meanwhile the unemployment rate would be around 3.9%; in terms of inflation, it raises its outlook at the end of 2017 to 1.7% announcing that in the medium term it will converge to its 2% target.
On behalf of the ECB we did not have changes in monetary policy: rates and reduction of the purchase plan are maintained. However, Mario Draghi's statements pointed to a significant improvement in growth forecasts. Anticipates that by the end of 2017 the GDP of the Euro Zone will be 2.4% with an inflation of 1.5% still far from its objective.
Continuing with the agenda, the Bank of England maintained current monetary policy with rates at 0.5%, after having increased in its previous meeting with the aim of controlling inflation that, for the month of November, stood at 3.1%. In its statement mentions that United Kingdom leaving the UE is the most significant influence for the economy at this time.
Meanwhile, the Bank of China surprised with a rise in interest rates of 0.05%, without major impact on the markets.
Apart from the monetary policy meetings, the week also saw the publication of a large number of relevant macro data. In the Euro Zone, we have the publication of the preliminary composite PMI that continues to show expansive levels (Act 58 previous 57.5), in addition to the recovery of the manufacturing sector that shows the index of industrial production exceeding the previous data (Act 0,2% previous -0.5%), confirming the favorable dynamics of this economy at the end of the year.
On the other hand, in Germany we had mixed data; Thus, the monthly CPI stood at 0.3%, reaching an interannual change of 1.8% in line with market expectations; however, the ZEW confidence index downed in December to 17.4 (previous 18.7 expected 18), in a scenario in which the current situation is favorable whereas the expectations subscript decreases.
In United States we had the publication of the monthly CPI which was 0.4% in line with expectations, marked by the rise in fuel prices. On the other hand, the labor market maintains favorable levels, as shown by requests for unemployment benefits which was 225K ,below the estimates, anticipating a new positive employment data. While the composite PMI stood at 53 (previous 54.5), with notable performance in the manufacturing sector and lower in the service sector.
Despite the favorable macro environment, the main indices finished the week lower, affected by the new uncertainty surrounding the approval of the Tax Reform in the United States, following the objections presented by two Republican senators. Wall Street had a bearish turn, while the EUR / USD pair was at 1.18 levels. The continued appreciation of the Euro moved the bearish movements to the other side of the Atlantic. The Ibex35 retreated to 10,150 points, while the DAX trimmed the gains of the previous week at levels of 13,103 and the Eurostoxx50 at 3,562 points.