The rain of sales triggered by the more aggressive than expected message from the European Central Bank does not seem to end. The bad data on US inflation, which in May rose by 8.6% in its year-on-year variation -three tenths more than in April and above expectations- leave no room for doubt: the rise in prices has not yet reached the top. Faced with this storm, investors take cover. The European stock markets are about to close the week in free fall: the Ibex 35 drops more than 3% and loses 8,400 points; the Italian Mib 4%; the French Cac and the German Dax 2%. Across the pond, markets are also taking a hit, with the Dow Jones and Nasdaq down 2%.
Within the Spanish selective, all values are dyed red and banks are presented as the most penalized: BBVA falls more than 8%; CaixaBank, Santander, Sabadell and Bankinter 6%. After the blow from the ECB, the Ibex has entered the red this year, following in the footsteps of the other European indices. Specifically, the Spanish parquet
The ECB’s announcement of an end to debt purchases and a 0.25% rise in interest rates in June did not surprise investors, who were already expecting a change in direction towards monetary normalization. However, investors detected in the tone of the institution chaired by Christine Lagarde more forcefulness than expected. They believe that the French is willing to play all its cards to curb inflation. This first increase in rates is the appetizer for another increase, even higher, in September. “The general conviction is that central banks, with the US in the lead, are totally committed to lowering inflation, even at the cost of penalizing economic growth, which could lead some of the developed economies to enter a recession”, Juan José Fernández Figueres, director of analysis at Link Securities, has pointed out.
Along with the rise in the US CPI, which has once again set a record in the last 40 years, the collapse of Spanish equities is also weighed down by the rise in geopolitical uncertainty caused by the cut in trade relations with Algeria, according to clarifies Patricia García Sánchez de la Barreda, an analyst at MacroYield. The North African country is an important energy supplier for Spain and although it is not one of the main destinations for Spanish goods and services, exports in 2019 totaled almost 3,000 million euros.
After a tougher-than-expected ECB meeting, risk premiums have skyrocketed. The Spanish is at 125 points, the Portuguese at 127 and the Italian at 230. In fact, analysts agree that investors expected more specificity regarding the mechanism that the ECB is proposing to avoid market fragmentation in a context of withdrawal of monetary stimuli.
He knows in depth all the sides of the coin.
subscribe
