Buy with the rumour, sell with...markets hit the brakes after Macron victory

A collection of profits in European stocks after the strong gains of recent weeks. Emmanuel Macron gained victory over Marine Le Pen in the French presidential election, disregarding political uncertainty for the moment in Paris. However, the market began the week with losses. Investors bought with the rumour and sold with the news, already confirmed and priced in. The Ibex 35 fell 0.35% to 11,096.30 points.

Stocks had worked for this scenario, as the gains from last week demonstrate. The Ibex gained 3.9% in the last five sessions, accumulating a rally of 18%. The big push from the banks following results season allowed a new strength for the Ibex, which returned to above 11,000 points, The figures of the seven major banks saw an increased profits of 20%, to 4 billion euros.

The improved results came despite losses of Banco Popular, which shot up 8.85% on Friday, and 1.07% on Monday during a volatile session. The entity lost 18% of its value this year and 60% in the last 12 months.

The best performer on Monday was DIA, after US fund LSV declared a stake in its capital of 3%, valued at more than 100 million euros. Its shares rose 1.1%. On the losses side, Caixabank (-2.57%) and Bankia (-1.99%) were the main hampers, followed by ArcelorMittal (-1.29%).

Among the big stocks, Inditex (-0.63%), Iberdrola (-0.52%), Santander (-0.51%), BBVA (-0.49%) and Telefónica (-0.29%) all saw red on Monday. In Paris, the CAC 40 fell nearly 1%, while the DAX fell 0.12% and the FTSE 100 rose 0.05%. In Wall Street, the losses were moderate.

In foreign currency, the euro corrected 0.3% to 1.0979 dollars. Investors also collected profits after the European currency celebrated maximums of six months after Macron’s victory. Oil fell 0.8% after rising for the early part of the morning, with Brent once again under 49 dollars.

In macro terms, Germany published factory orders for March, with an increase of 1%, two points higher than expected. In the UK rental prices showed an increase of 3.8% in April, more than forecast.

The general stock exchange continues to see results. Pharmaceutical firm Almirall reported a profit of 19.6 million euros in the first quarter, 10% more than the previous year. Sacyr (-0.89%) saw its profit drop 26% to 31 million euros. Further results will come in the next few days from the likes of Endesa, Telefonica and DIA.

TECHNICAL ANALYSIS

“A formality of a session for the Ibex as it was in other European markets. As expected, Emmanuel Macron’s victory was already priced in by the markets and after an upward trend at the open it turned downward. As I like to remind you all, “what the rest of the world knows is worth nothing”. The market knew that the centrist candidate would win,” pointed out Bolsamanía technical analyst José María Rodriguez.

“As such, the euro/dollar reacted during part of the Asian session with rises that took it towards 1.10235 and now we have it at the gates of 1.09. Regarding the Ibex 35, the graph we can see has little implications really. It’s a corrective trend inside an impeccable upward curve in the short term. What’s more, the first support level can be found at 10,622 points, far from current levels.”

Gráfico diario del Ibex 35