Spain’s IBEX 35 index has advanced above 8,900 points on Friday following better-than-expected data from Spain and optimism on Wall Street.
Spain reported that retail sales rose by 5.3% in April, which is significantly higher than market estimates. On an unadjusted basis, retail sales increased 3.3 percent annually after falling 5.5 percent in the previous month.
Sales in stores continue to show signs of recovery, which is very important for the sector that was hit by the pandemic, and now with the added problem of the rise in the cost of raw materials and energy due to the war in Ukraine.
Employment in retail trade has increased by 2.3% in April compared to the figure for the same month in 2021, and it has already accumulated a consecutive year of year-on-year increases.
On the other side, Russia’s attack on Ukraine has rarely left a deep scar on markets, but even before events escalated around Ukraine, markets were trying to come to terms with inflation and rate hikes.
The war between Ukraine and Russia continues to cause supply chain issues for many companies that look to find other sources for their parts. Since the invasion, raw materials and commodities prices have surged, intensifying already-high inflation.
Signs of slowing economic growth and lingering inflation were temporarily ignored, but as for the whole of Europe, rising inflation is a threat to the Spanish economy. Tim Ghriskey, senior portfolio strategist Ingalls & Snyder, said:
It was inevitable that the losing streak would end; corrections and bear markets are followed by ‘up’ markets. Generally, upbeat earnings guidance and solid economic indicators have fueled hopes that the economy will not enter into a recession.
European Central Bank announced that it would not raise interest rates before the third quarter, and the less-aggressive-than-anticipated ECB is also responsible for stocks’ advance.
Technical analysisSpain’s IBEX 35 index has recovered from its lows reached at the beginning of the month and closed the week at 8,933 points.
Data source: tradingview.com Traders should have in mind that the risk of another decline still persists, and if the price falls below the 8,500 support level, the next target could be 8,000 points. On the other hand, if the price jumps above 9,100 points, the next target could be 9,200 points.
SummarySpain’s IBEX 35 index advanced on Friday, supported by the news that retail sales in the country rose by 5.3% in April compared with the previous month. Spain’s IBEX 35 index closed the week at 8,933 points, but traders should have in mind that the risk of another decline still persists, and the upside potential remains limited.
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