A red photograph of European stock markets in Friday's trading session. It is not a surprise: since yesterday's session on Wall Street ended with a drop in all its indices, including the tech-heavy Nasdaq, the scarlet extended to the futures of European stock markets, and it was only a matter of time before they started the day... with losses.
The wave of American sales from yesterday is spreading to European stock markets, with widespread declines in all indices: from the German DAX (-1.2%) to the British FTSE (-0.8%), including the Milan stock exchange (-1.1%) and the Parisian one (-0.7%). The Ibex 35 opened with a 1.28% decrease, starting at 15,784.2 points.
Among the reasons for all these declines, expert opinions vary. On one hand, the American stock market has adopted a cautious attitude because it no longer trusts that there will be a Fed rate cut, and it still fears a bubble in the artificial intelligence (AI) sector. All this, despite the very positive results presented by Nvidia this week, which have not fully restored confidence to the rest of the companies in the sector. "The market wonders to what extent AI will be as profitable as the market discounts, warning that current bets could take years to translate into tangible gains," say experts from Banca March.
Precisely the technology sector has been one of the most affected sectors in the opening of this Friday, as well as Defense, although in this case, the reason for the lack of interest in the stock market can be associated with the latest announcements of peace plans that the US has for the war between Ukraine and Russia.
But there is also another possibility: that there is a large-scale profit-taking, given the good results that have been published in recent days. As money exits venture capital, public bonds are gaining traction, and against the red of venture capital, public debt bonds remain in the green. Analysts speak of an expulsion effect: with a high level of public debt, expected in countries like Japan or Germany, investors are moving their capital to public debt. In the case of Japan, they have just announced a large public fundraising plan, and although they have not provided exact figures, they already project a large bond issuance that has boosted their yields to levels not seen since 2008.
Overall, uncertainty is high in the markets, warn analysts, and therefore, volatile and sudden changes in the market are expected. But for today, Bankinter analysts believe that yesterday's drops on Wall Street "were excessive. It is logical to feel some vertigo due to the levels reached and to question the valuations of non-listed companies whose business revolves solely around AI. But Nvidia was a good reflection of the strong fundamentals of large listed technology companies. It is advisable to remain calm."
In the case of the Ibex 35, the biggest gains were for Redeia (+0.67%) and Iberdrola (+0.39%). On the other hand, notable declines were seen in Repsol (-4.16%), Indra (-3.72%), and Solaria (-2.63%).