The Ibex index fell 2.1% in its worst week since October | Financial markets

The Spanish stock market has exhausted the bullish momentum with which it ended 2023 and began the year. The Ibex 35 lost 2.1% in its worst week since October and led European stock market declines weighed down by gains from Iberdrola, Cellnex and the banking sector. Selective saw how in just a week it went from 10,200 points to a loss of 9,900 points and became the European stock market’s top weekly loser.

“The mood at the start of the year is a little gloomy, but despite this, the market decline is not as pronounced as one would expect,” admits Diego Fernandez, investment director at A&G. In a statement to Bloomberg, the expert believes there are still “excesses from last year that need to be ironed out as expectations of rate cuts have gone too far.” “We remain cautious on the stock.”

Doubts that are also reflected in the development of the rest of the European markets, where the decline ranges from 1.2% in the Cac 40 to 0.7% in the Euro Stoxx 50, but softer than in Ibex. Clean energy companies have been the hardest hit on the Spanish stock market this week and are far from finding their footing. Solaria shares fell 13.2%, Acciona fell 11.6% and its green subsidiary fell a further 7.9%. In Solaria’s case, Citi analysts downgraded their recommendation from Buy to Neutral given the decline in their EBITDA estimates. They believe the company is too dependent on energy prices. In addition, they lowered their target price from 17 euros per share to 15.5.

Rovi, for his part, stands out against the opposite background. The company was up 4.28% for the week, followed by Meliá with an increase of 4.17%, driven by the good outlook for the tourism industry this year after 2023, when Spain managed to achieve record foreign tourist arrivals exceeding 84 million.

In the debt market, bond yields ended the week with a slight increase. The yield on Spanish 10-year bonds rose to 3.24%, the yield on German bonds due in 2034 is 2.34%, and the yield on US bonds maturing in 2034 is above 4.17%.

Link Gestión estimates that investors are beginning to realize that central banks, while they will cut their benchmark interest rates this year, will do so later and likely to a lesser extent than what markets had priced in until recently. . European Central Bank (ECB) President Christine Lagarde recently cited June as a likely start date for rate cuts.

Looking ahead to next week, investors are awaiting fourth-quarter US GDP data and the start of earnings season in Spain, which Bankinter kicks off next Thursday. According to Bank of America experts, the next rise or correction in markets will require data that will erase talk of a hard landing of the US economy.

Yves Bonzon, CIO of Julius Baer, ​​reminds that the main risk “lies in an unexpected acceleration in growth, which could cause the Fed or even the ECB to refuse to stop cutting interest rates to less restrictive levels.”

For his part, Bank of America chief strategist Michael Hartnett believes that as long as US 10-year yields remain between 3.75% and 4.25%, investors will once again avoid banks, Socimi, small-cap stocks and the most debt-heavy companies.

With geopolitical risks rising due to the crisis in the Gulf of Aden, which threatens to damage global trade, a barrel of Brent oil costs around 78 euros. Global Director of Multi-Asset Investments at Allianz Global Investors notes that the markets’ main problem and biggest catalyst

oil prices is that the conflict will spread to the Strait of Hormuz, through which a fifth of the world’s barrel consumption passes every day.

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