Friday, March 29

European stock markets rise to the slipstream of Wall Street and pending the ECB


In January, investors’ fear that central banks would be forced to withdraw their monetary stimuli faster than would be desirable in order to fight high and persistent inflation greatly conditioned their investment decisions, penalizing both variable income, especially growth stocks, such as technological or biotechnological ones, as well as fixed income, which has led to a strong rebound in the yields of these last assets -yesterday, for example, the yield of the German bond with a maturity of 10 years closed above 0% for the first time since the beginning of the pandemic, something that also happened with that of the bond with maturity at 5 years spainol-. Today, in the public debt market, the return on the ten-year US bond falls slightly, to 1.77%, the German debt rises to -0.01%, while the return on Spain’s public debt rises to 0.74% with a risk premium quoted at 75 basis points. Italy’s 10-year bond offers an IRR of 1.36% while its risk premium drops slightly to 137 basis points.

All in a moment when quarterly earnings release season is not bad although it has not served to encourage investors, who have punished the companies that have disclosed their figures, whether they have beaten the expectations managed by analysts or if they have fallen short, the latter being, as is evident, the that have come out worse stops.

From Link Securities, its analyst Juan José Fdez-Figares acknowledges that it is difficult to determine if the indices have bottomed out, “which would mean that the correction suffered in January would be about to end, although there are some indications that this could be the case, especially since money has continued to flow into the equity funds of these markets despite the falls. Also, investor sentiment is now very negative, which is usually a good contrarian indicator of future stock market performance. In addition, we must insist that, for the time being, equities are one of the few investment alternatives that can serve to counteract high inflation”.

Of course there can always be a geopolitical part to watch. British Prime Minister Boris Johnson will pledge to defend Ukraine’s sovereignty on a visit to Kiev today, as part of diplomatic efforts by the West to stop a possible Russian invasion that Moscow denies it is planning.

European indices rise after the DOW JONES Ind Average closed up more than 1.1% to 35,131 points; the S&P 500 advanced 1.8%, over 4,515 integers while the NASDAQ 100 closed with advances of more than 3.2% that took the index to 14,930 points. The Russell 2000 advances more than 2.9%, up to 2,025 points.

Yesterday different officials of the Fed set March as the date on which the body will raise interest rates though they were cautious about what might happen next, signaling their desire to keep options open in the face of an uncertain outlook for inflation and the ongoing pandemic. This week it is the turn of the ECB with expectations set on whether it will make a move in the heat of what its US counterpart is doing or will continue to maintain its expansionary policy in the face of growing market volatility.

Oil futures prices edged higher, nearing seven-year highs hit last week, as investors bet supplies would remain tight, with limited production ramping up by major oil and gas producers. a strong recovery in fuel demand after the pandemic. At these hours, Brent crude oil futures are trading at $89.29 while West Texas advances to $88.25.

Retail sales in Germany, CPI of France or PMIs of the euro countries

This Tuesday, Germany publishes the data of retail sales for December, which fell 5.5% in real terms in the comparison with the previous month, according to data from the Federal Statistical Office published on Tuesday. The data for November had shown a variation of 0.6%. In year-on-year terms, retail trade sales showed no variation, after a drop of 2.9% in November.

Also before the opening, it was known that the prices of the houses in the United Kingdom rose 11.2% in interannual terms in January, above what was expected by the market, according to the mortgage company Nationwide on Tuesday. The data for December had shown a variation of +10.4%. A Reuters poll of analysts had forecast the figure to rise 10.8% in January. Compared to the previous month, prices rose by 0.8%, after a +1.0% variation in December.

In France, the CPI for January will be published. In Spain, the data to follow will be the manufacturing PMI of the first month of the year, which will also be known in France, Germany and the euro zone. Unemployment data will also be published in several countries, such as Italy, Germany and the euro zone.

In the US, PMI and ISM data will be followed, as well as construction spending or the Redbook index.

In the forex market, EUR/USD rises to $1.1266 while Bitcoin is up 3.6% and trading at $38,487.7.



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