Uncertainty in the market after a sharp drop in large Ibex 35 values

Donald Trump’s resounding victory in the US presidential election came as a shock to the Ibex 35 index, which ended the session this Wednesday with growth decrease by 2.9% to 11,495.30 points. In contrast, Wall Street ended up more than 2% in its major stock indexes. Tesla and Bitcoin, which once again set all-time highswere the great winners of the New York tycoon’s return to the White House.

On the other hand, the US elections had the biggest impact on German auto stocks, whose shares fell in price. 6.5% for BMW – also affected by a drop in quarterly profits by 83.75%-, followed by Mercedes-Benz (-6.44%), Porsche (-4.93%) and Volkswagen (4.2%). In the Ibex 35, renewables and banks were severely punished: the Spanish financial sector index fell 5.21% and, in fact, BBVA was the red light of the Euro Stoxx 50 in this Wednesday’s session.

Acciona was the company that fell the most yesterday in the Ibex 35 with a correction of 8.05%, renewable Acciona Energía fell by 6.98%, BBVA by 6.62%, Banco Sabadell by 6.48% and Solaria by 5.63%. ” A Trump win could be particularly damaging to currencies

from developing countries, which could hurt BBVA shares, especially due to its exposure to Mexico and, to a lesser extent, Turkey. Banco Santander could also suffer in this way, but with a significant presence in the US, it could benefit from Trump’s election victory as his policies tend toward financial deregulation,” explains Antonio Castelo, an analyst at iBroker.

Financial analyst Manuel Pinto highlights the relevance Mexico for BBVA, given that the country generates half of its profitsin a context where 80% of Mexican exports are destined for the United States. In Santander’s case, roughly 40% of its net income comes from South America and Mexico, economies linked to the U.S. that could be affected by tariffs. On the other hand, the US accounts for only 9.5% of Santander’s net income.

“Except, “The decline in global economic activity will impact all banking activities.”adds Pinto, who suggests a Trump victory could lead to the European Central Bank (ECB) cutting interest rates “more aggressively than expected” given the possible impact on economic growth in Europe, which would impact banks’ margins and profits.

Nuria Alvarez, an analyst at Renta 4, explains that Spanish banks fell on Wednesday due to falling bond yields and expectations of a more aggressive monetary policy from the ECB, motivated by the risk of Trump introducing tariffs on eurozone exports. However, Alvarez doubts these falls, pointing out that the ECB’s main goal is to keep inflation around 2%, not to stimulate economic growth.

According to Alvarez, Trump’s victory should not harm Mexico or BBVA in the region, since during his previous administration, from 2017 to 2021, BBVA increased its business in Mexico. In addition, it is considered possible that Latin America will become commercially important to the US if Republican tariffs on China lead to implementation.

Return of inflation?

Renta 4 analysts note that Trump’s victory could cause ‘big inflation’with tariffs increasing by 10% on all imports and 60% on imports from China, in addition to immigration restrictions that could push up wages. This would lead to short-term growth from tax cuts, but subsequent cooling due to higher tariffs and interest rates, delaying the 25 basis point cut until 2026.

China and Mexico are the countries Trump has focused most of his attention on, but his rise to the helm of the world’s largest economy will have a significant impact on international trade overall. The Republican leader proposed applying a 10% tariff to all imports into the US, regardless of their origin. In the case of Mexico, this figure would increase to 25%, and for China – to 60%.

Renewable Energy in the Face of a Hurricane

Energy companies like Iberdrola, -4.22% that have opted to switch to renewable energy have benefited from renewable energy subsidies promoted by Biden’s Inflation Relief Act. “A Republican administration could cut subsidies for green energy. This is also reflected in the prices of renewable energy sources such as Acciona Energía (-6.98%) and Solaria (-5.63%),” states Castelo.

The US is already the world’s largest oil and gas producer.but Trump wants to remove the remaining obstacles. He intends to reinstate liquefied natural gas export permits, expand federal drilling auctions, speed up permitting for new pipelines and loosen regulations aimed at cutting emissions from power plants and cars. The question is how the new US president will treat competing exporters: Russia, Saudi Arabia or Iran. “Trump will likely ease sanctions on Russian energy, but leave sanctions on Iran in place,” Reuters noted, citing University of Houston energy expert Ed Hirs.