Without macroeconomic references, business results focused the attention of the markets yesterday. Although on Tuesday, with the European markets closed, the president of the Federal Reserve, Jerome Powell, assured that more rate hikes in the US will be necessary, investors preferred to remain with the idea that inflation is beginning to show signs of moderation. This was enough for the European stock markets to extend the rally. The Ibex 35 rose 0.6%, a rise that returns it above 9,200 points. The Spanish selective, which has advanced 12.13% so far this year, is trading at a 20-month high.
Despite the renewed strength shown by the Spanish stock market in an environment marked by monetary tightening, the Ibex continues to be the only European index that has not recovered pre-pandemic levels. The selective rebounds 51% from the 2020 lows, but is still 8.49% from the 10,083.6 points it registered in February 2020, before the pandemic broke out.
The German stock market tied yesterday with the Spanish one. That is, the Dax advanced 0.6%. This resemblance is limited only to the scope of the day. Although so far this year the German index is behind the Ibex, with a rise of 10.69%, the recovery capacity of the Dax in the hardest moments of the crisis led it to return to pre-Covid levels in the final stretch of 2020. Its high industrial component at a time when mobility restrictions took their toll on tourism firms allowed the German index to reach maximums in January 2022. A year ago the Dax, as well as the Cac, revalidated their all-time highs. In other words, they took over from the US indices, which in the year of the pandemic, driven by technology companies, broke their records. As of today, the German Dax stands at 5.28% of the 16,271.75 points registered in January 2022.
While the German and Spanish stock markets tied yesterday, the Italian Mib added 0.15%. The Transalpine stock market leads the gains in Europe so far this year with a rise of 14.57%. The reason that justifies this good performance is the high weight that banks have in the index, the sector that has benefited most from monetary normalization. Britain’s FTSE rose 0.26% while France’s Cac escaped gains yesterday and lost 0.18%.
Although in recent days investors have threatened to collect profits, the desire to continue obtaining an extra investment to combat high prices has been stronger. Despite the warnings of experts, the purchases have continued their course. Juan José Fernández-Figares, director of Link Securities, points out that, although the bottom of the market is showing great strength and equities may rise a little more, it is difficult that “in the absence of a catalyst they can go much further”. The most probable scenario with which they work from the firm is that the markets enter a consolidation phase in the short term. Despite the fact that the indices and listed companies are showing signs of overbought, the expert believes that the correction will be very limited.