The countries that border the Old Continent show muscle in the financial markets. The stock markets of these regions have taken advantage of the stock market ‘rally’ and are at the head of the increases with double-digit revaluations. The very composition of its indices, with a great weight of banking and cyclical sectors have contributed to this rebound.
The prospects of a containment of inflation both in Europe and in the United States this 2023, giving rise to the hypothesis that the end of the rises in interest rates by the Reserve could end before the summer, have fueled the spirit for weeks investor, guided by the premise that the probability of the result of a bump similar to last year is low or very low.
Although these forecasts are losing steam as key data such as the CPI for the United States or the improvement in the PMI for purchases in the North American country, as well as Germany and France -the economic locomotives of the Eurozone- are known, the stock markets have experienced a great pull since the beginning of the year.
In this context, Greece, Italy and Ireland stand out as the main winners of the investment wave to date. The main index of the Hellenic country accumulates a rebound of around 19% so far this year. The Athens stock market shows strength after losing just 2% in the worst year in decades for equities. This push is led by banking entities such as Piraeus (+60%) or Alpha Services (+40%). At a greater distance is the National Bank of Greece, which although it advances more than 30%, the great weight they play within the index acts as a driving vector.
Also noteworthy is the rebound experienced by Marfin Investment, a Greek business giant that carries out its activity in various sectors such as health, telecommunications, transport, real estate or food. Its diversification has helped it bounce more than 310% in less than eight weeks. Coca Cola HBC, the second largest bottler in the world, and the heavyweight of the ASE, remains in the background with an increase of 7% in the annual calculation.
On the other side of the Old Continent, the Irish ISEQ Overall is listed, which also stands out at around 15%, boosted by the financial company Permanent Group (+38%), Corre Energy (+33%) and the mining company Ormonde Mining, which exploits land of minerals in Spain. However, within the main reference stock markets in the European markets, it is the FTSE MIB that leads the bullish fever with a rise of more than 14%, in contrast to the cumulative decline of 13% last year. The weight of companies such as Intesa Sanpaolo (+19%), the colossus Unicredit (+35%) or Telecom Italia (+41%) has played a fundamental role in this progress.
Apart from the CAC 40, which is reaching all-time highs after registering a rise of more than 12%, the list of peripherals that rebounded in double digits is completed by the Ibex 35. The Spanish selective accumulates a rebound of 11.5% after corrections of the last days. The high representation of the bank, with up to six entities, and the resurgence of tourist values have reinforced its boom. The list of most bullish companies is made up of Banco Sabadell (+3o%), IAG and Meliá, ambassadors with 29%. Iberdrola, for its part, the company with the largest capitalization in Spain, has been trading negatively since January.
The PSI of Portugal is left out of this race with an annual rise of 4%. It should be noted that it was the only index in Europe that closed 2022 positively, with 2.8%, thanks to Galp. The Portuguese index is in line with Wall Street, where the S&P500 is revalued by around 4%, while the Dow Jones has been losing positions in recent days until closing this Wednesday with losses in the annual calculation of 0.31% after the publication of the minutes of the Fed in which they hint at more rate hikes. The Nasdaq, for its part, recovers part of the lost ground with an advance of close to 10%, which in no case compensates for the 30% bump suffered between January and December 2022.
Now that the possibility that the reference money rates could be higher than expected, everything indicates that investors will seek refuge in the most favored sectors of this situation such as banking, a factor that becomes the great vein of Spanish banking. In any case, the IG analyst, Diego Morín, points out that Europe is always behind the United States in terms of market reactions, as well as in the rhythm of the economic cycle, which is why they take longer to enter in recession, but also in beginning the economic recovery. “The market has had a strong rotation since the beginning of the year. We will see if it is capable of maintaining it over time,” precisely.
