The IBEX 35 started Monday’s session in the red, extending last week’s decline in a day conditioned by the stagnation of the conflict opposing the United States and Israel to Iran, the selling pressure on the bond market and the rise in the price of oil.
Developments linked to the conflict in the Middle East remain the major concern, fueling inflationary fears and raising expectations of rate hikes from global central banks for this year.
A drone attack caused a fire at a nuclear power plant in the United Arab Emirates, while Saudi Arabia said it had intercepted three other unmanned aircraft. At the same time, US President Donald Trump warned Iran that it must act ‘quickly’ to reach an agreement.
The strategic Strait of Hormuz remained practically closed to maritime traffic, with Tehran trying to formalize its control over a route which, normally, channels 20% of global oil trade.
Investors’ apprehension lies in the prolonged continuation of high crude prices, which would lead to a sharp rise in inflation on a global scale and, potentially, a recession.
Brent rose 1.9% to $111.34 per barrel, while US crude gained 2.2% to $107.72.
G7 finance ministers are due to meet in Paris on Monday to address the situation in the Strait of Hormuz and the supply of critical raw materials, although geopolitical differences within the group threaten to complicate a coordinated response.
The situation had a direct impact on debt markets, where sales intensified and bond yields continued to rise, with Japanese rates reaching highs not seen since 1996.
Added to this adverse panorama were disappointing macroeconomic data from China. Growth in the world’s second-largest economy lost momentum in April, with a deceleration in industrial production and retail sales falling to their lowest level in more than three years, in a context of energy costs increased by the Iranian conflict and lackluster domestic demand.
Even so, Bankinter’s analysis department emphasizes that ‘the risk of inflation and higher rates arising from more expensive oil due to the war in Iran/Hormuz will only translate into a limited impact on the economic cycle, against a backdrop of excellent corporate results’.
These analysts consider that last week’s meeting between the American and Chinese leaders reduced the geopolitical risk, given Beijing’s refusal to see Iran acquire nuclear weapons and Washington’s green light for certain technological transfers to China.
‘But perhaps most important from a geostrategic point of view,’ Bankinter adds, ‘is that China is not making any gesture of effective support to Iran (or, of course, to Venezuela), because this indicates that the China/Russia/North Korea/Iran/Venezuela bloc is falling apart. And, if this is the case, the challenge to American hegemony weakens notably.’
In terms of companies, attention will be focused this week on Nvidia’s results, expected on Wednesday, which will serve as a test for the euphoria around artificial intelligence having supported the recent upward momentum in the technology sector.
Companies in the American distribution sector will also publish their figures, notably Walmart, the results of which will make it possible to gauge the state of consumption in an environment of high energy prices.
At 07:01 GMT on Monday, the flagship index of the Spanish stock market, the IBEX 35, fell by 119.00 points, or 0.68%, to 17,501.90 points, while the index of large European stocks FTSE Eurofirst 300 fell by 0.69%.
In the banking sector, Santander lost 0.67%, BBVA fell by 0.45%, Caixabank lost 0.05%, Sabadell fell by 0.24%, Bankinter was lighter by 0.47% and Unicaja Banco lost 0.29%.
Among the major non-financial stocks, Telefónica fell by 0.03%, Inditex lost 1.37%, Iberdrola fell by 0.47%, Cellnex fell by 0.50% and the oil company Repsol rose by 1.73%, benefiting from the rise in the price of raw.
(Reporting by Tomás Cobos; writing by Jorge Ollero Castela)
