A new black day on world stock markets, conditioned by the fear of an economic slowdown in the midst of an accelerated tightening of monetary policies to combat the brutal inflationary spiral. The Ibex 35 closed yesterday with a fall of 2.47%, to 8,183.3 points. Since the European Central Bank (ECB) ended its debt purchases on Thursday and announced several rate hikes in the coming months, the main stock market has been falling sharply by 7.5%, in line with other major Western stock market indices and their worst streak since the invasion of Ukraine.
The intensity and persistence of price rises continue to give negative surprises, as shown last Friday by the rises in CPI data for May in the United States (8.6%) and Spain (8.7%). Inflation seems to be far from over, and as a result, investors are increasingly believing in the soft landing of the economies promised by central bankers with a gradual rise in interest rates. Fearing that the economy will be hit harder than expected, even to the point of recession, risk aversion has shifted to all sorts of assets, from which money escapes.
Thus, the selections of the main European stock markets fell in line with the Spanish: Italian (2.79%), French (2.67%) and German (2.43%). Only the British performed relatively better, although also very negative (1.53%). The day began with strong sales after the blow suffered by the Asian stock markets, and the European falls were aggravated by the poor opening of Wall Street, where the main indices closed with sharp declines: 2.79% the Dow Jones, 3.88% on the S&P 500 and 4.68% on the Nasdaq.
The larger and faster tightening of monetary policy is also rapidly making debt financing more expensive. The price of the securities is falling due to sales and, as a result, the interest rate on the 10-year Spanish bond in the secondary market is already close to 3%, compared to 0.5% at the beginning of the year. Over the same period, the risk premium (differential of this interest rate with that of the German bond) has risen sharply from 75 to 134 basis points. In addition, new covid outbreaks in China, coupled with the continuation of the war in Ukraine, threaten to further prolong bottlenecks in global supply chains.