The Ibex is in full swing so far this year and adds its fourth consecutive week to the rise | markets

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With a week to go before the central banks speak, investors choose to prolong the rises. The greater resistance shown by the economy has been sufficient ingredient for investors to decide to get on the upward trend that has prevailed since the beginning of the year. Although the rises in recent sessions are more moderate than those registered in the first days of the year, the correction that analysis firms warn so much about has not yet arrived. In an aimless day, the Ibex 35 managed to shake off doubts and advance 0.27% on Friday, a sufficient rise to maintain the 9,000-point barrier and revalidate the highs of November 2021. In the last five days, the rises they are expanded to 1.59%. That is to say, the Spanish selective achieves full so far in 2023 and adds its fourth consecutive week on the rise.

The pull experienced by Sabadell on Thursday after the presentation of results continued on Friday. The entity scored 5.24% on Friday, gains that in the week are extended to 20%. That is, it reaffirms itself as the most bullish value in the week. Although the pull of Sabadell served as a boost to the rest of the entities, only Unicaja (5.36%) manages to sneak into the list of listed companies that have risen the most in the last five days. However, the podium of firms that rise the most in the week is made up of Rovi (7.86%) and Sacyr (6.57%). On the decrease side, Solaria (-2.19%), Telefónica (-2.52%) and Acciona (-2.23%) stood out. Cellnex, which last week was driven by rumors of a takeover bid, opted for consolidation and lost 0.96% due to silence about a possible acquisition.

The behavior of the Ibex 35 was in line with that of the rest of the European indices. The German Dax advanced 0.77%; the French Cac, 1.45% and the Italian Mib, 2.56%. Only the British FTSE deviated from this trend and ended the week flat (-0.07%).

Bank of America analysts point out that the good performance recorded by the European stock markets at the beginning of the year is being supported by the inflow of flows. In the last week the funds of European shares received 3,400 million dollars. This is the largest inflow since February and it is only the second week of receipt of flows after 48 consecutive repayments. This is enough for the European stock market to extend its gains against US equities. A behavior that is supported by the slowdown that inflation is beginning to show and the relief experienced by gas prices.

The DWS manager is trying to reduce optimism and, in line with the warnings made by analysts in recent weeks, they point out that there is very little correlation between a good start to the year and a good year in general. Experts acknowledge that the prospects for the markets are not as bad as feared in mid-2022, but they consider that they have not improved excessively either. “It seems to us that it is still early to review our objective for the S&P 500 for the year (4,100 points). However, we may do it for the European and Asian markets where the macroeconomic environment has surprised in a much more positive way”, they underline.

James Rutherford, director of European equities at Federated Hermes Limited, points out that the good performance of the markets is due to investors giving the Federal Reserve a better chance of achieving a soft landing. Although there are many unanswered questions, the latest macroeconomic data show greater resilience in the world’s leading economy. The best example of this is the growth in the US in the fourth quarter of 2022, which exceeded analysts’ expectations (2.9% year-on-year, compared to an estimated 2.3%).

Juan José Fernández Figares, director of analysis at Link Securities, points out that, although this greater strength may be an argument for the Federal Reserve to accelerate rate hikes, investors chose to see the “glass half full”, interpreting that The figure supports the majority hypothesis that the US economy can achieve a “soft landing”.

From Société Générale they rule out that both the US and the euro zone enter recession in 2023 and instead predict a prolonged period of stagflation. An idea in which Rutherford also agrees, who points out that “fears of a recession in Europe have diminished, benefiting the markets, since a milder winter climate has reduced the probability of energy rationing and gas prices have fallen, to which added to the positive impact that the reopening of China has in this region”.

Lewis Grant, Federated Hermes equities portfolio manager, is more cautious, pointing out the moderation experienced by the stock markets in recent days. “There was a time when a recession seemed inevitable, especially in Europe, and while that may not be the case anymore, we believe the probability remains high,” he explains.

Although investors have decidedly opted for a moderation in the process of raising rates, the next few days will be key to verify to what extent this was reality or was it mere speculation. Although the growth data and the overheating of the US labor market give the Fed room to continue being aggressive, the moderation that inflation is beginning to show is sufficient ingredient for the Open Market Committee (FOMC) to announce an increase in 25 basis points, an idea that has gained traction in recent weeks. However, moderation is not a pause. Several members of the US central bank have reiterated that prices are far from the 2% target and they see rates above 5% at the end of the year.

The ECB will be more aggressive. As her president, Christine Lagarde, pointed out in her speech in Davos, the battle against inflation continues. In other words, the consensus expects a rise of 50 basis points in the next two appointments. With this idea as a backdrop, the bonds put a stop to the gains they registered at the beginning of the year. The yield of the Spanish bond rises to 3.22% while the German bond stands at 2.3%. The divergence of monetary policy serves to sustain the recovery that the euro is experiencing. The community currency rises more than 13% from the lows of September and changes to 1.0858 greenbacks.

Along with the business results, the OPEC meeting will be held next week. Brent is close to $86.

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