The Ibex 35 falls 2.46% and marks its annual minimum due to fear of an imminent recession | Economy

The Spanish Stock Market does not raise its head in 2022. It is experiencing another black week (-5.02%) and has already fallen by 11% so far this year. After a Thursday of negative reactions to the rise in interest rates by the US Federal Reserve, the Ibex 35 closed the week with its worst data of the year: it depreciated 2.46% and fell to 7,583.50 points , its lowest level so far this year. The publication of the advance data on business activity in Europe (PMI), which falls to a 20-month low and fuels fears of an imminent recession, has also dragged down the large stock markets of the Old Continent: the German DAX, the French CAC and the British FTSE depreciated around 2%. The trend is global: Wall Street has opened in the red and the Dow Jones, the North American industrial index, falls almost 2%.

Interest rate hikes by central banks are not well received by equity markets. Added to the rate hikes by the Fed, the Bank of England —and, most likely, the ECB at its next meeting in October— this week is the uncertainty generated by the partial mobilization announced by Russian President Vladimir Putin. And, this Friday, a new setback to market confidence: the bad PMI for September. This macroeconomic data, measured each month by S&P Global, reflects the behavior of the manufacturing industry and the services sector. A reading above 50 points indicates expansion, while below this threshold anticipates a contraction.

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According to the latest update of the indicator, economic activity in the eurozone marks 48.2 points, the lowest in the last 20 months. September is the third consecutive month of decline, which has stoked recession fears among investors. According to ING analysts, the poor figures for the Old Continent indicate that “a recession could already have begun.” “The stock markets are doing the same thing they did in 2008, the only difference is that now there is a rate hike and the dollar is strong,” says financial analyst Juan Ignacio Crespo.

In Spain, the upward revision of growth in the second quarter has not been enough to alleviate the fear of the crisis: the Ibex has turned red. The main Spanish indicator sinks below 7,600 points and marks its worst figure so far this year. The previous one was on March 7, when it fell to 7,644.60 points. Only two of the 35 values ​​have been saved, Siemens Gamesa and Fluidra. According to the analysis team of the investment bank Renta4, the stock market has reacted downwards to “the greater damage expected in terms of growth and employment in exchange for controlling inflation.”

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The large Spanish banks, which endured widespread losses this Thursday, give up the ground gained and all depreciate around 2%. At the head of the losses is Grifols (-7.90%), whose valuation was lowered this Friday by the S&P agency.

a strong dollar

In the foreign exchange market, the dollar, spurred on by the Fed rate hike, closed a week of constant gains. The euro is once again approaching the 20-year lows that it already marked in July. The green ticket is paid, in the middle of the afternoon, at 0.97 euros. The pound sterling, despite the Bank of England rate hike, also depreciated against the US currency. “It had been a long time since there had been a crisis in the foreign exchange markets,” says Crespo. For the analyst, the drop in the pound is “much more important than the fall in the stock market.”

The only notable exception is the Japanese yen. The Japanese government intervened on Thursday in the foreign exchange market to relaunch its currency – which was at a 24-year low – after its central bank decided to continue with ultra-low rates. So far it has worked and the Japanese currency appreciates slightly (+0.5%) against the dollar.

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The risk premium goes up; oil goes down

The debt market has not been immune to the general trend and is also getting worse: the Spanish risk premium rises above 113 points (113.2) and the 10-year Spanish bond is paid at an interest rate of 3.15% , slightly more than this Thursday. Oil is not far behind in this black market day: Brent (the reference crude oil in Europe) depreciates 5% and a barrel slightly exceeds 85 dollars. The West Texas Intermediate (WTI), a benchmark in the US, follows suit and the barrel falls more than 6%, to 78.34 dollars.

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