The IBEX 35 drops 0.25% on a cautious day, but Repsol surges 4% thanks to rising crude prices. Brent advances to nearly $77 per barrel following new attacks between the United States and Iran.
The IBEX 35 closed Monday's session with a moderate decline of 0.25%, down to 19,335 points, on a day marked by the escalation of oil prices and attention on corporate results kicking off this week on Wall Street. The main drag on the Spanish index was technology, while the energy sector acted as a counterbalance thanks to the rise in crude prices.
Oil boosts oil companies after US-Iran attacks
The price of Brent, the European benchmark, has risen to nearly $77 per barrel, after the United States and Iran exchanged new attacks overnight. This increase has directly benefited the energy companies on the IBEX 35, with Repsol leading the way with a 4% rise. It was followed by Naturgy and Acerinox, both up by 2%.
Market fears remain focused on a potential blockade of the Strait of Hormuz, one of the key routes for crude oil transportation worldwide. If it materialises, it would spike inflationary pressures and complicate the monetary policy of central banks, a scenario that investors consider the worst possible.
Technology weighs on the IBEX 35 and the Nasdaq
In contrast to the strong performance of oil companies, the technology sector was again the main focus of selling. The collapse of SK Hynix on the Seoul Stock Exchange reignited doubts about the high valuations in the semiconductor sector, dragging down European manufacturers like ASML Holding and Infineon Technologies. On Wall Street, the Nasdaq fell by around 0.8%, pressured by major tech companies.
On the IBEX 35, the biggest declines were for Laboratorios Rovi, which corrected by 2.95%, followed by Solaria (-2.3%) and IAG (-2.1%). In the case of IAG, the rise in oil also weighed on the stock, despite Deutsche Bank raising its price target by 19%. Telefónica, on the other hand, regained ground, adding 2.5%.
A key week for markets: results and inflation in the US
Investors face a week packed with important references. This Tuesday marks the start of earnings season on Wall Street with figures from major banks: Goldman Sachs, JPMorgan, Citigroup, and Bank of America. In Europe, companies like Burberry and Richemont will report results, while in Spain, Bankinter will kick things off on Thursday, July 23.
Additionally, tomorrow will reveal the inflation data from the United States, which always invites caution. This is especially true as the president of the Fed, Kevin Warsh, is scheduled to appear before Congress this week, where he could provide hints about the future direction of interest rates. Despite geopolitical tensions, some strategists believe that the underlying scenario remains favourable for equities. Morgan Stanley expects the earnings season to confirm an expansion of profit growth beyond the small group of large tech companies. Citigroup maintains a neutral view on European equities, considering it a good alternative for diversification against the high volatility associated with the artificial intelligence sector.
“The market is in wait-and-see mode, but oil is in charge and the oil companies are taking advantage,” summarise sources from a Spanish bank's trading desk.
For individual investors, the recommendation is to stay calm and avoid impulsive decisions. Volatility can offer buying opportunities in battered sectors, but it is wise to wait until uncertainties about inflation and interest rates are cleared. Tomorrow's session, with US CPI data and the first bank results, will set the trend for the rest of the week.
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