After the strong rises on Tuesday, the Stock Markets had a session on Wednesday in which all the leading role was given to the meeting in which this afternoon, with the European markets already closed, the Federal Reserve (Fed) faces one more decision complex: follow his plan to raise interest rates or give in to market pressure, fearful of the risk of recession after the outbreak of the banking crisis in recent days.
Volatility has been the protagonist of the session, but the Ibex finally closed the day with a fall of 0.44%, which led it to stand at 9,009 integers.
The banks, which on Tuesday led the rises with advances that exceeded 7% in some entities, were at the forefront of the falls this Wednesday. Bankinter was the ‘red lantern’ with a fall of 4.6%, ahead of Banco Sabadell (-2.7%), Unicaja (-2.2%) and CaixaBank (-2.1%). BBVA managed to end the day positive (0.3%).
The biggest increase was recorded by Repsol, with an increase of 0.8%, followed by Endesa (0.7%), Inditex (0.5%), ArcelorMittal (0.3%) and Red Eléctrica (0.3% ). Beyond banks, the biggest falls were recorded by Merlin (-3.9%), Colonial (-3.5%) and Grifols (-2.7%).
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Consensus expects the Fed to eventually raise interest rates another 25 basis points – below the 50bp anticipated before the Silicon Valley Bank (SVB) crash. “The rise in rates is a drag on growth and the most directly exposed sectors show very strong signs of slowing down,” warns the manager Ostrum AM in an analysis report.
The firm agrees with other analysts that despite the recent calm in the market, there are still risks, pointing directly to the flight of deposits from the smaller entities to the “better regulated” large ones.
For this reason, and in exchange for the interest rate hike (if it finally occurs), the Fed Chairman, Jerome Powell, is expected to reinforce his speech of firm support for the country’s banking sector and, above all, send a clear message of that the central bank will do whatever is necessary to help any entity in trouble, with a focus on the regional sector.
This same Tuesday, the US Treasury Secretary, Janet Yellen, opened the door to the possibility of protecting all the deposits of banks in trouble, against the limit of 250,000 euros established up to now, as they already did with those of the SVB. A message along these lines from Powell would be very well received by investors, who are also expecting greater precision regarding the future of monetary policy.
Regarding the rest of the stock market indices of the main European stock markets, the FTSE 100 in London closed with a revaluation of 0.41%, while the French Cac 40 advanced 0.26% and the Frankfurt Dax, which made 0.14%. On the other hand, the FTSE Mib in Milan lost 0.12% at the end of the session.
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