Ibex 35 sets fresh 2018 low, key technical support in play

Shares of lenders acted as a crutch for Spain's main equity gauge, with those of Bankia tacking-on 2.98%, followed by Sabadell (1.98%) and Mediaset (1.51%).

But the remainder of the Ibex's 'blue chips' were in the red. DIA fared worst, retreating 4.62% after Kepler singled-out the grocer as the worst of a bad lot in a research report sent to clients, cautioning that a bid might surface to take the company private.

Amadeus (-4.18%) and Grifols (-2.89%) also traded lower, as analysts at Berenberg cut their target price for the former. Repsol finished lower too, after the CNMC, the market regulator, opened a probe into its recent acquisition of Petrocat. Inditex (-0.67%), Telefónica (-1.8%) added their weight to the selling.

On the broader Mercado Continuo, shares of Adveo plummeted 57.3% after management warned shareholders might be diluted upon the entry of a foreign investor.

Euskaltel was also unwanted (-6.11%) on the heels of a target price cut and recommendation downgrade out of Santander from 'buy' to 'hold'.

Most of the Continent's other main stockmarket indices also finished in the red, although Milan's FTSE Mibtel again managed to outperform.

China and the US

Overseas, investors were very much focused on the potential fall-out from the expected US decision to levy tariffs on an additional $200.0bn-worth of Chinese-made goods, likely at some point after today.

"The main preoccupation for investors continues to be on whether the US is serious about arriving at some form of deal with Canada over NAFTA in the wake of President Trump’s tweets at the weekend, that it wasn’t and isn’t a political necessity to get a deal," said CMC Markets UK's Michael Hewson.

"In addition to that anxiety levels are growing ahead of the weekend and the possible imposition of another $200bn worth of tariffs on Chinese goods later this week."

TECHNICAL ANALYSIS

Jose Maria Rodriguez, chief technical analyst at Bolsamania.com highlighted how futures on the Dax and Euro Stoxx, which tended to lead the Ibex 35, were themselves testing technical support at their August lows.

Wall Street, he said, held the key.

"The Ibex 35's close at 9,301 and at its lows of the session leaves me with a bitter taste and I would not be at all surprised if first thing tomorrow morning the benchmark gapped lower at the open, starting the day from below technical support," he said.

"All we can do now is wait and see if money doesn't suddenly come in at these levels. A weekly close clearly below support would flash another negative signal with a first target for the falls in the range between 8,960 to 9,000 points and perhaps even towards the 8,700 point level."