More Results to Come, More Growth for the Markets

Weekly Macroeconomic Outlook (30th July – 3th August)

Last week was a really positive week for the markets.

• Firstly, because of the Junker – Trump meeting
• Strong quarterly results and macroeconomics inidcators
  • Mostly the American GDP which reached the 4.1% growth
• Also, there was the ECB meeting where it was confirmed what it was previously stated in the previous meeting
  • No modifications
    • However, it gave a soft message and reiterated the importance of an accommodative monetary policy

This week, probably we’ll have again a positive tone in the markets.

• As trade wars concerns have reduced
• Furthermore it is a really intense week in terms of:
  • Quarterly results
  • Macroeconomic Indicators
  • Central Banks Meetings
• Regarding corporate results, there are still a lot of companies left to publish
  • Apple, Tesla, BNP Paribas…
  • So far, in United States, 245 companies have already published
    • The average growth in EPS has been around 23% and 86% of the companies have break expectations
  • Moving to Central Banks, this week is going to be really intense too
    • 1^st reference will be the FED with no modifications expected
      • Around mid-July Powell stated that two more rises in interest rates are expected in September and December in 2018 and three more in 2019
    • 2^nd reference is the RBI (Reserve Bank of India) which, in this case, could really rise interest rates to 6.5%
      • It would be the second rise this year
    • 3^rd reference is the BOE which is forecasted to rise the interest rates to 0.75%
      • Important to bear in mind that inflation has peaked to 2.4% and labour costs have also increased
    • 4^rd reference is the Central Bank of Japan which is expected to continue with the same monetary policy however it can give a  harder message in terms of future expectations
  • Finally, it is also a very intense week in macroeconomic indicators
    • Forecasted results are rather positive

Wrapping all these factors up, it is expected a bullish week in the markets, especially indexes. Markets look good after a reduction in concerns on trade wars and protectionism plus solid quarterly results and macroeconomic indicators.