Profitability Reports of our clients from April 2017
Tuesday, 09 of May 2017
World Macro Panorama,
Theresa May ,
GLOBAL MACRO PANORAMA
EUROZONE: the latent risks to the French elections became dissipated with the victory of the pro-European candidate Emmanuel Macron.
The ECB started talking about cyclical recovery and inflation with a gradual upward trend, so that after the summer we could start to hear about tapering. However, Draghi ruled out discussing changes in monetary policy until the second half of 2017.
Greece reached an agreement with its creditors after implementing larger reductions in pensions and increases in taxes. In this way, the third tranche of aid will be unlocked to allow it to meet the debt maturities committed for the coming months.
PMI manufacturing rates supported the region's positive outlook after reaching rates of 56,7 today, up from 52,2 previously supported by the whole except Greece. Unemployment rates remained low at +9,5% and price levels maintained the upward trend with the year-on-year consumer price index for April at +1,9%.
U.S.: the FED left the monetary policy unchanged, the reference rates remained within the range +0,75% and +1%. However, investors have already discounted a rise of 25 bp. for the next meeting on the 13th of June.
The labor market remained robust following the recent rebound in non-farm employment creation rates (211.000 current vs. 185.000 expected).
As for fiscal policy, Donald Trump presented the cut of the tax plan, factor that encouraged the markets, especially due to the reduction of the Corporate Tax up to a +15%.
UK: Theresa May announced earlier elections for next June 8th, ruling out reversal at the exit of the European Union.
With regard to monetary policy, the BOE estimated rates of growth and inflation higher than the previous ones, announcing the possibility of increasing reference rates.
JAPAN: Following the meeting of the main BOJ members, Kuroda announced that current purchasing rates would be maintained for a time.
There were improvements in the Japanese trade balance and in the leading indicators of economic activity driven by the recent weakness of the Yen
CHINA: The Asian giant showed a moderation of the activity in both; the manufacturing and services sectors. The latest PMI manufacturing data fell to its lower level of 6 months to the range that separates expansive growth rates from contractionary (from 50,3).
Equity markets recorded strong gains especially in the Euro Zone. The IBEX-35 added a 19% YTD (as of May 5th) with advances of +7% to the 11.135, followed by the STOXX-50 with advances of +5% to 3.658, while the DAX-30 reached levels of historical highs after rebounding a +4% to the 12.716.
From the US, the S&P-500 ended at the gates of the 2.400 after a +2% increase (an area in which, if surpassed, we could talk about a "free rise"), while the Nasdaq Composite did so with advances of +4% reaching the 6.100.
Advances in the Asian stock markets were somewhat lighter. The Hang Seng remained at 24.476 unchanged, while the Nikkei-225 selective rose a +3% to 19.445 in a month in which volatility levels became further reduced (-18% to levels of 10,57).
A reduction in the levels of volatility mentioned above was the reduction of government TIRs (especially the European ones after the French elections and the unlocking of the Greek funds).
At the sectoral level, we again saw falls of -8% in the gold and precious metals sector, followed by the energy sector (-2,42%). However, the biggest advances are in the cyclical, industrial, technological and financial sectors (+4%).
As for currency, the Euro was the currency most benefited by the recent published macroeconomic data and the latest revisions made by the Central Banks. The EUR/JPY went up by +5% to 123,92 (we must bear in mind that the Yen is a refuge currency which become especially appreciated in times of high uncertainty). The EUR/USD on the other hand rebounded by +3,12% trading around the 1,0995 the pair.
The Barrel of Brent fell to 49,10 USD/Brent (-9,68%), pending for further agreement on the freezing of crude oil production. The ounce of Gold on its part, is trading at 1.227 USD/Onz. (-2%).