Investors begin to be tired of so bad news and take advantage of any loophole to put aside sales., The possibility that the US avoids the closure of the administration and hopes of reaching peace in Eastern Europe serve as a counterpoint to the increase in commercial tensions. The IBEX 35 clings to the 13,000 points and rises 1.43% on Friday, profits that make up, but fail to erase the weekly losses. In the last five days, a period that has been marked by the tariff crossing and the bad taste that left the results of Inditex, the Spanish stock market goes back 1.9%. The textile group is left 11%, its worst week in five years, coinciding with the beginning of the great confinement.
Friday’s optimism means much less than the risks have disappeared. In the last days the market has attended a constant change of direction in commercial matters confirming that the tariff war has done nothing more than start. After the entry into force of the taxes to aluminum and steel, Canada and the EU showed that they will not keep their arms crossed and responded to the envy with rates on US products worth 45,000 million euros. Trump showed again his belligerence and. The tariff crossing has re -tests the patience of investors and threatens to deteriorate an American economy that begins to give the first deceleration signals. The recession drums return to the front line while protectionist policies are seen as a clear inflationary risk.
The behavior of the Ibex 35 followed the wake of the rest of the European indexes. Just 24 hours after the markets had to digest the possibility that peace negotiations between Ukraine and Russia were in dead points, the US president has assured that the conversations held with their Russian counterpart had been very productive. . The hopes of peace and the millionaire investments that would help revitalize the anemic German economy translated into 1.86% profits for the Dax, an index that has to be erased the weekly losses (-0.1%). The rest of the bags did not want to miss the party and opted for the climbs. The French CAC adds 1.13% on Friday; the British FTSE, 1%; The Stoxx 50 euro, 1.42% and Italian MIB, 1.73%. The profits do not obey a simple rebound, but are being accompanied by money entry. According to the data of Bank of America, the entry of money in Variable Income Funds recorded the highest volume in eight years and thus adds five consecutive ascent weeks.
The European Variable Income Earnings on Friday were supported by Wall Street increases. A day after the S&P 500 entered technical correction, the market reference index shakes the cobwebs and has risen 2.13%, which closes its best session from the elections last November. Despite this solidity, the S&P 500 gives up 2.27% in the last five days and chains five weeks in negative, its but streak since May 2022, a period marked by the strong types of types and the correction of the FAANG, at that time the engine of the markets. Superiors were the Nasdaq promotions, which has been recorded 2.61% on Friday, while Dow Jones has risen 1.65%. Investors are struggling to find the right value in a context in which tariffs, inflationary tensions and the weakening of the economy are the great winds against.
Analysts do not finish agreeing. While some consider that the falls of the start of the year are a mere correction ,. “The context of uncertainty continues and will continue to dominate and ballast the risk assets,” Macroyield analysts point out. The firm’s experts remember that the aggressiveness shown by the Republican is considerably higher than the one held in the first mandate. “The economic uncertainty has risen extraordinarily, approaching the maximum zone at the beginning of the pandemic and favoring the deterioration of variable income,” they point out. After the S&P 500 entered Thursday in the correction zone (it fell 10% from its last maximum), the next point to be monitored is the possibility that the falls will extend and drag the index to a bearish market. That is, that it falls 20% from the maximums registered in February.
Nothing can be discarded. The constant comings and goings of the Trump administration have made obsolete the forecasts handled by the analysis firms by 2025. Waiting to see how events evolve and their impact on the economy, investors now cling to the possibility that the USA avoids a closure of government after the Democratic leader in the Senate withdrawing his threat to block the financing project of six months. “As on previous occasions, we hope that an agreement is reached given the risk of not doing so,” says rental analysts 4. However, this will not be enough to return the tranquility to the market. “It could be just a temporary respite and there is probably also a contagion effect in Europe,” says Sophie Alternatt, economist by Julius Baer.
Short and medium term expectations are not very hopeful. After a somewhat more hopeful data battery that aimed at a price moderation, on Friday it was known that the confidence of the US consumer has fallen at 59.7 points in March, its lowest reading since November 2022 and the third consecutive monthly cut. While consumers’ trust deteriorates long -term inflation expectations rise to 3.9%, their highest level since 1993.
With these data on the table, Chris Iggo, CIO for Axa Investment Managers, is skeptical and believes that the markets have underestimated the disturbing nature of the Trump administration. “One thing is safe: political risk will not disappear, and political risk means volatility in markets,” he remarks. The expert points out that as economic activity weakens, it is more difficult to assess the cash and cash flows of companies, “US growth prospects are being questioned. It costs me a bit to see the perspectives of the variable income. It has less safe growth: it is an illusion to bet that the political risk disappears and the previous rally continues. Trump will not cease to be a source of uncertainty and, if the political risk follows, follow the volatility in the markets, ”he emphasizes. IgGO adds to the voices that advise prudence and believes that the most likely scenario remains risk aversion waiting for more clarity about geopolitical events that are marking the pulse of the markets.
While the variable income experiences strong oscillations, the debt market seems much more stable. And the update of macroeconomic projections, the US US bonus is maintained at 4.3% with the two -year reference to the 4% edge. “Bonds offer some protection if challenging policies make the US economy slow down more and before the previously estimated, which in turn would probably lead Fed to cut the types more quickly,” Pimco analysts point out.
The agreement reached by conservatives, social democrats and green allow the future German chancellor, Friedrich Merz, to move forward the fiscal plan that includes the mobilization of 500,000 million to promote investment in infrastructure and defense. After the vote on Tuesday in Parliament, the plan will pass through the Chamber of the Regions (Bundesrat). Merz manages to save the first fire test before the new Parliament is constituted.
The stimuli are seen as an incentive to refloat the economy but will require a considerable increase in debt emissions. In just two weeks the profitability has climbed 50 basic points. The promotions have their replica in the rest of the euro zone references. The most striking case is from the 30 -year French debt that is maximum of 2011.
While the yield increase the expectations of an improvement of growth allow the euro to move away from the parity that came to touch in February and are already above $ 1.08. Bank of America analysts point out that the appetite for the community currency is at the same level as in August 2020, after the announcement the Next Generation funds.
– – – –
