Investors were gripped by despondency yesterday when faced with the evidence of the economic slowdown.29 February 2008
MADRID - Investors were gripped by despondency yesterday when faced with the evidence of the economic slowdown. While the extent of the deceleration is not shaping up to be greater than expected, it is taking place far more rapidly than forecast. The figures available and the projections that can be extrapolated from these point to a difficult first quarter on the macroeconomic front. This has put investors on guard about the possibility of developments on the economic level filtering down to corporate earnings, albeit somewhat further down the road.
The Spanish blue-chip Ibex 35 lost 1.35 percent yesterday to close at 13,272.10 points, its low for the day. The benchmark index, however, remains within the broad trading range seen over the past few weeks. Turnover in the continuous market came in at EUR 4.119 billion.
Earnings reports released over the past few days have shown companies to be in a reasonable state of financial health, with the majority of them maintaining their forecasts for this year, at least as of yesterday.
As has been the case in the past few months, European investors remained focused on the latest US economic indicators. The final figure for US fourth quarter GDP last year confirmed the earlier estimate. However, the breakdown of the figures highlighted the weakness in the property sector and the onset of fatigue in private consumption. On top of that, weekly jobless claims rose for the first time in a number of weeks, which led to Wall Street opening lower and the subsequent knock-on effect on the European bourses.
Bond yields dropped sharply yesterday despite the uncertain scenario for interest rates in Europe. This possibly reflected a switching of funds out of the stock market into safer forms of investment.
[Copyright EL PAÍS / RAFAEL VIDAL 2008]