The Ibex-35 drops 7.5% in just three days, while the cost of Spanish debt shoots up to 2014 levels
The panic that gripped the Stock Exchanges last week after knowing the inflation data from the United States (prices are already rising at a rate of 8.6% in that country), was followed this Monday by a new onslaught from the markets , fueled by falls around the world and widespread fear of the economic future. The Ibex-35 has finally left 2.47% and has closed at 8,183 points. This is its lowest level since mid-March, in what was the worst stage after the start of the war in Ukraine. In three sessions, it has lost 7.5% of its value.
Investors have begun to withdraw positions in the markets, which are experiencing one of the most turbulent weeks of the year with several open fronts. On the one hand, the inflation data continue to show how the unstoppable rise in prices seems to have no end. On the other hand, all eyes are on the meeting of the US Federal Reserve (Fed), where a rise of 0.5 points is expected after knowing the CPI for May. This week will also meet the Bank of England, which could announce further increases in rates. And to finish off such a complex context, new outbreaks of coronavirus in Beijing have forced the Chinese authorities to restrict movements, with the effect that these decisions have on production, distribution and consumption in the rest of the world.
The rest of the European stock markets have followed the same downward path as the Ibex: Paris has lost 2.4%; Frankfurt, 2.5%; the Eurostoxx-50, 2.7%; and London, 1.5%. On Wall Street, the industrial S&P-500 has confirmed its new downward trend.
In the case of debt, the cost of the 10-year Spanish bond continues to accelerate and is already at around 2.9%, its highest level since June 2014. With this, the risk premium rises again this Monday another 9% up to 135 basis points.
Sergio Ávila, an analyst at IG, explains that "when interest rate hikes can cause a significant slowdown in economic growth, as is the case at the moment, and that can translate into a period of stagflation in the economy, then the The situation is no longer so good for the banks. In addition, he points out that "future rises in interest rates in Europe may cause problems in the payment of debt to peripheral countries that have large percentages of debt compared to GDP, the generalized economic mismanagement of these countries means that when they are stressed interest rates have to use large items of the annual budgets to meet the interest on the debt ».
Among raw materials, the price of a barrel of Brent crude, a benchmark for Europe, stands at around 120 dollars, down 1.6% compared to last week. This fall is explained by the weak prospects for consumption, which may be altered by the rise in interest rates, as well as by the new coronavirus problems in various parts of China, pending the rise in crude oil production announced for July. .