After three sessions of sharp falls, the European stock markets breathed a sigh of relief. The tension had skyrocketed: in the face of growing fears of galloping inflation and the tightening of monetary policy by central banks, nerves took hold of investors, who reduced their risk positions. After the latest bumps, the European markets take a break and have woken up this Tuesday in green: the Ibex has opened with a rise of 0.56%; Frankfurt, Paris, London and Milan have also woken up with small increases, less than 1%. However, stock market operators do not lower their guard: the meeting of the Federal Reserve (Fed) concludes this Wednesday and will be revealing to determine the next rate hike and, from there, the movements of the short-term indices .
Within the Spanish selective, Aena, Naturgy and CaixaBank stand out among the most benefited stocks, trading with a rise of over 1%. For their part, Cellnex, Ree and Cie Automotive, the most affected, recorded slight losses. The small gains that the European stock markets have made at the open on Tuesday are not enough to cover the losses they have suffered so far. So far this year, the Italian Ftse MIB has fallen by around 19%, the German Dax and the French Cac by 15%, while the Ibex and the British Ftse have managed to reduce their declines to 5% and 2%, respectively. .
According to analysts at Link Securities, many investors are convinced that central banks will be forced to raise interest rates to control price escalation even if the cost is to cause a recession. In fact, after the bad data on US inflation published last Friday (+8.6%), the possibility that the Fed chooses to raise rates by 75 basis points —above the half percentage point that the market had been discounting — is gaining strength. “The scenario of a soft landing for the main developed economies, in which the central banks were capable of clamping down on inflation without excessively penalizing economic growth, seems to have been ruled out for the time being by some investors who see the entry into recession of the main developed economies as inevitable”, pointed out Juan José Fernández Figueres, director of the analysis house.
The Asian market continues in a negative tone: the Japanese Nikkei has closed this Tuesday with a collapse of 1.32% and the Hang Seng of 0.32%. Wall Street has not escaped the wave of decline that has hit the international stock markets. The S&P 500, the most representative index of the US economy, entered the bear market at the close of the last session, having lost more than 20% since the last peak, reached on January 3.
The actions of the Fed will be the compass of the stock markets for the next sessions: the experts agree that if this Wednesday is less aggressive than expected, it is possible that there will be a small rally of the indices. In addition, the lifting of restrictions in China due to the pandemic and the first signs that inflation has peaked will condition the behavior of financial markets in the medium term.
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