Volcanic week on the stock market: Wall Street records and falls in the Ibex index | Financial markets

Thursday’s rate cut by the Federal Reserve would have been the financial highlight of the week under normal circumstances, but it was overshadowed by Hurricane Donald Trump. The Republican candidate’s resounding election victory shook markets around the world, with a particularly negative impact on the Spanish market. With a loss of 2.46% for the week and 0.16% on Friday, it ranks among the world’s worst performers along with the French Cac. Not long ago he was (briefly) breaking 12,000 points and is now fighting for 11,500.

The situation is almost the opposite of that recorded in the US stock markets. The S&P 500 soared 4.7% for its best week in all of 2024 and is on track to hit 6,000. The Dow Jones and Nasdaq also set all-time highs, with weekly gains of up to 5.6% for the tech indicator. The promise of tax cuts for companies and the possibility that congressional oversight would allow Trump to cut the corporate tax rate from 21% to 15% have sent shares soaring as the cut is a direct contribution to earnings. “While it is often said that the impact of political events on markets is temporary, it would be unrealistic to apply this idea to the current situation since the results of this election carry significant weight, especially on the US economy and its relations. international,” explains Allianz GI.

The investment euphoria has attracted $20 billion into U.S. equity funds, the highest in five months, according to Bank of America. Money is also flowing into small-cap funds, and in fact the Russell 2000 index, which focuses on mid-market stocks and has a greater focus on the U.S. market, soared 8.% for the week. Analysts explain that these types of companies could benefit from trade restrictions, in addition to lower taxes.

As Francois Rimet, senior strategist at Crédit Mutuel Asset Management, noted: “We believe the current momentum is likely to continue in the coming weeks, with US equities outperforming European ones. In US equities, thanks to their low valuations, small and mid-sized companies, as well as banks, should be able to continue their rally.”

In some sectors the growth was very large. Thus, within the S&P 500 index, the best values ​​were Palantir (artificial intelligence used in defense), Axon (manufacturer of, among other things, stun guns) and Tesla, Elon Musk’s company, all three with an increase of more than 25%. top industries, auto, steel (due to tariffs), petroleum (due to forecast more mining permits) and private healthcare due to forecast of public health cuts.

On the other side of the Atlantic, Trump’s election was a frightening sight for the European economy. Analysts cut their growth forecasts due to expectations not only of higher tariffs on U.S. exports but also of a trade war with China that would punish the EU’s other major market. Added to this is the risk of a political crisis caused, on the one hand, by the strength of the far-right Eurosceptic forces, allies of Donald Trump, and on the other, by his lack of commitment to NATO in the context of the Russian crisis. threat. “The main risk is related to trading. In the short term, a protectionist trade stance favors the US dollar and poses a risk to economic growth outside the US (…), Europe becomes a cause for concern as it could be targeted by a more hostile business environment. , without the unified leadership needed to solve this problem,” says Schroders.

The Euro Stoxx index ended the week down 1.6%, while all major European indices ended the week in the red. The cool outlook for the Old Continent has led to a weaker euro, given the expected gap between US and European rates. Two-year European debt fell weekly in both Germany and Spain. And it is precisely this behavior that has had the greatest impact on Ibex values ​​this week. The banking sector led the way with losses of more than 3.5% in BBVA, Sabadell and Santander. Iberdrola also fell due to its reliance on renewable energy, or Puig, at a bad time for the luxury sector.

However, Rovi turned out to be the worst value in the selection. The pharmaceutical company has lost nearly a fifth of its value this week. Earlier this month, the company canceled the sale of its third-party manufacturing business, which was valued at 3 billion euros. Additionally, on the day the results were released, the pharmaceutical company announced that it would not sell Risvan in the United States, another blow to the price. Among the week’s top picks were Acerinox and Arcelor, which have large US businesses that would benefit from possible metal tariffs, IAG (cheaper oil forecast) or Grifols, given the likelihood of the Brookfield takeover going ahead.