Bank prevents Ibex from joining European stock market comeback | Financial markets

After the storm that erupted in markets last week as a result of the European elections and especially the call for legislative elections in France following the strong rise of the far right, calm has returned to European stocks, although it has not fully recovered. recover from the strong ones recorded in the previous week.

French Cac became the leader of weekly growth, increasing by 1.67%. A partial recovery (it fell 6.2% the previous week), further hampered by the evolution of the French financial sector: BNP Paribas fell 15% after the election was announced; Société Générale shares lost 10.6% and Credit Agricole lost 11%. Together the three companies have left 16 billion euros in capitalization in the last two weeks.

Smaller gains were made by the Euro Stoxx 50 index, which rose 1.41% for the week compared with 1.67% for the Dax. On the Spanish stock market, the Ibex index ended the week with a slight gain of 0.36%, weakened by Friday afternoon when it was on the verge of losing 11,000 points.

Analysts at MacroYield believe that “European equities may continue to be weighed down by the political context, while the United States may see better news over the medium term thanks to inflation indicators and business results.”

Barclays, for its part, believes that the stability of global equities remains “intact” in the face of future interest rate cuts, which central banks are announcing almost every minute. A situation which, according to a British investment bank, has little stimulating effect

economy, which could help boost earnings and support valuations despite some mixed data and higher geopolitical risks.

Cuts returned to European stock markets on Friday in a session marked by the so-called quadruple witching hour. That is, the expiration of futures and options contracts on indices and stocks. This is an event that usually tends to increase trading volumes and volatility of the day. In this case, more than $5.5 trillion in options related to indexes, stocks and exchange-traded funds expired. Added to this is the decline in American technology companies, which makes analysts wary of the start of the expected correction, especially when the S&P 500 and Nasdaq indices once again confirmed their historical highs during the week. .

In addition, it became known about poor data on the eurozone composite PMI. In June, this figure was 50.8 points, which is lower than 52.2 points in the previous month, and also lower than analysts’ estimates. The return of this indicator to the 50-point barrier separating recession from growth is cooling expectations for the reactivation of the eurozone economy.

“This time it’s not about political risk, but about PMI data and how markets are pricing in eurozone growth,” explains Benoit Peloy, investment director at Natixis Wealth Management.

At the same time, red numbers were eventually imposed on the Spanish stock market: the Ibex index fell by 1.15% under pressure from financial companies and Inditex. Of course, Rovi’s value fell the most, falling 4.47%, which was penalized by a decline in the value of BNP Paribas. The French firm’s research team sees no new catalysts to extend what has been its rally so far.

Among financial companies, Bankinter fell 3.16%, followed by CaixaBank (-3.12%) and Santander (-2.39%). In comparison, Telefonica and Aena led the gainers with gains of 1.34% and 1.08% respectively.

Macroyield believes that “volatility will likely continue to hamper” Europe’s evolution compared to the United States, “where AI also continues to act as a driver,” they estimate.

On the Spanish stock market, the biggest gains over the week were seen in IAG and Indra shares, up 3.04% and 2.87% respectively. However, the biggest penalties were suffered by the two firms that suffered from the increase in debt: Colonial lost 7.99% and Solaria – 5.47%.

J. Safra Sarasin Sustainable AM, its CIO Philippe E. Bertschi estimates that in the second half of the year, “the main driver of the markets will continue to be artificial intelligence and associated growth and profit expectations. The question remains how long large tech companies can abstract themselves from economic reality.”

In the commodities market, oil closed the week at around $86 per barrel, the highest level in a month. Kepler estimates a level that could reach $90 in the coming weeks, indicating increased demand over the summer and the possibility of renewed geopolitical tensions in the Middle East.

Among currencies, the euro continues to decline against the dollar and is already at 1.0684 US notes.

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