The economic outlook looks complicated and the financial markets are under pressure. Investor sentiment is weighed down by inflation, fear of recession and now the political crisis in Italy. But the european bags today, they are looking to recover some of the ground lost in recent sessions. The Ibex 35 it rebounded by more than 1%, in line with the rest of the parquet floors of the Old Continent, and reached 7,900 points. Wall Street futures are pointing to gains of around 0.4%.
Within the Ibex 35, CaixaBank is the stock that has progressed the most with an increase of more than 2%. It is followed by Ferrovial, Sabadell and Cellnex. The banking sector, which started with falls, has recovered. On the downside, there are only three stocks: Rovi, IAG, and Siemens Gamesa.
Yesterday, the Spanish selective was at its lowest level since March. The Spanish stock market recorded its fifth consecutive session of losses, its worst sequence since the end of June. In the cumulative of the year, the ibex falls by more than 10%.
Worse economic prospects due to uncontrolled inflation are adding more pressure on the monetary policy of the European Central Bank (ECB), analysts point out. The monetary authority has announced that it will raise interest rates next week by 25 basis points, but more aggressive hikes are to be feared in Europe and the United States. However, comments made yesterday by the president of the Federal Reserve of St Louis, Louis, Bullard, who said he advocated a rate hike of 75 basis points, not 100 basis points as the market began to discount after record inflation data, the nerves have calmed down somewhat.
Similarly, the market is also aware of Italy, where the 5 Star Movement (M5S), one of the main parties in the government coalition, yesterday abstained from voting on a motion of confidence in Prime Minister Mario Draghi in the Senate, which opened a government crisis in the country. All of this had an impact on the debt market, where bond yields rose sharply. Today, interest is moderate. The Spanish ten-year bond fell to 2.29% from 2.34% previously, the German bond fell from 1.189% to 1.115% and the Italian fell to 3.342% from 3.426%. Italy’s risk premium hit 228 basis points, a one-month highthen softened to 214 basis points.
In Asia, we know that China’s GDP growth fell to 0.4% in a quarter marked by epidemics. Analysts were expecting growth of around 1% in this quarter. The Tokyo Stock Exchange rose 0.54% thanks to the push from major exporters. The Seoul Stock Exchange gained 0.37% on technology and autos. For its part, the Shanghai Stock Exchange lost 1.64% and the Shenzhen Stock Exchange, 1.47%.
Wall Street closed yesterday in mixed territory and the Dow Jones left at 0.46% dragged down by the disappointing results published by the major American banks and fears of an even more aggressive monetary policy to contain inflation.
The financial sector was the hardest hit, after the country’s biggest bank, JPMorgan Chase, announced that its first-half profits fell 35% due to increased reserves to cover risks in the face of a possible recession. JPMorgan Chase, whose health is seen by many analysts as an excellent indicator of the US economy, lost 3.49% on the stock market after disclosing its accounts and expressing concern over the current situation. Investment bank Morgan Stanley also reported results today, which saw a 19% decline in profits in the first half of the year.
“If banks are a barometer of the economy as a whole coupled with what we’re likely to see in other revenue in the near future, it’s going to be a lousy quarter,” CFRA chief investment officer Sam Stovall told CNBC.
Investors were also worried about the possibility that the Federal Reserve (Fed) would announce further interest rate hikes to curb inflation, which stood at 9.1% in June. The US central bank raised its rates at its last three meetings, and that too gradually (0.25 point in March, 0.50 point in May and 0.75 point in June).
The Fed has already warned that it intends to approve a further hike after its monetary policy meeting this month, which takes place on the 26th and 27th, and some analysts believe the next could be even higher, although the general expectation is that return to 0.75 points.