The Ibex falls 2% in its worst session since the March banking crisis

2023-07-06 18:09:29

The Spanish stock market retraces the path that just a week ago led the Ibex-35 to exceed 9,600 points. Fears of new interest rate rises, and their impact on economic activity, have returned with force to the market and the selective leaves 2.12% at close to 9,285 points.

It is its worst session since mid-March, in the midst of the banking crisis in the US and with the fall of Credit Suisse in Europe. Within the indicator, IAG led the falls (-4.14%), followed by Inmobiliaria Colonial (-4.1%), Merlín Properties (-4.07%) and Inditex (-3.89%). Other weight values ​​such as Banco Santander, Repsol or BBVA fell more than 3%, 2.2% and 1.7%, respectively, while Indra was the only one to close positive after adding 0.51%.

The day has also been hard for other European places, where the red numbers have exceeded 3% in Paris or 2.5% in Italy and Germany after learning new references from the US labor market.

Specifically, the country’s private sector generated 497,000 jobs in June. A figure that doubles the 228,000 that the analyst consensus anticipated and also the data registered the previous month, according to the monthly report of the ADP consultancy.

Federal Reserve Minutes

As soon as the data was released, investors accelerated their withdrawal from the market, given the prospect that this strength in the labor market will give wings to the Federal Reserve (Fed) to raise interest rates again. In case there was any doubt, the minutes of the last meeting of the organization make it clear that, despite the pause in June, practically all the members of the council were in favor of returning to the bullish cycle as soon as possible.

With this scenario, the market already gives almost full possibilities that the meeting at the end of July will come with a new rise, opening the door to another one in the coming months.

The fear that this could lead to a contraction in the economy is being reflected, above all, in the debt markets, where investors are demanding higher yields to buy US debt.

Specifically, the interest on the ten-year bond is already close to 4%, which has not been seen since the beginning of March, just before the fall of the Silicon Valley Bank that unleashed a real banking shock in the country. And the same thing happens in the shorter terms. The yield on the two-year bond is close to 5%, also at four-month highs.

“The more you adjust the rates, the harder the impact on the economy will be, and the harder the impact, the faster you will have to lower them,” they warn in this scenario from the Federated Hermes manager in an analysis of the situation.

From Bankinter’s analysis department, they indicate that “now there is more concern about a possible recession than about aggressiveness with interest rates, although both things are closely related.” The consensus estimates that in the short term it will be necessary to be attentive to data such as consumption or those related to the labor market, which the Fed follows with special interest when making its rate decisions.