The IBEX 35 opened Wednesday with modest gains after surpassing the 14,300-point mark on Tuesday for the first time in 17 years, as markets remained wary over stalled progress in trade agreements and the fiscal outlook of major developed economies.
Investor sentiment has been fragile since Moody’s downgraded the United States’ credit rating last week, raising concerns about the country’s $36 trillion debt pile. President Donald Trump is pushing for tax cuts that could worsen the debt burden by between $3 trillion and $5 trillion.
Progress in Trump’s global tariff war has slowed considerably this week, even as the 90-day tariff truce for US trade partners nears its end in the absence of new trade agreements.
Meanwhile, Federal Reserve officials said on Tuesday that higher tariffs on US imports would lead to rising prices, and advised patience before making any decisions on interest rates until it is clear whether the inflationary impact will be fleeting or more persistent.
On the macroeconomic front, before the market opened, the United Kingdom reported a larger-than-expected inflation surge in April–even in areas closely monitored by the Bank of England. Investors now believe the central bank will have to slow its already gradual pace of interest rate cuts.
“The day’s key data is out, which was UK inflation, and it was even worse than expected,” analysts at Bankinter said in their Telegram channel.
“Be cautious about this inflation rebound, because we continue to warn about the risk it poses for the second half of the year from a global perspective. It’s likely that markets are beginning to collide with a reality less benign than previously anticipated.”
As of 0713 GMT on Wednesday, Spain’s benchmark IBEX 35 index was up 11.90 points, or 0.09%, at 14,335.30 points, while the pan-European blue-chip index FTSE Eurofirst 300 was down 0.20%.
In the banking sector, Santander rose 1.01%, BBVA gained 0.73%, Caixabank advanced 0.91%, Sabadell was up 0.64%, Bankinter climbed 1.55%, and Unicaja Banco increased 1.72%.
Among major non-financial stocks, Telefónica slipped 0.20%, Inditex fell 1.18%, Iberdrola dropped 0.28%, Cellnex lost 0.39%, and oil company Repsol declined 0.59%.
(Reporting by Benjamín Mejías Valencia; editing by Jorge Ollero Castela)