Ibex-35 drops 5% in week to 7,583 points, a level not seen since November 2020
Losses are forcefully imposed on European stock exchanges, providing evidence that a spurt in interest rate hikes by central banks will propel the global economy into recession. Ibex-35 is witnessing a decline on Wall Street, with losses that were around 2.46%.
After four consecutive seasons of decline, the selective is left 5% throughout the week. But most importantly, the levels left by the bearish bounce on the indicator. Notably, IBEX closed the session at 7,583, trailing the previous low of the year marked at 7,644 in the midst of the outbreak of the pandemic.
You have to go back to November 2020 to see similar closing levels, just before the markets started rallying after the pandemic hit with the announcement of vaccines.
Panic has normalized all over the old continent, with a 2.3% decrease in Paris and 2% in London and Germany. The Italian stock market behaved even worse, falling more than 3% amid tensions caused by the electoral process.
As if that weren’t enough, new indicators are becoming known, pointing to a more complicated autumn for the economy in the euro area. This is reflected in the general buying index (PMI) which is prepared monthly by S&P Global, and which ranged from 48.9 in August to 48.2 in September. This is its lowest level in the last 20 months and then falls below the 50 barrier which marks the split between expansion and contraction.
“A recession is on the horizon for the euro zone, as companies point to deteriorating business conditions and rising price pressures coupled with skyrocketing energy prices,” said chief economist at S&P Global Markets. Intelligence, Chris Williamson, who forecasts a contraction of 0.1% of GDP in the third quarter
Bonds, Euro… and Euribor
Tension is more clearly noticeable in debt markets, with bond profitability skyrocketing in the secondary market (which may be an indicator of what investors demand from states to buy their debt).
Investors are selling bonds, pushing prices down and increasing returns, which goes in reverse. And the interest of Spanish for 10 years already beats 3.177%.
But the most extreme case is still the United States. Interest on the 10-year bond has not reached its limit and rose to a comfortable 3.76% on Friday, the highest since 2010. Two-year bonds are up more than 4%, an indicator (when short-term bond interest exceeds longer-term bond interest) that investors are pricing in a recession over the next 12 months.
The worst prospects that currently exist for Europe and, above all, the fact that the European Central Bank (ECB) is one step behind the US Fed in withdrawing stimulus to combat inflation, once again hit the euro in the forex market. put pressure on The single currency is not the only one to touch and after losing parity on Wednesday, it is trading at $0.9754 on Friday, a new low in the past 20 years.
The body is bound to accelerate the increase in interest rates. And that perspective also perpetuates the strong growth in Euribor, which hit 2.5% fears this Friday, pushing the provisional average for December to 2.13%, up from the 1.25% recorded in August.
In the crude oil market, the price of oil fell 2%, with a barrel of Brent, a reference in Europe, at around $88.62, while US West Texas is again near $82.