Madrid Stock Exchange Palace. /
All European stock markets fall sharply this Monday in the face of recession expectations, high inflation and the possible rate hike
The Stock Exchange has started the week with a significant decline that led it to lose 2% in the first steps of Monday’s session, which led the Ibex-35 to stand at around 7,800 points, its lowest level since March, when the Russian invasion of Ukraine began.
The gloomy economic outlook that hangs over the euro zone weighs down investors’ expectations, in a week that will be key due to the meeting that the European Central Bank (ECB) plans to hold this Thursday, in which it could decide on a new rise in interest rates between 0.5 and 0.75 additional points. Already in July, it raised the official price of money in the euro zone to 0.25%, after six years with rates at 0%.
In fact, it is bank stocks that are losing the most ground this Monday. Specifically, Sabadell lost 2.9% of its value, while Santander lost 2.9%, BBVA 2.8% and Bankinter 2.7%, while CaixaBank fell 2.5%.
The rest of the European stock markets also start the week with heavy losses, even above 2%. Investors are fleeing risk amid slowing activity in many developed countries, high inflation and rising expectations of interest rate hikes. In this context, the euro has fallen below 99 cents on the dollar.
The Ibex ended last Friday recovering 7,900 points after cutting a losing streak of twelve consecutive sessions of losses, it opens with a decrease of more than 1.5% and is below 7,800 points.
From Link Securities they point out that central banks are expected to “continue to act forcefully in their attempt to moderate high inflation, especially the ECB, which could even implement a 75 basis point hike in its reference interest rates, which that it would be a movement of great magnitude that we believe is not entirely discounted by the markets».
In addition to decisions on monetary policy, the energy crisis has been aggravated in the European Union (EU) by the cutoff of Russian gas through the Nord Stream gas pipeline, which increases fears of fuel shortages in winter. The Kremlin on Sunday blamed European politicians for keeping the main gas pipeline closed, saying economic sanctions imposed on Russia have made it difficult for Gazprom to maintain the pipeline.
The Oil Ministers of the OPEC + Alliance, led by Saudi Arabia and Russia, analyze today in a telematic conference the state of the crude oil market, amid information about a possible cut in production. The price of Brent oil, a reference in Europe, rises more than 2% to exceed 95 dollars a barrel.