The January effect on the Ibex 35 and a bullish candle for 2023

The ‘january effect‘ is one of those stock market phenomena that arise from statistics and the behavior of investors. The conclusion goes to say thatAs January goes, so will the year go.‘, that is to say, that if the first month is painted with profits, so will the whole of the year. The reality is that it is fulfilled, with nuances, on most occasions according to records both on Wall Street and on the European stock markets.

This monthly barometer is part of a statistical troika (January Treble) wider and more reliable: the ‘Santa’s rally (strictly, the period after Christmas and until the first day of the following year) and the ‘first five days of January‘. Well, if we stick to what we have experienced this week, there are reasons for optimism for 2023 among both stock and fixed-income investors. The last two sub-indicators have closed positively and all that remains is to see the monthly balance.

The Ibex 35, the Spanish stock market reference, has started the year with a strong rebound of 5.7% that almost completely erases the losses accumulated in 2022 (-5.5%). The rise has been in line with its European peers as the Dax german, the cac French or the ftse British, which accumulate increases of 5 to 6 percent in these five days. It also exceeds the beginning of Wall Street with progress of less than 2% for the Dow Jonesthe nasdaq and the S&P.

For lovers of statistics, the ‘Triple Effect of January’ (post-Christmas, five days and monthly balance) seems like a separate talisman in its three parts, but as a whole it comes close to infallible truth with a reasonable margin of error. Is it then the end of the bear market of 2022? Before claiming victory, let’s see what could leave it on paper. Precisely, a scenario like the current one of change in the inflation expectations and of interest rates It is not the best soil to sow forecasts.

As they have been brandishing both the Federal Reserve (Fed) As the European Central Bank (ECB) Throughout your last few meetings, everything is going to depend on the incoming data. Despite the aggressive speeches of both central banks, there are winds of change and disinflation is gaining strength. Next Thursday the US December CPI reading and economists estimate a slowdown of six tenths, at 6.5%, that would complete a cycle of six consecutive months of brake. In Europe, last month, it has taken a step back to 9.2%, but it is still too high.

All the ingredients are combining so that the gatekeepers of monetary policy loosen the rope that makes financing more expensive in the near future. sovereign bond yields reveal a divergence in this sense and anticipate a ceiling in the rates around 5% for the US and 3.5% in the euro area. There are even voices who believe that the Fed will have to use its liquidity tools again to maintain stability in bonds if it continues to raise rates in 2023.

If this scenario crystallizes, the thesis of a ‘soft landing’ could be considered valid in the coming months despite the fact that some large economies such as the United Kingdom or the eurozone itself are in technical recession. A scenario of stability and inflation under control is once again good news for the stock markets after the severe correction since November 2021 that has hit, above all, technology and growth stocks. For him IBEX 3530% fed by banks, the 180-degree turn after having left negative rates behind is an additional catalyst. If in 2022 it was one of the least bad indicesin this year it can unfold its potential and shine, if the recession gives its permission, as in its best years.