Ibex index experiences worst week in nine months with forecast for banking sector | Financial markets

A softening tone from the Federal Reserve, the weakest job creation in six months in the US and a strong reception to results from big technology companies boosted stock markets in the final period of the week. The downward trend in the Ibex 35 index, which follows the news of the rapprochement between BBVA and Sabadell, is further influenced by the banking sector, the sector with the largest weight on the Spanish stock market. The Spanish benchmark index lost 0.16% on Friday, extending the week’s decline to 2.7%, its worst balance since August.

Sabadell, the object of desire, makes the most of the interest shown by BBVA. Although it pared previous days’ gains on Friday, the Catalan bank recorded a 1.34% rebound that took the week to 11.47%, its best balance sheet since January 2023. On the opposite side was the bank chaired by Carlos Torres, which fell 10.33%. Santander and CaixaBank round out the list of the week’s weakest stocks, with declines of 6.6% and 7%. The fall in debt yields after Fed President Jerome Powell confirmed that rates would not rise provided oxygen for heavily indebted publicly traded and clean energy companies, which have been hit hardest by aggressive price hikes. Solaria shares rose 7.48% for the week, followed by Grifols (6%), Acciona Energía (4.83%) and Cellnex (4.56%).

What are the rest of the stock markets doing?

Positive today for the main Asian indices. The Hang Seng in Hong Kong added 1.4%, while the Nikkei and Shanghai Composite remained closed for the holidays.

Wall Street extends rate hikes. Investors have been waiting for employment data, and while the U.S. economy continues to create jobs, it capped it at 175,000 jobs last month, below the 240,000 analysts expected and the lowest in six months. This increases hopes that the Fed will be able to cut rates at least once in 2024.

Keys of the day

• The market continues to monitor the development of Banco Sabadell, given BBVA’s interest in merging with it. BBVA has been trading up and down after falling 3.84% yesterday and 6.65% on Tuesday. Sabadell is also undecided, gaining 7% over the past two days.
• Puig debuted on the stock market today with a gain of 4.24%.
• CaixaBank announced today, even before the market opened, that in the seven weeks since the start of this program on March 14, it has carried out a buyback of 85.33% of its shares, for a total amount of 500 million euros.
• The Federal Reserve (Fed) announced Wednesday it was keeping interest rates unchanged at a range of 5.25% to 5.5%, leaving them at their highest level in 23 years. Fed Chairman Jerome Powell said it was “unlikely” that the central bank’s next move would be to raise interest rates and acknowledged that bringing inflation down to its 2% target would “take longer than expected.”
• Today the US releases its official employment report for April, an indicator that the Federal Reserve looks closely at in its monetary policy. Nonfarm payrolls are expected to add 243,000 jobs, down from March, and the unemployment rate is expected to remain at 3.8%.
• Today Credit Agricole or Société Générale, among others, present their figures.

What do analysts say?

Susan Hill, senior portfolio manager at Federated Hermes: “The Federal Reserve has clearly seen its confidence shaken by the recent string of disappointing inflation data. While the bar for a return to restrictive policies is quite high, the current federal funds target range of 5.25%-5.50% looks set to remain unchanged in the coming months. A notable addition to the FOMC’s statement was its acknowledgment of the recent lack of progress toward achieving the Committee’s 2% inflation target. “Even though the Fed has lost confidence in prices, they have, as expected, decided to continue working to reduce the volume of balance sheet settlements.” For her part, Deborah A. Cunningham, the manager’s chief investment officer for global liquidity markets, believes the U.S. economy is neither moving backward nor moving forward, but is simply playing overtime in a game in which cash remains king. “Two cuts is probably the most we’ll have this year,” he says.

Tiffany Wilding, PIMCO economist: At the June meeting, when the FOMC releases its next summary of economic forecasts (SEP), we suspect FOMC participants will revise upward their forecast for core PCE inflation closer to 3% (up from 2.6% in March ) and they will also revise upward the expected path of interest rates. We believe the median rate forecast for 2024 will continue to reflect the FOMC’s expectations of at least one cut in 2024. However, the likelihood that they will not reduce at all has increased significantly. Of course, if the economy weakens and the unemployment rate rises, we would expect the Fed to reduce this scenario and do so aggressively if necessary.

What is the evolution of debt, currency and commodities?

The euro rises to $1.0736.

Brent crude oil, the benchmark in Europe, rose to almost $84 a barrel.

Spanish 10-year bond yields fell below 3.3%.

Quotes

STOCK EXCHANGE – CURRENCIES – DEBT – INTEREST RATES – RAW MATERIALS

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