The IBEX 35 rose 2.55% in mid-session to 9,058 points, moving towards its second positive day after last week the main index of the Spanish stock exchange fell 6%.
Leading the advances in the first stages of negotiation is Banco Sabadell, with an appreciation of 6.71%, compared to the 5.10% registered by Banco Santander and Bankinter. On the downside, the biggest drop is from Melia Hotels, which drops 3.44%.
Investors will have to keep an eye on the financial sector for another day after the volatility of recent weeks due to the declines of several US banks and the Swiss giant Credit Suisse, absorbed by UBS this weekend. Yesterday, the president of European Central Bank (ECB), Christine Lagardehelped to calm spirits in a speech before the Committee on Economic and Monetary Affairs of the European Parliament, in which he stated that the institution is closely monitoring market developments following the intervention of the Swiss authorities in aid of Credit Suisse and that is prepared to respond “in whatever way is necessary to preserve price stability and financial stability in the Eurozone”.
In one of the great heavyweights of the index, Telefonica remains under pressure. The telecommunications operator’s shares lost strength in the market -despite yesterday’s recovery- with which they move away from the much-awaited level of 4 euros per share, while being clearly affected by the falls that we are seeing these days due to the turmoil in the financial sector.
On the Continuous Market, investors will have to pay attention to PharmaMar’s price. The biopharmaceutical doesn’t win for scares and its low level, in addition to having marked the worst levels of the year in the last week, brings it back to the peak of the pandemic, with accumulated drops of more than 21% just last month.
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At mid-session, the DAX was up 1.72% to 15,190.65 points, the CAC 40 was up 1.62% to 7,126.63 points and the FTSE MIB was up 2.57% to 26,565.00 points. In turn, the EURO STOXX 50 advances 1.81% to 4,194.15 points.
Investors are somewhat encouraged by the bailout of Credit Suisse by its Swiss competitor UBS, although concerns remain about the risk that the fallout could further hurt credit markets and smaller US banks.
In the macroeconomic section, today traders will learn about the Zew Investor Confidence Index for Germany and the Eurozone, while February used home sales will be released in the US.
However, all eyes are already on the two-day meeting of the Federal Reserve Federal Open Market Committee (FOMC)in which the highest US monetary authority is still expected to raise its reference interest rates by 25 basis points again – the market gives a probability of almost 75% for this movement and 25% for the Fed to opt for not raising quotes-.
However, “we believe that the most important thing will be to verify whether the crisis of confidence that the US banking sector is going through, largely related to the sharp rise in official interest rates carried out by the Fed, has somehow modified expectations that FOMC members have about their future behavior,” points out Juan J. Fernández-Figares of Link Securities.
That’s why this time it will be the dot chart, on which committee members plot their expectations for official rates, the one that catches all eyes, says the expert. “Part of the market expects the Fed to start lowering its official rates from the summer, something that, if true, should be reflected in the said diagram, at least in part, with a lower terminal rate than that reflected in December. It is equally possible, if not certain, that some members of the FOMC will opt for this new scenario. Otherwise, the reaction of the bond and equity markets can be significant, for the worse in the first case, and uncertain in the second.
Asian stocks rebounded from their lows and the Credit Suisse bailout slowed the sell-off in bank shares, although the environment is fragile and tension in markets has traders wondering if the US rate hike might have come to an end. . IThe Tokyo Stock Exchange was closed for a holiday.
In commodity markets, oil prices began to fall this Tuesday, while fears persist about a financial crisis, and also about the effects of the Federal Reserve rate hike, but at this point they gave way. Benchmark Brent crude futures in Europe rose 0.85% to $74.39, and West Texas futures rallied 0.93% to $68.45.
In terms of fixed income, bond yields continue to fall, with ten-year Spanish debt offering a secondary market yield of 3.162%, with the risk premium relative to Germany standing at 105.75 points. On the other side of the Atlantic, the ten-year US bond yield is 3.46%.
In currencies, the euro is at a cross of 1,071 dollars for each common currency. The exchange markets in general and the Eurodollar in particular experienced the last sessions marked by banking turbulence, first in the US and then in Europe on account of Credit Suisse, which is negotiating its inclusion in UBS, a veritable carousel – a round of changes that brought the relationship between the two currencies for the best and worst levels since January and almost year on year. And now with eyes focused on the Fed’s moves.