Calviño insists that Spain has “room” to cope with a rise in ECB interest rates and that society can resist it after the “cushion” offered by the state during the pandemic
Markets have already given their first judgment following the sharp rate hike approved last night by the Federal Reserve (FED) in the United States. Stock markets are waking up to significant gains, such as that of the Ibex-35, which started this Thursday’s session with a rise of 1.5%, taking the selective to 8,634 points.
Investors value the 50 basis point rise in the official US money rate positively, placing them within a target range between 0.75% and 1%. This is the largest rate hike in that country since 2000, 22 years ago. Since then, rate hikes have always been limited to 25 basis point increments.
FED President Jerome Powell yesterday hinted at the possibility that two more 50 basis point rate hikes will take place in the body’s next two monetary policy meetings, maintaining a rhythm that has not been recorded for a while. for a long time, more than two decades. In other words, they place more value on stopping the uncontrolled rise in inflation, which is over 7% in that country, compared to the perverse effects that a rise in interest rates could have in economic evolution. Despite the fact that the US economy fell by 1.4% on a quarterly basis in the first quarter.
After falling 1.04% yesterday, the Madrid selective squad started the session above the psychological level of 8,600 points in a context still marked by the evolution of the war in Ukraine and the presentation of company results, including ArcelorMittal and Siemens Gamesa.
In the early stages of Thursday’s session, virtually all stocks were in the green, led by ArcelorMittal (+3.95%), Amadeus (+2.78%), IAG (+2.68%), Fluidra (+2 .48%), Acerinox (+2.33%), Aena (+1.87%), Inditex (+1.84%) and Repsol (+1.74%). On the other side were PharmaMar (-1.56%) and Siemens Gamesa (-0.16%).
The rest of the European stock markets opened with increases of more than 2% in the case of Frankfurt and Paris, while London rose 1.66%.
The price of a barrel of Brent crude, a benchmark for Europe, stood at $110, up 0.4%, while the barrel of WTI, a benchmark for the US, rose 0.25% to 108 dollars. Finally, the price of the euro against the dollar stood at 1.0599 ‘greenbacks’.
Tension has eased in the debt market. At the moment, the Spanish risk premium is around 107 basis points, which is a decrease of more than 1% from yesterday’s closing price. The cost of the Spanish bond is 2%, well above the government’s estimates for the macroeconomic picture.
The vice president of the economy, Nadia Calviño, even believes that Spain has “room to cope with this progressive rise in interest rates”, referring to the decisions the ECB can take in the eurozone from the summer. Calviño recalled that of the public sector, “we absorbed private sector debt during the pandemic, which has provided a cushion to face rate hikes now,” referring to households and businesses.
In addition, he has indicated that the latest macroeconomic forecasts, sent to Brussels last week, “take into account the average interest rates of the debt issued”. “While interest rates are rising, the average interest rate on Spain’s debt will continue to fall,” said the vice president, recalling that the €140,000 million spent on public debt to support during the pandemic means society is now “pillow” has in the face of a rise in interest rates that virtually the entire market takes for granted.
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.
