Expectations that central banks will adopt aggressive policies to raise interest rates are driving the sector’s price
Investors are beginning to assume that the rate hike, at least in the US, will continue at an aggressive pace in the coming months. The fight against inflation has become a priority objective of central banks, and not even the drums of the recession can stop this battle, which seems longer than expected.
The market discounts that the Federal Reserve (Fed) will increase by 75 basis points at its next meeting this month. And there are already voices that even indicate that the monetary organization dares with the 100 basis points. A fact that would be historic and the consequences of which would create real uncertainty in the market.
Against this background, equity markets rely on sectors that could benefit from this scenario, such as banking. In Spain, the Ibex-35 advances 0.5% with a target of 8,100 points, with increases led by Banco Sabadell (+4.82%), CaixaBank (+4.82%), Bankinter (+4.02% ), Santander (+2.94%) and BBVA (+1.97%).
In the negative field, on the other hand, Repsol (-2.02%), Indra (-1.93%), Cellnex (-1.42%), Inditex (-1.14%), Red Eléctrica (-0.98% ), Ferrovial (-0.68%) and Physics (-0.54%).
“Investors are adjusting valuations in a scenario of continued high inflation. The central bank battle will be a longer and more painful process than was discounted (higher rates and longer). In addition, the impact on the economy will affect the EPS (earnings per share) of the companies. In this context, it is difficult to see progress in the equity markets,” said Bankinter’s analysis department.
On the commodities market, a barrel of Brent oil dropped to $93, while the American West Texas was around $87.9.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
