Ibex back on track and becomes refuge for European stocks

The Ibex 35 led the gains among European stocks on Wednesday and consolidated its position as a refuge for investors, against other unstable markets. The Spanish index gained 1.03% to 10,370.30 points, well above that of the CAC 40 and DAX 30, as well as the FTSE 100 which fell 0.3%.

A good day for the banks, as Santander rose 2.98% and BBVA was 2.13% higher, while another bank, Popular, shot up 5.5% after tanking 25% last week. A positive day also for ArcelorMittal (+3.5%) and airline IAG (+3.2%). Medium sized banks such as Caixabank (+3.4%), Sabadell (+3.1%) and Bankia (+2.8%) also performed well. Aena also rose, by 2.7%.

The wooden spoon was picked up by Abertis after it fell 3% following a gain of 6% on Tuesday after announcing negotiations for a merger with Italian group Atlantia. Iberdrola (-1.2%), Cellnex (-1%) and ACS (-1%) were the other poor performers on the day. Followed by Gamesa, which fell 0.7% after JPMorgan valued its shares at 18.50 euros.

In the general stock exchange, Sniace fell 9.5% after rising 17% yesterday following the completion of a capital injection. Atresmedia dropped 1.2% after a Sell recommendation from Deutsche Bank.

Investors were also wary of business results this Wednesday, such as Heineken (earned 293m euros in the first quarter) and Burberry. In the US, Morgan Stanley saw a 70% rise in its earnings for the quarter, well ahead of forecasts.

In the macro data area, eurozone inflation stood at 1.5%, as was expected. The IMF continues to publish its economic forecasts. It forecast 2.6% growth for Spain in 2017.

UK AND FRANCE

Yesterday’s announcement from Theresa May to call an election for 8 June ignited further political instability in Europe. The EU reiterated its negotiation plans for Brexit as they were. However, it’s true that Brexit is a distraction for the EU, when it appeared that many of its obstacles had been overcome.

France is worried...but less. The markets have assumed that Emmanuel Macron will win on the second round, with the Le Pen falling into second place. However, the elections will come thick and fast for investors, who will also have to contend with a vote in Germany in September.

TECHNICAL ANALYSIS

“On Wednesday our index rectified its losses and closed higher after five consecutive sessions of falls. Evidently, it’s impossible to determine if the correction will go on in the next few days or we will look towards new highs. Everything is possible.,” affirmed José María Rodríguez, Bolsamanía technical analyst.

“It’s true that the correction since the annual highs seems small, but in the daily graphic we have important levels of overselling in big stocks such as BBVA, Banco Santander and Telefonica, among others. In addition, if we look towards the index which encompasses European banks (SX7E), it is rising with force today after hitting the support zone of its upward movement of last July. The possibility remains that from here the European banks are ready to regroup in stock exchanges.”