Ibex surpasses 10,200 points boosted by Trump’s tax reform

The Ibex 35 returned to the black on Monday after the passing of Donald Trump’s tax reform through the US senate. The index began the week with gains of 1.23%, surpassing 10,200 points (10,208) thanks to a big push from Inditex, the best performer in the session with a gain of 3.40%.

Inditex was seeing purchases in the session after Goldman Sachs cut its recommendation of competitor H&M from neutral to sell. In addition, the bank reduced its valuation to 177 krona from 222.

The second best performer was Acerinox (+2.85%), followed by ArcelorMittal (+2.78%). The banking sector also saw a significant push, led by Santander which was up 1.34%. In fact, the entity reaffirmed its forecast for the sector in 2018, which may push the Ibex towards 11,200 points.

Only five stocks closed the day out in red, with Siemens Gamesa leading the fallers with a drop of 2.67%. Indra (-1.83%), Red Electrica (-0.56%), Gas Natural (-0.24%) and Melia (-0.09%) were the others. Repsol announced that it would sell its 20% stake in Gas Natural, valued at 2.7bn euros, in order to reduce its debt and increase investment.

Authorities decided on Monday that Abertis and Tecnicas Reunidas would remain in the Ibex, while the latter was also boosted by a contract of 4.2bn dollars from the Bahrain Petroleum Company.

TRUMPS REFORM BOOSTS EUROPE

Without a doubt, the good news that has pushed the european stocks has come from United States: The Senate has approved Donald Trump’s tax reform, which means another step towards the definite approval of one of the President’s main promises. The Senate approved the reform on Saturday with 51 votes in favour from the republicans and 48 votes against from the democrats and one republican. Now this law proposal will have to harmonize in a bilateral commission from which it left the House of Representatives the past november 16.

In statements to Bolsamanía a few weeks ago, the majority of experts insisted on the importance of the approval of Trump’s tax reform to see an end of the year rally. For the moment, there has been an important step towards the achievement of an end that for experts, is the main catalyst for markets right now. “More than the differential fact of the liability of Catalonia, what affects (the Ibex) is the losses on a global scale. The tax reform in the United States is penalizing Wall Street, that has been falling from historical maximums. This also pulls Europe and inside Europe, the Ibex”, pointed out Julian Benavente, the CM Capital Markets analyst, to explain the the descents that the stocks registered in mid november. On his part, Juan José Fernández-Figares, head analyst of Link Securities, pointed out that the american tax reform was key and warned that it’s non approval by the Congress “could make this correction in the stocks to go further”. Of course, “if finally the law is approved in the terms that the market has managed, it could become the catalyst that the markets now don’t have on occidental values”, Fernández-Figares explained.

EUROPE AND COMMODITIES

The passing of Trump’s reform in the senate has not only affected the Spanish stock exchange, but also other markets in Europe. The DAX 30 led the gains in the Old Continent with a rise of 1.5%.

The Brexit theme resurfaced on Monday. This week negotiators from the UK and EU will meet in an attempt to break the deadlock in talks. The bloc has given PM Theresa MAy until Monday to propose a better offer on several issues. According to Reuters, key diplomats say they are more optimistic about a deal being made, but maintain that problems persist.

With respect to data of the day, unemployment in Spain rose by 7,255 people hampered by the service sector. The price index for October in the Eurozone was 2.5%, below the 2.6% predicted.

In other news, oil was down 1.37% at the closing of the Spanish market, after rising last week after an OPEC decision to extend production cuts.

TECHNICAL ANALYSIS

Bolsamanía analyst José María Rodríguez said the next resistance for the Ibex is at last week’s high of 10,323 or even higher at 10,600 points. Meanwhile, there is no resistance until 9,900 points.

“This puts our index in no-man’s land, relatively far from support levels and key resistances,” he explains. “There is little to do while the price remains between this range of numbers.”