Market Analysis by Quasar Elizundia, Expert Research Strategist – Pepperstone
– September 18, 2024 –
IBEX 35 Continues Its Upward Path and Reaches Levels Unseen Since 2015
The Spanish benchmark index, the IBEX 35, has maintained its bullish streak, reaching levels not seen in nearly a decade. During Tuesday’s session, the index advanced more than 1%, trading above 11,700 points, a mark very close to the historical highs reached in 2015. This positive performance reflects a predominant trend in Spanish equities since the August lows, driven by several key factors for investors.
One of the main catalysts for this growth has been optimism surrounding monetary policy in both the United States and Europe. The Federal Reserve (Fed) has hinted at a shift towards a more relaxed monetary policy, generating positive expectations for equities due to anticipated interest rate cuts. This expectation has benefited stock markets, as lower borrowing costs generally have a positive impact on equities.
On the other hand, the European Central Bank (ECB) has been more proactive in this regard, executing its second interest rate cut in September, following the first one in July. These actions by the ECB are seen as a key supportive factor for the recovery of the markets.
The Role of Inditex and the Banking Sector
On an individual level, Inditex continues to stand out as one of the most important companies in the index, recently achieving new record highs in its share price. The company, a global leader in the textile sector, has been one of the main drivers behind the IBEX 35’s performance in recent months.
Inditex, the owner of Zara, has been a key contributor to the IBEX 35 after reporting strong financial results in the first half of 2024. Profits grew 10% year-on-year, reaching €2.8 billion, while sales increased by 7.2%, totaling €18.1 billion. This performance, along with the positive reception of its new fall/winter collection, which has seen an 11% increase in sales between August and September, has boosted the company’s shares, which have been rising sharply in recent trading sessions.
Likewise, the banking sector has played a key role in this rise, with significant recoveries from the August lows in the stocks of Santander and BBVA.
International Outlook
The strong performance of the IBEX 35 has not been isolated from international markets. European stock exchanges have shown relatively positive behavior, though not to the extent of the Spanish front, driven by widespread optimism regarding central bank monetary policies. Attention is now focused on the Federal Reserve, whose next move will be crucial in determining the direction of the markets in the coming weeks. Investors are hoping that U.S. retail sales will provide a clear indication of whether the Fed will opt for a 50 or 25 basis point rate cut at its next meeting.
Technical Analysis
The weekly chart of the IBEX 35 shows a clear upward trend, with the index surpassing key levels and approaching highs not seen since 2015. The IBEX 35 previously broke the 2024 historical highs, confirming the continuation of the positive structure initiated after the August 2022 lows.
The monthly chart of Inditex (ITX) shows a clear upward trend since the lows recorded in 2022, with a strong rebound that has taken the stock past key levels. Currently, the share price is trading above the 161.80% Fibonacci expansion level, set at €41.40, suggesting a positive extension in its trend.
The next key target is the 261.80% level, at €55.52, which would mark a new milestone for the company’s share price if achieved.”
