Saturday, March 25, 2023

European stock markets are testing their strength

It continues, at least for now, a good year for the European stock market with double-digit increases in profits (less than two months) in some of them, something that extrapolating to 12 months will give more than 50 returns. Is it logical that there is a geometric growth of the market type, despite everything that is happening economically? Inflation is still high, in fact this very week we learned the preliminary data for February in Spain and it was really negative with prices much higher than expected (especially in monthly terms). In addition, the central banks will raise more than the faithful interest and the war in Ukraine has been going on for more than a year and, unfortunately, has no sign of stopping.

Having seen this, it is to be feared, in fact, the fear of the investor is almost always serious after the slowest fall in the markets, especially in the sellers. Apart from the fact that this in itself is already a positive sign, usually when small investors are afraid (it is not difficult to monitor) that the stock market will rise, it should be known that the first three factors have already come from last year.

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Even inflation, the interest rate rises and the war are already incorporated in all analyzes and are certainly incorporated in some cases, seeing how the listed companies present the result, with many unexpected positives and the amount of raw material prices falling as well as the industry; such as food or laughter.

It is clear that victory cannot be claimed, and any of these three can become even worse, even as they appear again. In this environment, the European markets could do better than the American ones, if the uncertainty of prices and interest arises, as they have more defensive elements among their parts: there are many banks, a lot of public service and little. technology (at least in the main weight indexes). However, if there is some stability and rate growth as expected, we could see how, once again (with the exception of last year), the indexes of the United States would do better than those of the Old Continent, especially with huge attention. the weight of large technology companies such as Apple, Alphabet (Google), Amazon, Microsoft, NVIDIA and a little less after the fall of the year, Tesla and Meta (Facebook, WhatsApp or Instagram).

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In the next few weeks we will not have so many business results, the season is coming to an end, but we will have macroeconomic data, especially inflation (which is published twice in Europe: preliminary and final data) and their meetings. The European Central Bank (in addition to the comments on central banks), next March 16, a week before the American Federal Reserve, whose results will also affect Europe. In this situation, the support of the main European indices can mark the continuation of the upper trend that began in 2023. So, according to the name, the ratio should be 9,200-8,800 for IBEX; 4,100-3,850 for the EuroStoxx or 14,600-13,500 for the DAX.

Nation World News Desk
Nation World News Desk
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