The rise in equity indices continued this week, with a rise of 1.3% on the Stoxx600 and an increase of 0.7% on the S&P500.
This week was marked by the announcement of Donald Trump's tax reform, which provides for drastic corporate tax cuts (20% tax rate on corporates), a reduction in the number of tax brackets from seven to three with a maximum tax rate down for the wealthiest households and also measures for middle-class households. This tax reform is of major importance for its administration after the failure of the reform of the Obamacare. This announcement had a positive effect on the value/cyclical sectors as illustrated by the Dow Jones Transport up sharply this week.
IYT (ETF iShares Secteur Transport US), boosted by Trump tax cut plan : weekly data
The decline in the Euro could continue in the coming weeks, as Germany is looking for a coalition, which could last for months but mostly because of Spain which begins to worry the markets because of the referendum taking place on Sunday in Catalonia on independence despite the ban of the government of Mr Jajoy and the Spanish Constitutional Court. The poll should take place because the regional police do not intend to oppose it, and the participation rate will be key because the result of the vote will most likely be positive while the Catalan government has committed to declare independence within 48 hours after the referendum, which could have serious consequences for Spain and open a pandora's box in other European countries such as Italy for example with Venitia or Scotland for the United Kingdom. A declaration of independence in the aftermath of the vote could lead to a serious political crisis in Spain, leading to a drop in the Euro, which is already showing signs of weakness in the short term. The most probable however is that Catalonia negotiates a status of reinforced autonomy rather than a pure and simple breakout that would be complicated to implement.
L’IBEX (ETF Lyxor Lyxib) as the Catalan referendum is looming : weekly data
In the register of positive news, Britain seems to have changed its strategy with Europe and seems now willing to make concessions in order to extend the negotiation period of two years with the EU and guarantee an agreement which preserves its commercial interests, we are therefore again moving towards a "Soft Brexit".
The slight rise in the dollar and the prospect of a rise in interest rates weighed on the emerging countries and commodities this week, which overall continued to correct but with less amplitude, except for the oil which continued its progression this week and WTI reaches $ 52, its highest level in 5 months.
On the interest rate side, the 10-year German and US remain firm but stable over the week as there should be no surprise at the level of the Fed which will renew (or not) Ms. Yellen in next February , while inflation is likely to continue to be very low, probably due to productivity gains from new technologies.
In this context, gold continues to consolidate slightly while geopolitics was quiet this week, after a very tense period between Donald Trump and “Mister Kim”.
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The rise in equity indices continued this week, with a rise of 1.3% on the Stoxx600 and an increase of 0.7% on the S&P500.
This week was marked by the announcement of Donald Trump's tax reform, which provides for drastic corporate tax cuts (20% tax rate on corporates), a reduction in the number of tax brackets from seven to three with a maximum tax rate down for the wealthiest households and also measures for middle-class households. This tax reform is of major importance for its administration after the failure of the reform of the Obamacare. This announcement had a positive effect on the value/cyclical sectors as illustrated by the Dow Jones Transport up sharply this week.
IYT (ETF iShares Secteur Transport US), boosted by Trump tax cut plan : weekly data
The decline in the Euro could continue in the coming weeks, as Germany is looking for a coalition, which could last for months but mostly because of Spain which begins to worry the markets because of the referendum taking place on Sunday in Catalonia on independence despite the ban of the government of Mr Jajoy and the Spanish Constitutional Court. The poll should take place because the regional police do not intend to oppose it, and the participation rate will be key because the result of the vote will most likely be positive while the Catalan government has committed to declare independence within 48 hours after the referendum, which could have serious consequences for Spain and open a pandora's box in other European countries such as Italy for example with Venitia or Scotland for the United Kingdom. A declaration of independence in the aftermath of the vote could lead to a serious political crisis in Spain, leading to a drop in the Euro, which is already showing signs of weakness in the short term. The most probable however is that Catalonia negotiates a status of reinforced autonomy rather than a pure and simple breakout that would be complicated to implement.
L’IBEX (ETF Lyxor Lyxib) as the Catalan referendum is looming : weekly data
In the register of positive news, Britain seems to have changed its strategy with Europe and seems now willing to make concessions in order to extend the negotiation period of two years with the EU and guarantee an agreement which preserves its commercial interests, we are therefore again moving towards a "Soft Brexit".
The slight rise in the dollar and the prospect of a rise in interest rates weighed on the emerging countries and commodities this week, which overall continued to correct but with less amplitude, except for the oil which continued its progression this week and WTI reaches $ 52, its highest level in 5 months.
On the interest rate side, the 10-year German and US remain firm but stable over the week as there should be no surprise at the level of the Fed which will renew (or not) Ms. Yellen in next February , while inflation is likely to continue to be very low, probably due to productivity gains from new technologies.
In this context, gold continues to consolidate slightly while geopolitics was quiet this week, after a very tense period between Donald Trump and “Mister Kim”.