The Ibex records worst week of 2019 and sits at support levels after tariff announcement

The Ibex has once again lived its worst week of the year so far and has fallen a 3.5%. The Spanish selective has fallen 1.56% this Friday and closes at the support of 8,900 points (8,897) after the announcement of the 10% new tariffs on Chinese goods from Donald Trump. Arcelor (6.58%) and CIE (-4.53%) have fallen with strength in the Spanish index affected by the whole affair.

Trump’s move serves as new pressure on an already pressured market that has had a very bad week as it goes through result season (with big falls in some of the values), the fall of the pound due to no-deal Brexit uncertainties and the Fed’s announcement that hasn’t gone through with what it was expected of it (it lowered the rates but it has predicted that it will not be a prolonged movement of rate cuts).

This Friday there has been further publishing of results (IAG has risen a 6.93% after reporting). Also, other relevant data of the day has been the employment report in the US for the month of July. The US economy has generated 164.000 new jobs outside the agricultural sector, in line with what was expected and the unemployment rate was maintained at 3.7%.

Another relevant date this Friday has to do with the European Union and the naming of the new general director of the International Monetary Fund that will replace Christine Lagarde. She will drop the post to become the new president of the European Central Bank. The finance ministers of the eurozone will have to choose between the ex president of the eurogroup, Jeroen Dijsselbloem, the World Bank president Kristalina Georgieva. Spanish Nadia Calviño backed down from the race.

OIL PLUMMETS AND MORE…

Oil plummeted 2% at the close of the Spanish market after going down 6% yesterday. It is mainly for two reasons, the Fed and Trump’s decision to set extra tariffs on China. The trade war has put pressure on crude oil in recent times as it manages to weaken economic growth and demand for petrol.

In the business world, we can highlight Bankia’s 4.13% fall after receiving a negative report from Berenberg. The analysts have cut their price down to 1.55 euros from 1.75 euros and withdraw their sell rating.

TECHNICAL ANALYSIS

“The Ibex closes on Friday close to the day lows and in the middle of its support zone at 8,900. The June lows that we have been speaking about these past few sessions. Under this area we have the 8,780-8,800 points that coincide with the adjustment level of 61.8% from all the rise from the December lows”, points out Bolsamanía analyst José María Rodríguez.

“Or what is the same, if evened out the support range that must be respected at all times is between 8,800 and 8,900 points. Below that 61.8% adjustment, the technical aspect could be damaged further and we would not have any important supports down to the December lows at 8,300,” he adds.

“Looking at the two big banks in the country, BBVA and Santander, it seems that they are heading for their own support at 4,30 and 3,70 euros respectively. There we have the most important supports from these two banks. In theory this leads to believe that the support from which to rebound musn’t be far away, around 8,800 points we have been speaking about”, concludes the analyst.