On the Spanish Stock Exchange today we worked. Constitution Day was not a holiday among investors and the session was not exactly a party. The main selective of the Spanish stock market, the Ibex 35, has fallen 2.75% on Thursday, in its worst day of the year and with the biggest drop since October 2017, Pessimism has spread among European markets.
All have been dyed a dark red, which increased when Wall Street also opened with losses in the face of fear that the trade war with China will escalate. Nor has the detention in Canada of the daughter of the founder of the Chinese electronics giant Huawei helped to calm the waters. The squares of Frankfurt, London, Paris and Milan lost more than 3%.
The Spanish stock market has not been much less an exception: between the European squares the pessimism has extended and all of them are dyed today a darker red than that of the selective Spanish. The Eurostoxx falls 3.3%; Frankfurt, almost 3.5%; London, 3.58%; Paris more than 3.3% and Milan above 3.5%.
Wall Street has also suffered heavy downs in its session, of more than 2%. Although with the passage of the day in the United States have improved the situation, which in the case of the Dow Jones have remained at 0.32% and the Nasdaq 100 has ended in positive.
The uncertainty extends on several fronts. In the European Union, the horizon of the Brexit is still not clear and it is not clear that Theresa May won the support of Parliament for the agreed departure of the EU. In France, the government of Emmanuel Macron faces the crisis of the yellow vests, the strong protests of groups opposed to his policies that have forced him to back down in the rise of the rates of the fuels. And outside of the Old Continent, things are not calmer either.
The pulse between China and the United States does not slacken: now it adds to the cocktail of disagreements the detention by Canada at the request of the US of Meng Wanzhou, daughter of the founder of Huawei and important executive in the Chinese company, a giant of the mobile telephony.
The markets try to find definitive signs that the economic cycle of bonanza is ending and in the US bond market, they seem to glimpse some clues: the yield of short-term bonds (two years) begins to be higher than that of bonds medium term (five years). And the differential between two-year and ten-year bonds has narrowed to its minimum in more than a decade. That, in the past, was a kind of clear signal that the recession could haunt the economy. Analysts, however, call for caution because the US GDP and unemployment figures are still strong.
In Spain, the Ibex 35 experienced its worst day of 2018. All day long the decreases were around 2%. But with the red opening of Wall Street, they accelerated. In the last bars of the session they even exceeded 3%. In the end it has remained at 2.75%, up to 8,764 points, the worst bump of the year and the highest since October 2017.
So far this year the Ibex has already left 12.74% of its value. This Thursday virtually all stocks have suffered losses, led by the supermarket chain Dia, which has plummeted more than 9.3%. They have followed Cie, Arcelor, Repsol, ACS and CaixaBank, all with falls of more than 4%. The banks all point downwards of more than 3%. And infrastructure and tourism companies also suffer losses.
2018 will throw a sour balance for European investors. The stumble adds to an exercise of few joys: the Eurostoxx 50 accumulates a decrease in 2018 of more than 13%; in Frankfurt it exceeds 16%; in Milan, 14.7%; in London, 12.8% and in Paris, the best stop among large companies, is higher than 10%.
In Vienna the countries that makeup OPEC meet, the cartel of oil-exporting countries. They have to decide if they agree to a cut in production and exports to stop the fall of crude, which has gone from costing more than 85 dollars in February to about 60 dollars now.
Saudi Arabia defends the cut, despite the fact that the United States, its great Western ally, prefers to maintain moderate current prices. In any case, OPEC will finally wait for tomorrow to have a final decision on the cut, since the meeting of this Friday will be attended by other producers who are allies (not partners) of the group, especially Russia.
In New York the protagonist is Wall Street. It has also opened its session with falls of more than 1% and have been accelerating above 2% as the session progressed. This market was closed Wednesday by national mourning, but Tuesday had ended with a sharp fall of about 3%. It was hit by the cooling of the apparent commercial truce that China and the United States had staged in the G20.
Everything was afraid that this Thursday investor would turn their back on the stock market before the constant signs of more confrontation between the two powers. This has been the case: it has opened with losses of close to 1.5% in the Dow Jones and 1.3% in the S & P500. and half a session there, they were around 2%, with the exception of the Nasdaq, which held the type with lower drops. As the day has gone by, the situation has improved.
The latest sign of disagreement in the China-US pulse transpired last night: the daughter of the founder of Huawei, a leading executive of the popular Chinese mobile phone maker, has been detained in Canada , at the request of the United States demanding his extradition. Apparently, he is accused of having missed the embargo imposed on Iran and having traded with this country. China has demanded its immediate release.
In addition, shortly before the opening, the United States published its data on foreign trade. The trade deficit increased by 1.7% in October to 55.5 billion dollars. Imports grew 0.2% to a new record; exports registered a decrease of 0.1%. It is the largest US trade deficit registered in a month of October since 2008. And, despite the trade war of Donald Trump, trade with China reached a historical deficit of 43.1 billion dollars.