The Euro area ended 2016 with a bang, according to BoAML, although growth and inflation will be hump-shaped. In Dec, the ECB ended the 2015/16 experiment of monetary policy covering for fiscal easing. But potential growth remains low. The UK is not really in much better shape: it is now a 1-1.5% growth economy, meaning low rates and austerity for longer.
Alfonso de Gregorio (Gesconsult) | We like Euskaltel because of its strong cash generation and good market positioning. In addition, there are the possibilities for inorganic growth and the good macroeconomic and industry outlook for the group’s business.
Julius Baer Research | Oil’s push above USD 58 per barrel on the first trading day of the year seemingly only was a temporary burst of energy. The market’s focus is on quota compliance as the oil producers must now walk the talk of supply cuts. We remain sceptical that the supply deal will have a material impact, swiftly erase surplus supplies and provide lasting support to prices.
We can expect a rise in interest rates in 2017, driven up by the Fed, but fuelled by doubts over Europe. And I would bet the dollar will appreciate against the euro and the yuan – and sterling – although I am not normally a betting man.
UBS | Last year was a challenging one for the cash equity exchanges. LSE was the only exchange that reported a year-on-year increase to volumes (+3.5%). The other exchanges experienced volume declines of 15-20% for DB1, Euro next and Borsa Italiana and a 35% decline at BME.
The Spanish equities market saw a turnover of €652.907 billion in 2016, a decline of 32.1% from a year earlier. The fall is in line with the general decrease in volumes registered in stock markets across the world. In December, trading volumes fell 27.5% to €48.987 billion from a year earlier.
BoAML | QE drove fund flows in 2016, but the past two months was all about reversing this trend. All-in-all, commodities, EM debt and IG were the winners; equities and HY the losers. For example, last week’s flows HG: +$1.6bn / HY: +$1.1bn / Equities: -$40mn
In the aftermath of Mr Trump’s victory, stock markets surged, building on promises of strong stimuli and sizeable tax breaks. As time goes on, they are reappraising the short-term outlook, since fundamental changes may take more than one year to materialise. No wonder investors are turning cautious, cashing in on early gains.
CaraxAlphavalue | We held the view a year ago that 2016 would be difficult. It turned out to be wrong from summer 2016. Still, we repeatedly mentioned that the 2016 earnings delivery would not be as strong as anticipated from a recovery year after a disastrous 2015. Price earnings ratio ambitions started 2016 with a +12% hope. By early 2017, we are down to 7.5% on our coverage (469 stocks with a combined market cap of about €9tn).