The Ibex falls 4% in the week and barely respects the support

The European stock markets closed in red this Friday with the Ibex (-1.97% and 6,613.9 points) leading the falls, despite the fact that it managed to rebound from the support area of ​​6,580 points. Indices in the Old Continent have been pressured by the failure of the American company Gilead's (-1.4%) first trial of a potential anti-coronavirus drug. Nor does it like that the European Commission (EC) has not been able to reach an agreement on economic measures to deal with the virus.

Oil, which has been another indisputable star of the week, rises 3% on average at the close of the European market after closing on Thursday with increases of 19.7% in West Texas and 4.7% in Brent. After a start to the week that will go down in history due to the collapse to negative terrain of WT crude oil, the week ends with a better tone supported by the tensions between the US and Iran and also by the rumors about more production cuts.

In the absence of space to store the crude, the Oklahoma energy regulator has announced that producers can close their wells and not lose their leases. That opens the door to lower production. It is also speculated that some OPEC + members are contemplating additional cuts to the agreed 9.7 million barrels per day.

The European Council meeting to address the health crisis ended without an agreement, as anticipated. European leaders agreed that a huge bailout package is needed, but politicians are divided as to its size and whether the funds would be distributed in the form of loans or grants. Ursula Von der Leyen, President of the European Commission, has suggested that the package will be worth at least € 1 trillion. France, Spain and Italy are pressing for subsidies, while countries like Germany and Austria are in favor of the loans since they want the money to be returned. "In the end, it will probably end up reaching a compromise that involves a mixture of grants and loans," point from CMC Markets.

On the other hand, last night the United States House of Representatives supported the rescue package of 484,000 million dollars. Most of the funds will be used to help businesses affected by the closures. Donald Trump warned that the guidelines for social distancing may have to be extended until early summer.

In the macro data chapter of the day, after the debacle seen yesterday in the PMI and in the weekly unemployment claims in the US, which amounted to 4.4 million, exceeding the forecast of 4.2 million, today the German IFO for April was published. The IFO business confidence index stood at 74.3 compared to the expected 80.0 and the previous 86.1. The current situation index stood at 79.5 compared to the expected 81.0 and the previous 92.9. The expectations index falls to 69.4 compared to the anticipated 75.0 and the previous 79.5. Klaus Wohlrabe, an IFO economist, said that "the recovery will probably not be V-shaped," adding that the German economy is at its most difficult time since reunification.

It should also be remembered that this evening, the S&P will review the rating of Italy. Italy is currently rated 'BBB', but with a negative outlook, so there is a risk of a decline given the sharp increase in the budget deficit in 2020.

TECHNICAL ANALYSIS

"The Ibex closed this Friday after filling the bullish gap of 6,580 points in its entirety and at noon it seemed to be moving away from the danger zone but at the end of the session we have collapsed and although it is true that we have not closed the gap, we have not lost support, It is taking effort to get out of the danger zone, "explains José María Rodríguez, technical analyst.

"Otherwise, everything remains the same as in the last two weeks. With a clear resistance zone at 7,210 points and above 7,450 (38.2%) and 8,000 (50%). And with a first support at the lows of this Friday ", qualifies.

"In the end, everything will depend on what the banks do, and where the European banking index, the EURO TOXX Banks is, as it is unable to put itself in the middle with respect to the support it presents at the historical lows of the month of March. If this support is drilled (48.65) we can get scared again ", concludes the expert.