The Ibex 35 does not celebrate Trump’s arrival at the White House and This Wednesday, it recorded its worst session in a year and eight monthswith a drop of 2.9% which leaves the Spanish index at September levels. At the start of the day, the reference was separated from the photo of the rest of the European stock markets, tinted green. This optimism did not last all day, however, and the continental indices closed with losses of around 1%. The United States reacted well to the announcement of the new president, with increases of up to 5% for the Russell 2000 index and with the S&P 500 once again revalidating its all-time highs, with data at European fence.
The expectation of a greater slowdown in the decline of interest rates in the United States after the victory of the Republican candidate is one of the aspects that influence on this side of the Atlantic, since a change in the Funding policy in North America directly and indirectly affects many things. of the world, with companies (like Iberdrola, in the case of Spain, among others, or the banking sector) penalized for this.
Spanish banks were the biggest victims on Wednesday, with a correction in Ibex banks reaching 5%. BBVA and Banco Sabadell led these declines, with declines of more than 6% in both cases. The sharp decline in the segment weighed heavily on the performance of the Ibex 35, since the banking segment has a weight of almost 30% within the index. “Global banks (Santander and especially BBVA) could be negatively influenced by their exposure to emerging market currencies, which a priori would show poor results after Trump’s victory, notably in the case of BBVA, which also has significant exposure to Mexico,” Antonio explains. iBroker analyst Castelo agrees.
“The market feels that, if activity in Mexico weakens, it could have more difficulty in carrying out the public purchase offer on Sabadell and that is why Sabadell’s shares are also very penalized, since their price would depend, in a certain way, on the BBVA price when the payment is made in shares”, adds the expert, who also believes that the market does not take into account the fact that Banco Santander (which fell by 4.2%. yesterday) “could benefit from Trump’s presence in the presidency by having a significant presence in the United States, because their policies tend to favor financial deregulation,” he adds. The premium in the exchange operation (5.0195 Catalan securities for each Basque security) is reduced to 1.7% after the declines.
Regarding the reaction of European stock markets, Matthew Gilman and Thomas Parmentier, strategists at UBS Global Wealth Management explain: “While equity fundamentals remain generally favorable, we see less upside potential for European stocks under a Trump presidency in particular. , we see risks to economic growth due to tariffs and rising US bond yields, which could weigh on valuations.
“Possible customs duties in the region, which could generate a 1% drop in the GDP of the common area over the next year, would be the fundamental reason for these differences. Indeed, companies in the luxury sector or automobile industry have suffered in recent years from the advantage of the polls which gave Donald Trump the winner”, they say in XTB.
Loss of support
As expected, the Ibex lost its support at 11,560 points at Wednesday’s close. Something that would be, according to Joan Cabrero, technical advisor at Ecotrader, “anything but bullish for Spanish stocks, and would open a probable further fall towards the September lows around 11,130 points and I do not exclude that it could looking for support at its bullish guideline which passes through 10,900/11,000 points, I am talking about a minimum drop of an additional 3.5% and limited to 6%,” he explains.
Cabrero indicates that, if this fall finally occurs, the investor would be faced with an opportunity to buy a Spanish stock exchange looking for a final stretch of a bullish year. However, he recommends waiting for the weekly close, where we can have a clearer reading of the digestion of the results in the United States.
