Crude weighs on bourse

11th March 2008, Comments 0 comments

The first session of the week in the Spanish stock market was an eventful one, giving rise to a whole gamut of interpretations by some observers.

11 March 2008

MADRID - The first session of the  week in the Spanish stock market was an eventful one, giving rise to a whole gamut of interpretations by some  observers.

The Spanish blue-chip Ibex 35 ended the session heading in the same direction as the rest of Europe, shedding 0.29 percent to close at 12,655.00 points.

The local market went out on its own, with gains at the opening despite a fall of almost 2 percent earlier Monday in Tokyo. This was read as a timid celebration to the Socialist Party's election victory Sunday, and, therefore, a continuity in policy.

But it is very difficult to go out on a limb in a global market, and the Ibex 35 subsequently began to lose ground, albeit still keeping clearly ahead of the rest of Europe.

Wall Street's opening and developments in the oil market led to a further bout of volatility in the markets.

The price of a barrel of crude at one point hit USD 107.85 in New York, while Brent crude in London moved above USD 104 a barrel.

These rises left it very clear to investors where inflation is heading, and by association interest rates as well, at least in Europe. In the United States, there is still speculation of a "surprise cut" by the Federal Reserve before its next official monetary policy meeting. That speculation stemmed from rumours of liquidity problems at one of the investment banks, which was subsequently rejected.

The Ibex 35 swung between a gain of 1.13 percent at one point to a loss of 0.94 percent, which brought the benchmark index close to 12,500-point mark before it started to recover. This pronounced volatility, however, failed to push up trading levels. Open-market deals in the Spanish continuous market amounted to EUR 3.6 billion.

[Copyright EL PAÍS / RAFAEL VIDAL 2008]

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