The low activity on Friday in the Spanish market due to the Constitution Day festivity does not prevent the Ibex 35 to be among the indices that rise the most on the European stock market this week. He selective maintains 12,000 points at the weekly close with those that are trading close to fifteen-year highs at the doors of the last meeting of the European Central Bank in 2024.
The Ibex 35 rises 3.7% in the last five sessions compared to the 3.9% that the German Dax advances or the 3.6% that the EuroStoxx 50 advances. Even the French Cac closes the week in green despite the political instability and crossroads facing Macron before jumping to 2025. However, and despite the fact that the pillars of the euro zone (France and Germany) keep all EU member states in suspense, monetary policy does not give up space in the minds of investors.
Next Thursday the European Central Bank (ECB) will announce a new cut of 25 basis points, according to the market, to close the year with the deposit facility rate at 3%. A different announcement by ECB President Christine Lagarde will have consequences for European equities. A pause in monetary easing would send a message contrary to that of the last meetings and would raise fear among investors that the Inflation still a real concern for Lagarde.
But an opposite opinion could also come. “The ECB will have to make a key decision on interest rates. The possibility of a cut of 50 basis points It would be the most aggressive response and probably the most appropriate for a context like the current one. This type of decision would reflect a determined stance to face the challenges of growth,” commented Pedro del Pozo, from Mutualidad.
An even lower interest rate environment than expected may be the key to rally of Christmas that the market fantasizes about, which sees an upward trend for the Ibex 35 due to fundamentals. But also from a technical point of view the Spanish selective can score new highs of the year. Ecotrader’s technical advisor, Joan Cabrero, considers that after exceeding 12,000 points, the Ibex 35 shows signs of strength that it will not lose as long as the support of 11,486 points is not breached.
“Beat the increasing resistance of 12,400 points It would be a sign of enormous strength and the icing on the bullish cake for 2024,” says Cabrero. For the Ibex 35 to reach this resistance, it must still rise an additional 2.2%.
ACS and IAG lead the way to the Ibex
In the last five sessions, ACS is the company that advanced the most within the Ibex 35 on the stock market. With a rise of more than 9%, the construction and concessionaire closes its best week since March 2022 due to the improvement in expert valuations and its exposure to the United States in a context in which the dollar shows its strength. In fact, Ferrovial is also among the most bullish of the week for the same reason and reached the 30 billion market capitalization.
However, IAG is the second that has advanced the most since last Monday. So far this year, the airline has risen 91.5% also due to the good evolution of its business compared to other European companies in the sector. IAG chains six consecutive weeks of growth while the market consensus extends its path an additional 3% to the target price of 3.51 euros, according to Bloomberg.
On the other hand, it is Puig that registers the greatest decrease in the last five days. The news of the withdrawal of a cosmetic product from the firm, announced this Thursday by Charlotte Tilbury, is not being well received on the stock market. The Catalan company’s shares plummet this Friday and they fell almost 8% for the problems with ‘Airbrush Flawless Setting Spray’. Firms such as Citi foresee a deterioration in the expected profits for this year due to the impact on the sales target.
Bonds touch political tension
The debt market also does not reflect the European political climate with greater concern. Ten-year German sovereign bonds increase their yield by almost 9 basis points this week to once again exceed 2.1%. Meanwhile, French debt with the same maturity stands at a return of 2.87%, with little change since last Monday. Of course, the market sees greater risk aversion in the French market than in the Greek or Spanish market, for example. In fact, the Spanish bond offers a return of 2.76% at the weekly close while the Swiss securities approach 0% return in most sections of the debt curve. For its part, the ten-year US bond remains below 4.2% with the euro at $1.058, giving Lagarde more breathing room than on previous dates.
The last few sessions were also turbulent in the raw materials market. The Organization of the Petroleum Exporting Countries (OPEC) and its partners (OPEC+) barely have room to maintain the price of crude oil and, therefore, decided to delay the increase in oil production to April 2025 and extend the voluntary cuts until 2027. The Brent barrel, a reference in Europe, marks a new session lower to 71.3 dollars.
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