Spain’s main stock index rose at the opening on Friday, at a time of relief in world markets due to intervention measures at several struggling banks, although the Ibex-35 It was headed for its worst week in six months after turmoil over a possible banking crisis.
In a week marked by turbulence in the banking sector and a fear of widespread global contagion, Credit Suisse (SIX:CSGN) and First Republic Bank were the latest to receive lifelines from the Swiss and US authorities to prevent further disasters.
The former announced on Thursday that it will borrow up to $54 billion from the Swiss central bank, while the latter received an injection of $000 billion from large US banks.
However, the danger has not passed with the bailouts, as economists warn that continued sharp interest rate hikes have exposed cracks in the global financial system, with data indicating that record amounts of emergency liquidity have been requested from the US Federal Reserve.
The market also appears to be positively digesting the ECB’s 50 basis point rate hike, which on Thursday said the European banking system is strong enough to withstand the move.
“Yesterday the ECB finally opted to continue with the pre-financial instability script (SVB, Credit Suisse) and raise +50 bps to 3% (deposit rate) to deal with uncomfortably high inflation (headline CPI 8.5% and core at record level of 5.6% in February vs. 2% target), inflation that is expected to remain high for a long time.” wrote the analysts of the house Renta 4 (BME):RTA4).
However, the ECB refrained from giving any provision on future hikes.
“Although the market interprets the lack of guidance as ‘dovish’ (accommodative) and maintains the arrival level at 3-3.25%, the ECB remains firmly determined in its fight against inflation, which in our view suggests that further rate hikes will be necessary unless we see an intense and rapid disinflationary trend.” added from Renta 4.
Markets are currently betting on future hikes of 25 basis points by both the ECB and the Fed, or even a pause in the case of the Fed.
During the day on Friday, the CPI data for February for the euro area and the industrial production data for February for the US will be published.
In this context, at 08:05 GMT on Friday, the selective Spanish stock market Ibex-35 rose 61.00 points, or 0.69%, to 8,951.20 points, while the index of large European stocks FTSE Eurofirst 300 advanced 0.77%.
In the whole of the week, the Ibex-35 shows a decrease of 3.6%.
The banking sector recovered ground after the losses of the week: Santander (BME:SAINT) rose 1.66%, BBVA (BME:BBVA) was recorded by 0.90%, Caixabank (BME:CABK) advanced 1.20%, Sabadell (BME:KNOW) gained 1.33%, Bankinter (BME:BKT) was revalued by 1.51% and Unicaja Banco rose by 1.09%.
Among the large non-financial securities, Telefónica (BME:TEF) fell by 0.08%, Inditex (BME:ITX) advanced 0.83%, Iberdrola (BME:IBE) was down 0.23%, Cellnex (BME:CLNX) gained 0.03% and the oil company Repsol (BME:REP) rose 2.67%.