Profitability Reports of our clients from June 2018
Friday, 13 of July 2018
WORLD MACRO PANORAMA
EURO ZONE: The European Central Bank announced the extension of its stimulus program until December 2018, reducing purchases by 15,000 million euros monthly from September to make way for its monetary normalization plan. Regarding interest rates, Mario Dragui announced that they will remain stable for a period longer than the completion of purchases.
Inflation rebounded in June to 2%, supported by the increase in energy and food prices, although the underlying figure stood at 1%, one tenth below the May revision when excluding volatile products. Regarding GDP, the ECB projects economic growth of 2.1% for 2018, weaker than previous estimates when the entity expected a variation of 2.4% per year.
As for the confidence indexes, during the month of June we saw special weakness in Germany, due to the deterioration of the commercial relations with the United States, which continues to negatively impact the expectations of the businessmen. On the other hand, the PMI, both manufacturing and services, remain in an expansive zone, although with decreases compared to the previous month.
At the political level, the German coalition has emerged from one of its major crises, the CDU and the Christian Social Union, have reached an agreement on the issue of immigration, framed in the new border management programs approved at the European Summit, the which seek greater control of people in an irregular situation, as well as support for countries with a greater flow of immigrants. For their part, the leaders of Italy and Spain were satisfied with the financial support offered by the member countries.
UK: The BOE meeting in June has decided to keep rates unchanged due to the moderation in growth and the uncertainty that is the proximity to the deadline to reach an agreement to exit the European Union.
However, the GDP growth data for the first quarter was in line with market expectations, with a year-on-year variation of 1.2%, while PMI's observations continued in the expansionary area, slightly surpassing the forecasts.
USA: The Federal Reserve increased rates to the 2% range, supported by an upward revision in inflation expectations. Now the projections of the FOMC members point to two new increases before the end of 2018.
In terms of economic forecasts, the United States GDP estimated for the current year increased to 2.8%.
CHINA: Leading manufacturing indicators showed a contraction with respect to the previous month, remaining in an expansive zone; On the other hand, service indicators exceeded the analysts' estimates, confirming the diversification in the growth engines of the Chinese economy.
JAPAN: The Bank of Japan decided to maintain its accommodative position in the face of weak economic data. The annual GDP for the first quarter contracted -0.6% impacted by the decrease in private consumption. We see with special attention the domestic demand indicators of the second quarter below the estimates that anticipate the end of the cycle for the Japanese economy.
Financial Markets (as of June 29, 2018)
The month of June was marked by the increase in volatility in the markets, the VIX index that measures the frequency and intensity of changes in the prices of assets increased by 20% with respect to the previous month as a result of the uncertainty generated by the protectionist measures of the United States.
Given the strong impact on business results expected from the new tax measures of the US administration, investors sought refuge in fixed income, which boosted the prices of American treasuries and the German bond that ended the month with rates of 2.8510% and 0.3080% respectively for reference 10 years. Similarly, the risk premium relaxed in Spain, Greece and Portugal, while in France and Italy the differential slightly increased.
In the equity market, we witnessed a bearish month, especially in Europe, where retracements were between 2% and 3%, with the exception of the IBEX 35 that remained relatively at 9,622 points and the FTSE100 which ended the month at 7,636 points with a -0.84% retracement. The worst performance was the DAX, which closed at 12,306 points, strongly penalized by its high participation in export companies.
In the United States, Dow Jones registered a -1.48% drop, while the Nasdaq and the S & P500 showed a decline of -0.6%.
For its part, Asian markets showed better performance, although without significant progress; except for the Hang Seng that sank -5.04% to 28,955 points.
At the sectoral level, non-cyclical consumption and utilities rebounded, while the industrial sector and precious metals were the losers at the end of the month.
In the commodity market, the Brent reference oil reached 79.44 USD / Barrel with a monthly variation of 3.45%, while gold in this opportunity did not act as a refuge for investors, falling -3.13% to 1,252 USD / Ounce.