The Ibex 35 breaks its bullish streak by registering the third worst week of the year with a 7.37% drop

The Ibex 35 stops its bullish streak and ends the week with the third worst week of the year when losing 7.37% and finish below 7,300 points, affected by the collection of benefits due to poor economic forecasts by the United States Federal Reserve (Fed).

The benchmark indicator of the Spanish stock market closed on Friday with a rise of 14.7 points, 0.2%, ending the week at 7,292.7 points, the level at the beginning of the month. Annual losses remain at 23.63%.

After having advanced about 22% in the previous three weeks, the national market has fallen in the current one due to the 12% drop in banking after the negative outlook for activity in the Organization for Economic Co-operation and Development (OECD) and the Federal Reserve and the 8.5% drop in the price of oil in this period.

After the pronouncement yesterday of the Spanish bank against the prohibition to distribute dividends in a general way, the European Central Bank (ECB) today he defended his “controversial” decision to demand that the entities in the euro zone suspend the distribution of profits, although he has assured that he will repeal this restriction when the recovery is solid.

Furthermore, investors are still pending that the Fitch Ratings agency update this Friday its assessment of the solvency of Spain’s debt, to which it awards a long-term rating ‘A-‘ with a stable outlook, in what is the first examination of the Spanish note by the firm since the past December and which will be marked by the impact of the Covid-19 crisis.

Bullish values

The values ​​that have appreciated the most this Friday have been IAG (+ 4.64%), ArcelorMittal (+ 4.44%), Colonial (+ 1.81%), Repsol (+ 1.24%) and Telefónica (+ 1.11%). On the opposite side, Mediaset (-3.09%), Indra (-2.01%), Inditex (-1.53%), Grifols (-1.34%) and ACS (-1.01%) have been placed ).

The rest of the main European stock markets have presented increases of 0.47% for the Ftse 100 of London, of 0.49% for Cac 40 of Paris and 0.43% for the Mib of Milan. Only the Dax of Frankfurt It has concluded with a decrease of 0.18%.

The barrel of petroleum West Texas Intermediate (WTI), benchmark for the United States, was trading at $ 36.27, while Brent crude, benchmark for Europe, was priced at $ 38.88.

For its part, the Spanish risk premium it stood at 104 basis points, with the interest demanded on the ten-year bond at 0.589%, while the exchange rate of the euro against the dollar lost some positions until it settled at 1.1257 verdes green notes ’.

Optimism is tinged with ‘red’

XTB analyst Joaquín Robles recalled that the last three weeks were marked by the optimism it generated the lower number of infections, the economic reactivation and the stimuli of the central banks, which boosted confidence in a rapid recovery.

However, the problem remains that the global economy is facing the biggest contraction since the second world war and it is not clear that it will overcome so quickly. In addition, Robles has indicated that spikes in infections in Germany and the US this week, alongside the words of the Fed president, Jerome Powell, returned uncertainty to the markets.

Similarly, the Bank of Spain It updated its forecasts, and after noting a 5.2% drop in the Spanish economy in the first quarter, it forecasts a setback of between 16% and 21.8% for the second quarter. “Until now the market has focused on controlling the health crisis, but has not taken into account the indirect effects of this crisis,” said the analyst. For the year as a whole, the drop could be from 9% to 12%.

Spain: one of the most affected countries

Spain will be one of the most affected European countries, since it has structural problems in your labor market, has a high exposure to the tourism sector and a business fabric made up of many small companies.

At the business level, IAG and Meliá They led the declines during the week out of fear of further ramps or less than estimated activity. “Despite having removed many restrictions, the demand for tourism could take longer to recover than other sectors,” said the XTB expert. The banking He also collected part of the gains accumulated during the last sessions and was again vulnerable to uncertainty.

According to Robles, there is still a large discrepancy between those who are committed to a solid recovery and those who continue to see a large number of unresolved sources of tension. “In the coming months, the market will have to face numerous uncertain events such as the possibility of a new outbreak, the collateral effects of an ultra-expansive monetary policy, the trade relations between the US and China, the American elections, the weakness of the peripherals or the possible exit from the United Kingdom without agreement, “he pointed out.