The Ibex-35 Holds 9,000 Points on a Day When the US Federal Reserve Announces Another Rate Hike
The European stock markets are entering a key session with timid increases, the closure of which will largely depend on the evolution of the markets on Wall Street. And it is that the European prosecutors are already closed when the most important reference of the day is known: the interest rate decision of the US Federal Reserve (Fed).
Investors have been taking into account for some time that the body led by Jerome Powell will implement another rate hike. Although this time it will only be 25 basis points, putting the brakes on the 50 basis points in December.
Currently, and with declines in Wall Street futures, the Ibex-35 is leading the rises in Europe with a 0.5% gain allowing it to approach 9,100 points. But we’ll have to wait until mid-session, with the US open, to find out if the trend is confirmed.
In the early stages of the negotiations, the biggest increases today were recorded by Sabadell (+1.86%), Repsol (+1.29%), Santander (+1.17%), Bankinter (+0.77%) and BBVA (+0.65%) the absolute protagonist of the day after presenting a record profit of 6,420 million euros.
Naturgy (-0.54%), Telefónica (-0.34%), Inditex (-0.24%), Red Eléctrica (-0.22%) and Iberdrola (-0.14%) led the falls of the Spanish selection.
Everything could change in a session where the Fed, if it finally meets expectations, will set its benchmark rate between 4.50% and 4.75%. But what will really shape investor behavior is the speech Powell will give to the media starting at 8:30 p.m.
In his words, the market will try to find new clues as to how long the US Fed will continue to raise official rates, what the final interest rate will be and how long it will hold it there before cutting it again. The consensus estimates that this ‘peak’ in interest rates would be close to 5%.
Link Securities analysts indicate that the easing of financial conditions (the highest since early 2022) following the cut in bond yields will lead Powell to reiterate his “tough” message that monetary policy will be restrictive “for some time”. to stay. If that is the case, and Powell expects no rate cuts this year, it is likely that both the bond and equity markets will react negatively, which will also benefit the high level of overbought that has driven prices down. of many assets.”
Along the same lines, they manifest themselves from Bankinter’s analytics department, where they indicate that Powell “could opt-out in a more ‘hawkish’ (aggressive) tone, as improving financial conditions (rises in bonds and equity markets) transfer of monetary policy.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
