Italy hits Europe: the Ibex 35 closes one step away from annual lows

Italy has hit, once again, the other European exchanges, and the Ibex 35 has not been saved. The selective has closed this Monday with a fall of 0.59%, to 9,199.2 points, so it is one step away from the lows of the year, which are at 9111 points.

Although both the Cac 40 in Paris and the German Dax 30 and Ftse 100 in London have ended the day with losses of more than 1%, the biggest falls have been in the Ftse Italian MIB index: it has lost more than 2.3% , while the profitability of the country's bonds has skyrocketed.

This is due to the fact that the European Commission (EC) has reprimanded the Italian Government for not complying with the EU fiscal rules when setting a fiscal deficit of 2.4% of the Gross Domestic Product (GDP) for 2019, in relation to 1.6% previously proposed by the country's finance minister, Giovanni Tria.

INCREASES AND PROFITS ON THE IBEX

In the Spanish selective, the companies that have led on Monday were Red Eléctrica (+ 1.24%), BBVA (+ 1.01%) and Acciona (+ 0.94%). On the other hand, Grifols (-4.22%), Amadeus (-3.73%) and Cie Automotive (-3.15%) were the ones that had most transferred.

One of the companies that has also been affected by the falls has been Cellnex Telecom (-1.5%), after the National Commission of Markets and Competition (CNMC) has proposed to regulate the broadcasting market so that it is "more flexible".

SANTANDER AND TELEFÓNICA, BENEFITED BY BRAZIL

On the other hand, we can talk about Brazil. This Sunday the country celebrated the first round of its elections and the candidate who can be considered the favorite of the market, Jair Messias Bolsonaro, has remained on the verge of the presidency of the country. Now, he will face the leftist candidate and successor of Lula da Silva, Fernando Haddad, in the second round on October 28. Unless capital surprise, Bolsonaro will be imposed and will be the new president of the country.

This has caused Santander and Telefonica, the two Ibex companies most exposed to Brazil and two of the big values ​​(or blue chips) of the selective, have held the rate on Monday. The Cantabrian entity, which has its main market in the country, has risen by 0.4%, while the 'teleco' has risen by 0.8%.

TECHNICAL ANALYSIS

José María Rodríguez, technical analyst at Bolsamanía, says that "the downward drip of the Ibex continues", so "we already have a stone's thrown at the annual minimums, at 9,111 points".

"We are going to see how our index reacts to this level, since the next support level (psychological more than anything else) is at the 9,000 points as a round figure, and below and of greater relevance we have the area of 8,800 points, which is where a potential bullish guideline passes, "explains the expert. Thus, he adds that "it would be the right support that joins the growing minimum of 2012 and 2016".

"In favor of the correction not coming we have the renewed strength (at least in the very short term) of Telefónica and Santander, while on the negative side we have the clear drilling of supports by the Italian index, which is what It is weighing on Europe as a whole, and if we look at all the European indexes, at least the three large ones (Dax, Cac 40 and Euro Stoxx 50) all point to the possibility of testing the annual minimums "Rodriguez concludes.

KEYS OF THE WEEK

This week has many open fronts, among which the experts continue highlighting the rebound of the yield of the bonds and their impact on the variable income. "If bond yields continue to rebound, equities will continue to be under pressure, which is going to be a determining factor in the behavior of inflation, a variable that we have been cataloging for a long time as a key to the future of stock markets in the short / medium term" , point out the experts at Link Securities.

The other open front in the week will continue to be politics, and more specifically what happens with Italy (as has been verified this Monday) and with the United Kingdom. "The European markets continue to focus on Italy and on the fight for Budgets with the European Union (EU)," say experts from Danske Bank. In addition, they also specify that the United Kingdom and the EU will continue to intensively negotiate before the EU summit on 18 and 19 of this month.

LOSSES IN WALL STREET

Finally, it should be remembered that Wall Street closed last Friday with notable drops that, in the case of the Nasdaq, exceeded 1%. This day remains the predominance of red, although with more moderate falls.

In addition, important cuts have also been seen in Asia on Monday after the Central Bank of China softened its monetary policy over the weekend. Japan has closed for a holiday.