Ibex 35 looked ready for a midweek session with a modest 1.8% uptick guiding the tone at the outset. The index hovered near 8,211.63 points at 9:01 am as traders paused to gauge potential shifts in interest rates after fresh data showed United States inflation climbing again to 8.6% in May, the highest since 1981. Analysts in Madrid expected the Federal Reserve to raise rates by 75 basis points in this inflationary climate, a move that would shape sentiment across global markets.
After a 1.4% dip the day before, the Madrid stock yardstick opened just above the critical level of 8,200 as investors assessed the path for monetary policy. Attention remained fixed on the European Central Bank which convened an extraordinary meeting on Wednesday to evaluate current market dynamics and their implications for policy. A central bank spokesperson confirmed that the Governing Council would meet on an ad hoc basis to discuss evolving conditions in the financial system and the economy.
This week has seen bond markets deliver a wave of returns, with benchmark Italian and Spanish yields climbing past 4% for ten-year maturities and Spanish yields moving above the 3% mark. The move underlined concerns about borrowing costs across Europe and introduced a fresh layer of volatility into the trading week.
In early trading, financial stocks led the gains. Santander rose around 3.46%, BBVA gained about 3.43%, Bankinter near 3%, Sabadell around 2.97%, Meliá Hotels about 2.73%, and CaixaBank roughly 2.39%. These advances helped lift the broader market as European equities opened higher: Frankfurt up about 1.3%, Paris around 1.5%, and London roughly 0.85% higher. The sector-wide strength contributed to a positive tone across the continent.
Oil markets started the day mixed. Brent crude, the European benchmark, slipped about 0.24% to near $120 per barrel, while West Texas Intermediate in the United States eased around 0.29% to around $118. These movements reflect a tug of war between supply expectations and demand concerns in a volatile global energy landscape.
On the currency and debt front, the euro traded near 1.0473 against the U.S. dollar. The Spanish risk premium hovered around 132 basis points, while the yield on the benchmark Spanish 10-year bond sat close to 2.991%. Taken together, these indicators hint at ongoing currency and sovereign debt tensions that are shaping European market dynamics in the early part of the week, according to market observers and analysts.