IBEX 35 index forecast for February 2022

Spain’s IBEX 35 index has advanced again above 8,700 points after Russia signaled it is withdrawing its troops from the Ukraine border.

Tensions between Ukraine and Russia appear to be calming down, but investors will continue to watch this situation very carefully. The main takeaway is that typically these events cause sharp and short-lived selloffs, while Deutsche Bank reported:

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Geopolitical events have rarely left a deep scar on markets, but even before events escalated around Ukraine, markets were trying to come to terms with inflation and rate hikes. That’s still likely to be the dominant theme for markets in the first half of 2022 and beyond.

European Central Bank president Christine Lagarde signaled this month that interest rate hikes this year were not ruled out. Policymakers finally concluded that inflation had spread more than previously expected, and Deutsche Bank expects a 25 basis point rate liftoff in December 2022.

As for the whole of Europe, rising inflation is a threat to the Spanish economy, and it is important to say that higher energy prices have a larger weight in Spain than in the eurozone as a whole.

Monetary tightening is usually seen as a drag on stocks, and higher interest rates could pressure the stretched valuations of tech stocks.

According to the second flash estimate issued by Eurostat, the euro area’s quarterly gross domestic product has increased by 0.3% in the fourth quarter, following a 2.3% growth in the third quarter of 2021.

This was in line with market expectations, but many countries continue to fight with high numbers of new daily infections, which leads to staffing issues across industries. Spain received billions from the EU’s pandemic recovery fund, and a further recovery of the tourism sector will boost economic activity.

Spain’s Minister for Economy and Digitalization, Nadia Calviño, said that the first quarter of 2022 will be impacted by the Omicron wave, but from the second quarter, she expects the economy to grow faster again.

The Spanish economy is currently 4% lower than pre-pandemic levels, while the eurozone as a whole reached its pre-pandemic level in the fourth quarter of 2021.

9,000 points represent strong resistance

IBEX 35 index continues to trade above 8,700 points, and if the price jumps above 9,000 points, the next target could be at 9,200 points.

On the other side, if the price falls below strong support that stands at 8,500 points, it would be a strong “sell” signal.

Summary

Spain’s IBEX 35 index has advanced again above 8,700 points after Russia signaled it is withdrawing its troops from the Ukraine border. Spain’s Minister for Economy and Digitalization, Nadia Calviño, said that the Omicron wave would impact the first quarter of 2022, but from the second quarter, she expects the economy to grow faster again.

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