Ibex moves further away from 10,600 as Repsol and Telefonica hamper index

The NYSE opened again on Wednesday following the Independence Day holiday. However, far from encouraging markets European indices continue to look for direction in what was a day of transition.

The most significant movement of the day came from oil, which saw its gains reversed in the last few hours. Brent crude fell 3.2%, below $48, after OPEC exports increased for June. This rise was produced despite the production limit from March 2018.

Repsol was the biggest loser on Wednesday as a result after it fell 1.7%, followed by Telefonica (-1.36%), which saw heightened losses in the latter part of the session.

Abertis was 1.3% higher after rumours of a potential counter bid. Ferrovial was the best performer of the day however after a gain of 1.98%, followed by Grifols (+0.97%). Santander fell 0.57% to 5.92 euros, continuing to adjust its price in relation to its capital investment. Goldman Sachs and JPMorgan analysts reiterated on Wednesday their buy recommendations. In the general stock exchange, Prisa shot up 15%, while Pescanova fell 5.9%.

In Spain, Ciudadanos and the government reached an agreement to reduce the IRPF in exchange for Albert Rivera’s support for a spending cap in 2018. The reduction will benefit lower profits and will cost 2bn euros.

With respect to the macro data of the day, May retail sales in the eurozone increased year on year by 2.6%. In addition, services PMIs for Europe came out better than expected (except in the case of Italy and the UK). The latest Federal Reserve meeting minutes will be released this evening, in which the central bank raised interest rates for the second time this year.

“We will keep an eye on the comments about when the Fed’s quantitative easing will begin, and the internal discussions from the members of the Fed,” Danske Bank experts said.

Investors continue to look towards Qatar and the Middle East in general, after Saudi Arabia, UAE, Egypt and Bahrain met on Wednesday to decide whether to continue with the sanctions imposed on Qatar. Before a decision was taken, Moody’s lowered the economic outlook of Qatar to negative.

The US continues to show its indignation after the latest missile launch of North Korea. Secretary of state Rex Tillerson said the test was a new scale of threat from the regime and asked for global action.

TECHNICAL ANALYSIS

“Wednesday’s session saw a quite lateral movement between a narrow range of prices, and from a technical point of view there are little implications. The only thing we have learned is that there is a small resistance zone, before the support, at 10,600 points,” said Bolsamanía technical analyst José María Rodríguez.

“If we look at the significant levels of overselling, along with the fact that the upward trend at the end of April would have been filled in its totality, in theory there would be a certain rebound. The problem is that as with our European neighbours, we haven’t filled the upward movement at 10,380 points in the Ibex 35.”

“On the other hand, banking sectors are performing well in Europe, discovering new heights from supports and it may kickstart a move to annual highs at any moment. If the banks rise it’s unlikely the Ibex will fall.”