Spain’s main stock index extended gains from the previous day on Tuesday amid heightened attention to U.S. inflation data that will reflect the effectiveness of the current tightening cycle.

The US Bureau of Labor Statistics will release on Tuesday (1330 GMT) the data of the consumer price index (CPI) for January, which will show the effect that the sharp increases in interest rates of the Federal Reserve are having on the US economy.

Although equities have started 2023 with strong optimism about the success of the campaign against inflation, recent data on the labor market keep central bankers firm in their resolve to continue raising rates until prices bend.

“(…) we do not rule out negative surprises given the latest known data on the price of second-hand vehicles +2.5% or fuels +9% in January,” said analysts at Renta 4 (BME:RTA4) in a daily note.

“The market, less accommodating already, aligns with the Fed’s dot plot and discounts for the next meeting +25 bps (March 22) while raising the arrival level to 5.25% by mid-year, expecting only -25 bps (vs -50 bps before) by the end of 2023 to 5% (in line with the dot plot, 5.1% as of Dec-23),” they added.

On the other side of the Atlantic, the GDP data for the eurozone for the fourth quarter (1000 GMT) will be released, a day after the European Commission raised its economic growth forecast for the region in 2023.

At 08:05 GMT on Tuesday, Spain’s selective Ibex-35 rose 26.60 points, or 0.29%, to 9,236.90 points, while the FTSE index of large European stocks Eurofirst 300 advanced 0.16%.

In the banking sector, Santander (BME:SAINT) rose 0.36%, BBVA (BME:BBVA) was recorded by 0.06%, Caixabank (BME:CABK) yielded 0.50%, Sabadell (BME:KNOW) fell 0.08%, Bankinter (BME:BKT) was left 0.09% and Unicaja Banco rose 0.17%.

Among the large non-financial securities, Telefónica (BME:TEF) recorded 1.19%, Inditex (BME:ITX) advanced 0.50%, Iberdrola (BME:IBE) was up 0.19%, Cellnex (BME:CLNX) gained 0.24% and the oil company Repsol (BME:REP) rose 0.36%.