After a start to the week of frantic swings, Spain’s stock index Ibex-35 showed a moderate decline at the opening on Wednesday, dragged down in part by the decline of Inditex (BME:ITX), as investors look for signs that the financial turmoil caused by the collapse of U.S. bank SVB has been contained.
The markets were more optimistic on the eve about the intervention of the authorities to prevent the contagion of the fall of Silicon Valley Bank (SVB) to the banking system as a whole, but doubts remain difficult to resolve in the short term, after which the attention in the banking field turns to the plan of the US Federal Reserve (Fed) to tighten the regulation and supervision of medium-sized banks.
In any case, concern about the impact of the brutal increase in the cost of debt on the health of banks has led to a recalibration of expectations in monetary matters.
Whereas before the panic caused by SVB analysts expected a 50 basis point (bps) hike in the Fed’s interest rates, they now discount a 25 bps increase at its March 22 meeting.
However, analysts at Renta 4 (BME:RTA4) point out that the probability of such a 25 bps hike has risen to 82% after Tuesday’s US CPI data – which showed a high level despite not bringing unpleasant surprises – while the probability of not raising rates falls to 18%.
“The market discounts only one or two more increases of +25 bps to a ceiling of 4.75%-5% (compared to 5.5%-5.75% before the SVB crisis) and two or three subsequent cuts (of -25 bps each) to 4.25%-4.5% at the end of the year, something that seems excessive considering the still high levels of inflation and the strength of the labor market,” Added.
In any case, the market will probably put aside the debate about the Fed when the European Central Bank (ECB) meets on Thursday, of which before the fall of SVB a rise of 50 bps was anticipated.
Beyond this week’s decision, any comment from the ECB on the impact of the collapse of the US entity on its monetary roadmap will be of special interest.
At the macroeconomic level, data from China showed that its economic activity picked up in the first two months of 2023, thanks to consumption and investment in infrastructure driving the recovery after the disruption caused by the pandemic.
During the day the industrial production of the euro area (10:00 GMT) and retail sales of the United States (12:30 GMT) will be known.
At 08:44 GMT on Wednesday, Spain’s selective Ibex-35 was down 46.50 points, or 0.51 percent, at 9,112.50 points, while the FTSE index of large European stocks Eurofirst 300 fell by 0.41%.
Inditex fell 2.23% after publishing results that were slightly below expectations, according to Credit Suisse (SIX:CSGN).
In the banking sector, Santander (BME:SAINT) lost 0.67%, BBVA (BME:BBVA) fell by 1.23%, Caixabank (BME:CABK) yielded 0.80%, Sabadell (BME:KNOW) fell 0.79%, Bankinter (BME:BKT) was down 0.43% and Unicaja Banco (BME:UNI) lost 0.92%.
Among the large non-financial securities, Telefónica (BME:TEF) recorded 1.39%, Iberdrola (BME:IBE) was revalued by 1.24%, Cellnex (BME:CLNX) fell 1.03% and the oil company Repsol (BME:REP) lost 1.01%.