- Biden confirms debt ceiling deal ready to be voted on in Congress
Just over two and a half hours had passed when the Spanish stock market was forced to digest a new twist in Spain's political landscape. After knowing the overwhelming victory of the Popular Party in the regional and municipal elections that were held this Sunday, the session started with timid gains for the Ibex 35 that reached 0.67%, with the selective above 9,250 points, which also extended to the banking sector before the prospect that there could be a turn to the right in the next General Elections, which were planned for the end of the year. But gradually the initial purchases were fading and the Ibex went into negative territory while the President of the Government, Pedro Sánchez, announced an electoral advance for next July 23. The national index closed the session with a very moderate fall of 0.12%.
Political uncertainty is never positive for investors and sales were primed during Monday's session with bank stocks, although they were calming as it moved towards its close. Banco Santander was the most punished title yesterday in the Ibex 35, with losses finally of 1.7%, which led the entity to 3.14 euros. The banking sector keeps its swords high before the Executive, which has pointed out on different occasions to the entities for what it has liked to define as "benefits fallen from the sky" derived from the vertical rise in interest rates in the euro zone, which have gone from -0.5% in the deposit facility to the current 3.25% and that have significantly increased their interest margin. However, this escalation occurs after almost a decade in which the sector has learned to seek profitability in other ways taking into account that its raw material, money, was literally worth zero. The Economy Ministry approved at the end of last year a new tax equivalent to 4.8% of the income of those entities that exceeded 800 million euros. The goal is to raise 3,000 million euros in two years. The bank already paid the rate on the profit of 2022 during the first quarter. Among the six listed entities, the amount amounted to 1,119 million euros.
The entity chaired by Ana Botín was also the most bearish entity of the EuroStoxx 50, and did so together with BBVA, with a fall of 1.2% (to 6.40 euros per share). In his case, he was not only pending the elections in Spain but also in the second round of the General Elections that were held in Turkey and where Recep Tayyip Erdogan was re-elected for the third time as president of the country. BBVA currently owns 86% of Garanti's capital, since just one year ago when it acquired another 36% of the entity for 1,410 million euros. Taking into account the depreciation of the lira, which continues downhill and unchecked for years, this same acquisition today would have been about 300 million cheaper for the president of the bank, Carlos Torres.
After yesterday's result in Ankara, the market has been forced to change the pace after having celebrated the chances that Erdogan's opponent, Kemal Kiliçdaroglu, had to form a government. It should be borne in mind that the country keeps inflation skyrocketing, above 40%, and, contrary to the most orthodox monetary policy, continues to cut rates, to the current 8.5% after eight consecutive cuts since March 2021. " The Turkish economy remains exposed to a disorderly adjustment after the election victory of President Erdogan (...) Capital controls and macroprudential measures, such as limits on cash withdrawals, deposit protection scheme and coercive measures on banks' portfolio allocations, are likely to remain at the core of Turkey's economic policies.
On the other hand, Unicaja shares suffered a fall of 0.4%, Banco Sabadell left 0.2% and CaixaBank rose 0.06%.
Debt 'ceiling' agreement
Beyond the electoral panorama in Spain, the news of the day was, without a doubt, the agreement on the debt ceiling in the United States that, again, achieved an agreement in extremis between Democrats and Republicans. However, the European market traded yesterday without the leadership of Wall Street, closed before the celebration of Memorial Day. This makes Tuesday the day on which the stock market can collect the consequences of this understanding.
Gilles Moëc, chief economist at AXA Investment Managers, argues that the agreement reached by both political parties entails a "minimal" cut in public spending and that, therefore, "it will only cause a small dent in the growth trajectory of the United States for next year (...) It could have been much worse, since the initial starting position of the Republicans in this negotiation was very hard. The bill they passed in the House of Representatives at the end of April was estimated by the CBO at a sweeping 1.6% of GDP by 2023. This would in all likelihood have triggered a very important recession," concludes the expert.
Yesterday's day was also marked by bulky purchases in the debt markets. Investors continue to find refuge in government bonds, as in German debt. The ten-year paper lowered its profitability by more than 0.10 percentage points, to 2.43%, and it is a situation that was also reproduced in the rest of the countries. Spanish debt securities to a decade went from 3.6% yesterday to fall below 3.5%; and in Italy its comparable went from 4.39% to 4.27%.
Berkeley soars and Amper sinks
Beyond the financial sector, investors yesterday sought refuge in energy and defensive stocks, as is the case of Telefónica (which rose 1.12%) and penalized the most volatile and stuck to the economic cycle such as tourism. Among the outstanding values of the session were notable the losses of Melia Hotels, of 1.4% as the second most bearish title of the index, while IAG left 0.55%. Among the winners of the session are Solaria and Acciona Energía, behind Grifols, above 1.4%, due to rumors of a new European directive on the plasma business, its main activity.
Berkeley, a small firm of the Continuum that is also listed on the Australian and United Kingdom stock exchanges, celebrated on Monday with strong purchases (of almost 22%) the possible change of color of the central government. Knowing that the Socialist Executive is against his project to install a uranium mine in Salamanca, he sees hope of moving it forward if Alberto Núñez Feijóo arrives at La Moncloa after the summer.
For its part, Amper finally sank 20% during the session. And why is simple: the technology company announced its intention to approve at the Shareholders' Meeting a capital increase equivalent to almost half of the capitalization that the firm had on Friday. Amper's objective is to approve an operation for a maximum of 55.4 million euros, which is the equivalent of launching just over 1,108 million new shares, with a nominal value of 0.05 euros each. This is half the price at which the company is trading right now, in full fall in the stock market, of 10 cents per share. Amper does not estimate when the capital increase will take place, but the General Shareholders' Meeting will approve the measure for a period of one year. Nor is it clear that it will be covered in full, so it points to its "express forecast of incomplete subscription" in the document sent to the regulator. The 55.4 million euros of the operation represent 47% of its current capitalization.
- Santander Bank
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