The Spanish stock market awaits the avalanche of new benchmarks in the coming days, and the Ibex is heading for the year’s highs. Tourism stocks and ArcelorMittal accelerate gains.
The week’s agenda will not give the financial markets much respite. Macro references such as the US GDP and the German IFO will share the limelight with a growing wave of corporate results, and with central bank news such as those derived from the Federal Reserve meeting.
The start of the week includes other uneven references. In Asia, Wall Street’s upward pull on Friday has given way to moderate gains on Tokyo’s Nikkei, despite the state of emergency decreed in cities such as Tokyo as a result of the increase in Covid infections. The greatest alarm about the coronavirus in Asia is concentrated in India, in the midst of a dramatic situation due to the record number of infections. In China, red numbers have prevailed over progress.
Markets in Europe are at least breathing a sigh of relief as Wall Street reacted on Friday, overcoming fears of a slowdown in the investment boom as a result of the tax hike being prepared by Joe Biden’s government. The macro and monetary references in the US will be decisive, but today’s agenda includes important news in Europe, such as the publication of the IFO index in Germany and a new trickle of business results. The IFO business confidence index in Germany improved in April, but less than analysts expected.
The Spanish stock market started the session frozen at last Friday’s closing levels, after a flat week for the Ibex. As the session progressed, and in anticipation of the battery of results in the coming days, the advances were reactivated, and the Spanish selective index is now close to 8,700 points, one step away from its highs of the year.
Today’s trading session includes a lull in the Ibex results season, before a revival with a special focus on banks. Bankinter’s accounts last week were received coldly by the market. The bank is also in the final stretch for the IPO this week of Línea Directa. The doubts in Bankinter contrast with the rises in BBVA, despite the bearish references derived from the new lows of the Turkish lira.
Cyclical stocks continue to perform well, especially ArcelorMittal, boosted by the rise in metal prices, and investor support is more pronounced today among the companies most closely linked to tourism. The proximity of the end of the state of alarm in Spain, the withdrawal of restrictions in Europe and the boost in the pace of vaccination with doses from Janssen and AstraZeneca improve the expectations of the tourism sector. IAG, Meliá, Aena and Amadeus start the week with gains.
Merlin rallies again, thanks to the improved valuation issued by Kepler analysts, and Cie Automotive brakes on a day that once again halted the European automotive sector’s rally due to the lack of chips. Gestamp, in the Continuo, joins this slump in the stock market.
The rest of the European stock markets are trying to shore up the levels at which they closed last week, on the verge of record highs in indices such as the German Dax and the pan-European Stoxx 600. The German IFO data does not cause any major shocks, on a day in which business results are again mostly favourable. The German Dax, on the other hand, is held back by the automotive sector.
Today’s trickle of results, prior to the wave of results in the coming days, has positive results from companies such as Pearson and PostNL. The courier company trades higher on the Amterdam Stock Exchange with improved forecasts for the year as a whole, taking advantage of the pull in the courier business. For Pearson, the UK company is benefiting from increased demand for its online education business. Philips’ accounts have also beaten forecasts, although the Dutch company is being held back on the stock market due to the announcement of provisions. The German Dax is hit by the slowdown in the main driver of its recent gains, the automotive sector. New warnings about chip shortages stall its rally.
Equity investors breathe a sigh of relief from the lull in US bond yields and watch with concern as bond yields in Europe spike. While in the US, bond yields in the run-up to the Fed are holding below 1.60%, far from their recent highs of 1.77%, in Europe, German bund yields are already approaching the -0.20% threshold, and in Spain they are strengthening above +0.40%.
The slowdown in interest rates on US debt and the rebound in Europe spills over to the currency market. The dollar extends its recent weakness, and the euro briefly reaches the level of 1.21 dollars. The pound strengthens on the threshold of 1.39 dollars.
The dollar’s weakness helps bitcoin to rally. The cryptocurrency broke the downward spiral of the previous days, and after losing up to 25% from its record highs, it rebounded and regained the $50,000 level. Gold, on the other hand, is stuck in its goal of reaching 1,800 dollars an ounce.
As in the case of gold, the signs of dollar weakness are not enough of a stimulus to generalise the rises in the commodities market. The upturn in Covid infections in countries such as India and Japan is cooling expectations for oil demand, and Brent crude oil is falling back to 64 dollars, compared to 62 dollars for West Texas crude oil, the US benchmark.