A bullish closing for the Ibex, but far from intraday highs and with a weekly drop of 2.8%

The Ibex 35 has rises 1.66% to 6,875.80 points, after scoring an intraday high of 7,000 points in the best moments of the day, due to initial optimism about a treatment against the virus. Investors have entered the market after the news of a promising drug from the American company Gilead, which shoots up 10% on the Nasdaq after announcing that it has conducted a trial with a drug that has proven effective against the coronavirus. However, optimism has cooled in the later part of the day, as Wall Street is not rising with the joy of other days.

The Spanish selective, which started the week at 7,070 points, rose to 7,209 points last Tuesday, but from that level, where there is a first resistance regarding technical analysis, it has clearly turned downward. During the week, it has lost 2.8%; and so far this year it accumulates a drop of 29%. The values that increased the most were Ence (+ 7.57%) and IAG (+ 7.27%); and the most bearish were Red Eléctrica (-2.4%) and Sabadell (-2.08%).

At a fundamental level, the bad macro data, added to the negative news of business results and warnings from international organizations about the economic impact of the virus, have had the stocks under pressure these days.

This Friday, China has confirmed that its GDP plummeted 6.8% in the first three months of the year, compared to the previous year, the first drop in its economy since Beijing began reporting on the quarterly gross domestic product in 1992. The figure was also worse than expected (a contraction of 6.5% was estimated). Meanwhile, Chinese retail sales for March have plunged 15.8% compared to -20.5% the previous month and the estimate of -10%.

Analysts highlight as a positive that although the first quarter GDP and retail sales were worse than expected, industrial production was better (-1.1% compared to the estimate of -7.3%). "The production side of the economy is normalizing," says Stephen Innes, an expert at Axicorp.

At the same time, investors have been paying close attention to all signs of reopening of economies in different parts of the world. Donald Trump proposed this Thursday a reopening by phases and zones. It seems that the American president has already assumed the country will be reopening on 1 May, as he intended. This is nothing short of impossible and can also be very counterproductive, experts find.

On the economic scene, inflation in the eurozone has moderated in March to 0.7%, October 2019 lows. In other markets, Brent oil rises 1.9%, to $ 28.34, although it accumulates a 55% drop so far this year.

In addition, the euro increases in value 0.36% and changes to $ 1.0874, while the yield on the Spanish 10-year bond relaxes to 0.79% thanks to the purchases of Spanish public debt from the ECB.

TECHNICAL ANALYSIS OF THE IBEX 35

"Despite closing in green numbers, we are far from the session highs (we have risen by 3.5%) and without making too much noise, we move away from the resistance of 7,437 points, the last of the bearish holes. It would seem that we are on 'stand by' because we do not dare to attack resistances but we do not pierce supports either, "explains José María Rodríguez, an analyst at Bolsamanía.

"We are in a no-man's-zone, between the support of 6,580 points (last bullish gap) and the last bearish 'gap' to which we have previously referred. So we can only keep waiting for us to break from one side or the other. All in all, maximum caution at the moment because many leading indices (Dax and S&P 500, among others) have rebounded up to 50% of the previous fall (the equivalent of 8,000 of our Ibex) and it will not be easy to follow climbing positions on the rebound, "concludes this expert.