Madrid 2,356 EUR 0,01 (0,43 %)
Madrid 2,356 EUR 0,01 (0,43 %)

FINANCE| 06.03.2020

“There are factors underpinning the continued optimism in the market”

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The markets are looking better. In Spain, the Ibex 35 has closed positively in nine of the last 10 sessions, and has gained around 12 percent, but the performance has been even better in the rest of Europe

Alberto Matellán, chief economist at MAPFRE Inversión, points out, on Radio Intereconomía’s program A Media Sesión, three factors that may justify this change in trend: abundant liquidity; macroeconomic data, which is turning out better than was discounted a few weeks ago; and that risks are waning, both politically in Europe and in terms of company bankruptcies. That is why the economist believes that “there are factors underpinning the continued optimism in the market.”

Among the macroeconomic data that has been published, and that partially justifies the stock market rebound, are those coming out of China. The Asian giant’s PMI for services stood at 55.0 points in May, compared to 44.4 the previous month and the expected 47.3. For its part, the composite PMI reached 54.5 points compared to the previous 47.6, thus returning to an expansionary phase. Matellán explains that these data are behind discussion of a possible “V recovery”, despite the fact that the United States and Europe are lagging somewhat behind. Business activity in the eurozone continued to deteriorate during the month of May, despite the progressive lifting of restrictions. The rate of decline has moderated substantially with respect to the lows witnessed in April, as reflected in the PMI index, which rose to 31.9 points from 13.6 the previous month. “This slower rate of recovery is due to the fact that the reopening of the economies is also happening on a staggered basis, which is why the sooner activity kicks off again, the sooner recovery will come ”, adds Matellán.

In Europe, Germany could act as a catalyst, since its ambitious fiscal stimulus plan is already taking effect. “I would like to think that there are several engines in play here, but if there can only be one, it could be Germany. The German fiscal stimulus is the largest in Europe, because it has enormous financial capacity. There is less fiscal margin to play with in Spain and Italy, and within that margin they’re doing what they can”, noted the MAPFRE Inversión economist.

In this new scenario, which looks more promising, Matellán believes that it’s a good time for retail investors to sit down with their advisers or managers and examine their portfolios. “If they see that things have gone well for them, then that’s great, but if they see that it’s gone wrong, they have to find out what caused that and take appropriate measures” he concludes.