Investors fear that strong macro data will support central banks in keeping interest rates higher for longer
European stock markets have resumed normal activity after the holiday on Wall Street. Finally, the reds prevailed in the Spanish roster with drops of 0.3% for the Ibex-35 returning to levels closer to 9,200 points in a session again marked by corporate results.
In this way, Rovi led the gains at the end, with a revaluation of 5.79%, followed by Grifols (+1.09%), Enagás (+0.92%), Banco Sabadell (+0.89%) and Red Electrica (+0.68%).
Behind them were Logista (-4.08%), whose shares are listed as of today without the option of the dividend to be paid this Thursday, Naturgy (-2.90%), Fluidra (-2.41%), Colonial (-2.05%), Amadeus (-1.50%) and Repsol (-1.50%).
In the rest of the European markets, the Italian FTSE MIB is down 0.68%, while the German DAX closed down 0.52%, the UK FTSE 100 down 0.46% and the French CAC40 down 0. 37%.
In addition to corporate results, investor sentiment is now influenced by a deluge of macroeconomic benchmarks that, with few exceptions, show great resilience in the Eurozone economy. For example, data for the February composite PMI for the eurozone was released this Tuesday, beating all expectations by improving to 52.3 points, a nine-month high and well above the 50.6 points expected by the consensus .
The problem? That this strength of the economy supports the growing number of voices suggesting that central banks could be more aggressive in their fight against inflation. The market now expects a further rate hike of 50 basis points from the European Central Bank (ECB). But most interest is being diverted to the US, where few already expect March to be the last Federal Reserve (Fed) hike.
The consensus is becoming clearer: there will be higher rates for longer. And that again translates into the fear that this scenario could lead to the dreaded recession at the end of the year.
Against this backdrop, debt markets are once again in turmoil. Investors choose to sell bonds, which lowers prices and generates returns (which move in reverse). In the US, the 10-year US bond yield is already above 3.87%, while in Spain the par paper surpasses 3.545%.
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.
