Investors are taking a breather after recent hikes in China and the US
Investors are facing another week that will be much lighter than the previous one in terms of macroeconomic benchmarks. Something that can be positive to process some of the data that has created some uncertainty in global stock markets. The first of these is the spectacular number of new jobs in the US, with 517,000 new jobs in January.
The data beat all expectations and, despite being good economic news, has reignited investor fears that the Federal Reserve (Fed) could rely on these kinds of references to keep interest rates high for longer than expected.
That sentiment caused Wall Street to close lower on Friday. And this Monday, the European stock markets took over with the Ibex-35, which registered a drop of 0.72% to 9,159 points at the close. CaixaBank (+2.4%), Bankinter (+1.8%) and Acciona Energía (+0.9%) were the most bullish stocks, while Fluidra (-4.4%), ArcelorMittal (-3.5% ) and ACS (-2.54%) were the leaders. bottom of the table.
Renewed geopolitical tension between the US and China also weighed on investors’ minds after the world’s leading power decided to shoot down a “spy” balloon on its territory, which Beijing has strongly condemned, arguing that the access to the US was accidental and that the device had a meteorological study purpose only.
In addition to these factors, the stellar start to the year in stock markets suggests that investors could take a breather to “enter a consolidation phase with a small correction from current levels,” as Link Securities analysts note.
This withdrawal from risky assets – which will have little impact – could see some take the opportunity to return to the fixed income market, where demand for bills and bonds has surged in recent weeks in countries such as Spain.
The low returns offered by savings on bank deposits, despite the rise in ECB interest rates, has caused quite a stir in this asset class. That same Tuesday, the Treasury expects to place between 4,500 million and 5,500 million euros in bills for six and twelve months. Currently, the marginal profitability of bills over that term is over 2.5%, which is why strong demand from retailers is once again expected in the agency’s new auction.
Investors are also bolstered by economic data prompting them to buy government debt, given evidence that the feared recession is getting further and further away. That same Monday, another indicator was released that points to this, the Sentix investor trust index, which measures investor confidence in economic activity in the Eurozone. Javier Molina, an analyst with the eToro trading platform, recalls that “despite still being negative (-8), it’s the fifth consecutive month we’ve seen a smaller decline, moving us closer to that more neutral brings confidence.”
“It’s interesting to see that it’s priced in that investors don’t think we’re heading into a severe recession. It seems like the most likely scenario to be discounted is a soft landing. It has nothing to do with the most pessimistic moments of the cycle,” he adds.
Meanwhile, in the commodities market, a barrel of Brent crude, a reference in Europe, reached $80.50, while the US West Texas rose to $73.7.
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.
