The Ibex 35 falls 1.45% this week and says goodbye to the 11,100 point mark after the ECB meeting

Jul 19. () –

The Ibex 35 closed the week with a fall of 1.45%, reaching 11,087.5 points, after the start of the corporate earnings season in Spain and the European Central Bank (ECB) left interest rates unchanged at its monetary policy meeting.

The Spanish index has thus put an end to two consecutive weeks of increases in a period in which it has tried to consolidate the level of 11,200 points that it reached last Friday but in the end it has not even managed to maintain the range of 11,100 points.

However, so far this year, the main indicator of the Spanish market has appreciated by 9.75%, according to market data consulted by Europa Press; it should also be noted that the annual high, reached on June 6, was 11,444 points.

In terms of Friday’s results, the Ibex has recorded a 0.54% drop in a day marked by the global failure recorded early in the day by Microsoft as a result of a problem in the update of the computer security company Crowdstrike and which has affected companies in different sectors globally, from airlines and banks to energy companies.

In the details of the week, the European Central Bank (ECB) decided on Thursday to keep interest rates unchanged after the cut carried out last month, so that the reference rate for its refinancing operations will now remain at 4.25%, the deposit rate at 3.75% and the lending facility rate at 4.50%.

The head of the eurozone’s guardian, Christine Lagarde, stressed at a press conference after the meeting that the institution’s future decisions depend on data, as it will not meet again to discuss eurozone monetary policy until September.

Regarding the ECB’s moves, market analyst Joaquín Robles has stated that one argument in favour of a further cut in September is the progressive weakening of the economy, although, on the other hand, wage pressure and wage inflation are still too rigid.

In addition, the inflation expectations of economic forecasters consulted by the European Central Bank (ECB) in its third quarter survey remain somewhat below those handled by the staff of the ‘Guardian of the Euro’ itself for this year and the next and fall below the stability target of 2% for 2026.

On the other side of the Atlantic, investors are already discounting a 25 basis point cut by the US Federal Reserve (Fed) at its September meeting, which would put rates at around 5%, as Robles has pointed out.

“Although inflation is still not close to its target [se sitúa en el 3%]American officials are confident that prices will eventually stabilize,” the analyst added on this point, since “the labor market in the United States continues to weaken.”

Linked to the ECB’s stance of keeping interest rates unchanged, Bankinter has started the earnings season in Spain this Thursday with results that have exceeded expectations: the entity obtained a net profit of 473.5 million euros in the first half of the year, 13.3% more than in the same period last year.

In fact, Bankinter has posted the best result of the week on the Ibex with a rise of 7.69%, followed by its sector peers Unicaja (+4.46%), Caixabank (+4.4%) and Banco Sabadell (+1.89%). On a more moderate note, BBVA has risen by 0.96%, while Banco Santander has been the exception by falling by 1.65%.

“Good results from the banking sector could bring [al Ibex 35] back to annual highs,” Robles warned.

At the other extreme, the weekly declines of Fluidra (-6.27%), Grifols (-6.16%), Colonial (-5.64%), Acerinox (-5.55%), Solaria (-4.95%) and Inditex (-4.36%) have stood out.

Robles has attributed the fall of Grifols to the fact that the credit rating agency has stopped covering the stock, while, in relation to Inditex, he has pointed out that it has been dragged down by the warnings of lower profits from several companies in the sector and the announcement of the payment of a seniority bonus to Spanish workers.

The rest of the European markets have seen losses of varying degrees this week: Milan has lost 1.05%; London 1.56%; Paris 2.46% and Frankfurt 3.07%.

In other geographies, Renta 4 analysts have highlighted the references coming from China, where the Third Plenum of the Communist Party has been held without announcing any stimulus to boost its “weak economy”, in particular, domestic demand and the real estate sector; meanwhile, in Japan, it was announced this morning that inflation rose in June to 2.8% year-on-year, while the underlying rate rose to 2.6%.

Following this, the Tokyo Nikkei and the Hong Kong Hang Seng have recorded falls of 5% for the week.

On the commodities market, the price of a barrel of Brent crude oil, the benchmark in the Old Continent, fell by 1.25% over the week to $84, while the price of a barrel of WTI crude oil in Texas fell by 0.85% to $81.5.

“Oil prices fell due to signs of economic weakness, which could translate into lower demand,” Robles said.

As for currencies, the euro depreciated by 0.16% in the week against the dollar, reaching an exchange rate of 1.09 ‘greenbacks’, while in the debt market the Spanish ten-year bond closed at 3.241% – without variation in the week -, with the risk premium (the differential with the German bond) at 77.7 points.

The troy ounce of gold fell 0.3% over the week to $2,405, although it reached an all-time high of $2,483 on Wednesday due to the prospect of a first rate cut by the Fed in September. The precious metal has appreciated by nearly 20% over the year.

Meanwhile, Bitcoin has gained 15% this week to $66,100 per cryptocurrency.

KEY POINTS FOR NEXT WEEK

Next week will continue to be dominated by economic data and corporate results, Robles said, with preliminary manufacturing PMI data for July in Germany being the highlight, while in the United States the second quarter GDP data and PCE inflation, a figure closely followed by the Federal Reserve, will be released.

In terms of corporate results, several technology giants such as Microsoft, Alphabet, Tesla and Amazon will be in the spotlight in the United States, while in Spain it will be the turn of Santander, Iberdrola, Repsol and Sabadell.