IBEX35: Downward pressure after the NFP

9 hours ago

Markets closed lower on Friday despite strong Non-Farm Payrolls data (256,000 vs. 165,000 expected) due to concerns that the Federal Reserve will keep rates higher for longer. This boosted Treasury yields, attracting capital into fixed income and affecting rate-sensitive sectors. In addition, corporate earnings warnings and global economic weakness increased caution. Technical factors, such as profit-taking and moderate wage growth, also contributed to the pessimism.
1. Concerns over strong employment data could increase the likelihood of a tightening stance from the Fed for a longer period of time.
2. Rising U.S. Treasury bond yields.
3. Corporate earnings and economic warnings: Corporations have started to report cooling earnings and global economic data in Europe and China showed weakness, which has increased fears of uneven global growth.
4. Expected falls in Wall Street: This result has caused many investors to take profits given the general pessimistic tone in the market, “A bird in the hand is worth two in the Bush”.
5. Technical and psychological factors: The market had already partially discounted the possibility of a strong data, and the additional data added some uncertainty about the ability of consumers to maintain spending in an inflationary environment.

IBEX 35: A month of downward pressure
The IBEX 35 (Ticker AT: ESP35, Spain's main stock market index, began the week with a 0.98% decline in futures, standing at 11,720 points. This downward movement is in line with the falls in Asian stock markets and the negative closing of Wall Street last Friday.
In the last month, the IBEX 35 has faced several factors that have put downward pressure:
1. stricter capital requirements for banks: the European Central Bank (ECB) has raised capital requirements to 15.6% by 2025, especially affecting banks, a key sector in the index.
2. Trade uncertainty in the US: The possible protectionist policies of President-elect Donald Trump have generated nervousness in sectors such as renewable energies and telecommunications.
3. Weak economic data in Europe: Especially in Germany, economic indicators have weighed on investor sentiment in European markets.
4. Slowdown in China: The Chinese economic slowdown and the implementation of tariffs have negatively affected global markets.

Market Outlook
Although U.S. employment figures show a solid economy, the IBEX 35 remains under pressure from international and local factors. Investors should keep an eye on upcoming corporate results and economic data, especially those related to inflation in the US, to assess the direction of the markets in the coming days. In conclusion, while the US market shows resilience, the IBEX 35 faces a week of caution, reflecting a complex global environment and expectations regarding monetary policy.

Ion Jauregui –ActivTrades Analyst






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