02/14/2022 – 9:33 Updated: 13:11 – 02/14/22
Bad start to the week for shares in the Old Continent. Sales are clearly taxed just like they did this morning on the Asian markets (Japanese Nikkei 225: -2.2%). Losses were already over 2% after the first bell rang and quickly widened to over 3 percentage points. The EuroStoxx 50, taken as a benchmark, drops to around 4,000 points and marks annual minimums. Similarly, the Spanish Ibex 35 fell to 8,500 units. And what do we expect from Wall Street? Futures contracts anticipate more red numbers across the Atlantic.
The losses suffered today on European stock exchanges are not far removed from those recorded on January 24, the worst day (so far) so far in 2021. Then the Ibex suffered a drop of 3.2 % and the EuroStoxx, more than 4%.
Joan Cabrero, technical analyst and adviser to Ecotrader, warns that the Ibex tests the bullish guideline who has guided the promotions since the minimum that the Spanish selective marked in December.
“The maintenance of this guideline, which crosses the domain of 8,550 points, and the support of 8,500 it depends that there is no deterioration in its short-term bullish possibilities and we must speak of weakness,” warns the expert.
Risk is not something “exclusive” to the Spanish stock market. The EuroStoxx 50 is also putting pressure on its support in the 3,980-4,000 stitches. If it falls below today’s (or any other day’s) close, the continental indicator will give way to “a more corrective than consolidating scenario,” Cabrero warns.
With an eye on bonds…
“In a session where the macro agenda seems empty, investors in Europe will continue to await news on the evolution of the Ukrainian crisis, while monitor the behavior of bond yields“, explained the analysts of Link Securities in the morning.
Ten-year German paper interest (bundle) drops sharply, reaching throughout the morning below 0.20% in the face of larger debt purchases. The US ten-year bond (T-Note), which climbed last week to 2%, even reached the 1.9% threshold.
In Spain, decade sight bond yields are approaching 1.15% and the risk premium, which measures the spread with German debt, exceeds 100 basis points for the first time since the summer of 2020.
…and at the Ukrainian border
On a geopolitical level, the stock market losses reflect concern over the growing tension on the Ukrainian border in the face of rumors of an imminent invasion of the European country by Russiaemerged from the United States and rejected by Moscow.
US President Joe Biden and his Russian counterpart, Vladimir Putin, spoke on Saturday. “The conversation ended without a conclusive result,” they point out from Renta 4. Tomorrow, Putin will meet the German Chancellor, Olaf Scholz, to try to resolve the situation through diplomatic channels.
“The negotiation phase seems exhausted», Regrets the Analysis service of Bankinter. “It means that if [la invasión rusa de Ucrania] in the next few days or not, we will have bags and other retirement risk assetswhile volatility, commodities and bonds are up,” they add.
The oil market is the risky asset that stands out as an exception to the Ukrainian crisis: this morning marked the maximum since 2014. Concretely, the barrel of Brent, a reference in Europe, climbed above 96 dollars in the first hour. North American West Texas (WTI) touched $95 a barrel. And more and more analysts see black gold above $100 in the near term.
As if that weren’t enough, investors are still awaiting any news or indications from the biggest central banks, in particular the US Federal Reserve (Fed), whose minutes will be released on Wednesday. “Therefore, the “manageable key” remains the Fed and the “unmanageable key”, Russia”they think of Bankinter.
“We continue to be trapped in a tense expectation, this week much more tense”, conclude these experts.