The Ibex 35 began March with the annual score in negative as the ‘ugly duckling’ of the main European stock indices, but it ends it as a ‘swan’ as one of the best on the quotation screens. In the absence of data from today’s session, its cumulative rise remains at 10% quarterly for the moment and in 2024. The momentum of its four pillars (Inditex, Iberdrola, Santander and BBVA), 50% of the weighting of the indicator, has been key to aspiring to sign its best month since November 2020 with a cumulative monthly revaluation of 11.1%, after closing on Wednesday at an unprecedented 11,111 points. It will be necessary for it to rise 45 more points, to 11,156 integers, so that it can surpass the performance harvested in November 2023 (+11.54%) when the current ‘rally’ began.
Chance and the design of the algorithms have wanted it this way because, as the president of the CNMV, Rodrigo Buenaventura, recalled in a recent speech, more than half of the operating stock market already belongs to the machines. The meaning of this figure for the human investor escapes reason, although statistics provide some keys by way of explanation. The first is that the Ibex 35 is trading at highs since May 2017 and its version with dividends, that is, including the return of payments to the shareholder, is at historical highs.
Type expectations, keys
Stock market increases have been widespread since the Fed and the ECB gave indications of possible interest rate cuts before the summer, but at the same time that they would be less than expected. In this way, the Ibex 35 has benefited more than the rest of the indices due to its greater composition of financial securities, which benefit from the current level of high rates. In fact, in the last month, the shares of the insurer Mapfre (+20%) are the ones that have risen the most, followed by Unicaja (+17.7%), BBVA (+17.5%), Caixabank (+16, 8%), Santander (+16.6%) and Bankinter (+14.%).
“Last week’s Fed meeting has further fueled the rally in global stock markets. Despite recent higher inflation prints, the Fed leaned towards the ‘dovish’ side, continuing to guide for three cuts rates of 25 basis points this year. Within the stock market, long duration stocks (i.e. those most exposed to the high rate environment for a longer period of time) have reacted particularly positively,” explains Mathieu Racheter, head of strategy at variable rent by Julius Baer.
On the other hand, Inditex has been the main protagonist of the Spanish market during the last two weeks after matching and beating expectations with the results they presented on March 13. Its accumulated rise of 14% in March has led it to set new historical highs above 46 euros, which brings it closer to 150,000 million euros in market capitalization. Its weight in the Ibex 35 has exceeded 15% and its movement makes a difference for the index, as happened this Wednesday when it rose 2% in reaction to H&M accounts.
Statistically speaking, stock markets tend to react upward to initial movements in rate cuts as long as there is no recession. Racheter recalls how, since 1980, the S&P 500’s return over the 12 months following the first rate cut averaged 14.2%, a higher number compared to the average 12-month return over the entire sample period (10 ,4). %).
“As such, rate cut cycles that are not triggered or followed by a recession tend to be accompanied by strong capital returns. That said, we recognize that each cycle is different. This time, much of the positive return has been tacked on, and We still hold the opinion that stocks in developed markets are ready for a correction, which would be healthy behavior,” Julius Baer explains.
