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Derivatives expire today on the Spanish Stock Exchange, which will increase volatility

Juan j, Fdez-Figares (Link Securities) | After spending much of the session trading in a narrow price range and between profits and losses, the major European and US stock indexes were mostly able to close the day with small gains.. recently rally The bullish trend experienced by Western stock markets over the past month and a half, which allowed the indices to recover almost half of what they lost in 1H2022, seems to be losing strength, since investors, who they clearly bet because of central banks. that they would start to ease their foot on the accelerator in their rate hike process if inflation showed signs of peaking, there is now more doubt about it, especially after the publication of the minutes of the July meeting of the Irish Federal Open Market Committee Wednesday. the Federal Reserve, known as FOMC, that no definitive conclusions could be drawn in this regard. In addition, yesterday two members of the FOMC, the president of the St. Louis Federal Reserve, Bullard, and the president of the Kansas Federal Reserve, George, “threw a bucket of cold water” on the expectations of investors “more optimistic.”, when indicating, in the case of the first, that he supports a new hike of 75 points at the FOMC meeting in September and confirming, in the second, that consideration of ending to the process of raising rates. The members of The FED must be “absolutely convinced” that inflation is starting to fall. Furthermore, and as far as the ECB is concerned, two members of its Governing Council supported, the German Schnabel and the Latvian Kazaks, in two speeches that the institution should act firmly against inflation in the Eurozone, a possible variable yesterday. it became known, as confirmed by Eurostat, that the level of the record high b he discovered last July – see more details on all these issues in our Economy and Markets section.

Therefore, i) the renewed doubt about the more or less firmness of the central banks in their fight against inflation, ii) that it is an important part of what was mentioned above. rally It was a consequence of the “need” of some large bearish investors to close short positions, given the level of losses they were accumulating and iii) the high level of overbought achieved by the main indices and many stocks, we believe that they do. it very It is difficult for the stock markets to continue climbing positions in the short term without first making a “stop along the way”, a stop along the way that could lead to a small correction in the coming weeks. More in the medium term, we continue to believe that the evolution of inflation will determine the trend of these markets, so we will have to be very attentive to the behavior of this variable in the coming months, starting with the head. which we had in August, whose preliminary reading we will know in the Eurozone at the end of the month.

In the short term, and focusing on the TODAY session, we would like to point out that we expect the main European stock indices to open the day without a clear direction and without major variations, on a day where the macroeconomic agenda and business. very limited, which will not have a significant impact on the evolution of the markets. For the rest, it should be noted that the monthly expiry date for derivatives on the Spanish stock market, which always increases the volatility of the market, a volatility that may be greater than usual given the volumes low trading is in this market. suffering, something that This time of year is usually normal.

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