Banks continue to drag the Ibex-35 while waiting for the US CPI

March 14 (Reuters) – Spain’s main stock index opened on Tuesday, extending losses, in another session marked by selling in the banking sector after the fall of U.S. bank Silicon Valley Bank, with attention on the latest reading of US inflation.

Markets continue to panic over the possibility that the fall of SVB and Signature Bank in New York will infect the banking systems of other economies, which was reflected in the extension of Wall Street’s red shutdown on Monday to squares World Cups in Tuesday Session.

Despite immediate measures taken by US authorities to support banks and reassuring messages from the US government, markets have lowered their bets on the next Federal Reserve rate hike, as the banking crisis cast doubts on the future. Effect of Monetary Aggression in the Banking Sector of the World’s Largest Economy.

“The financial instability caused by the SBV situation led the market to discount +25 bps with a probability of 69%, while 31% of the market expects no further upside at next week’s meeting,” write the analysts from Rent 4.

“An obvious consequence that the financial instability generated could have is a lower level of arrival of interest rate hikes by central banks, even if we consider that the market is now above its ‘dovish’ (accommodative) reading, while as soon as the problem of high inflation persists,” they added.

In this sense, the US CPI data for February (12:30 GMT) will be released on Tuesday, which could increase volatility. Markets are betting on higher consumer prices, although they doubt that the Fed will be enough to raise rates next week.

In this context, at 08:05 GMT on Tuesday, the Spanish Ibex-35 stock market fell by 12.70 points, or 0.14%, to 8,946.20 points, while the FTSE Eurofirst 300 index of major European stocks advanced by 0, 11%.

The banking sector continued to weigh on the index with the losses unleashed by the fall of SVB: Santander lost 1.23%, BBVA fell 1.16%, Caixabank fell 0.24%, Sabadell fell 0.73%, Bankinter lost 1.28% and Unicaja Banco lost 0.94%. .

Among large non-financial stocks, Telefónica fell 0.37%, Inditex lost 0.52%, Iberdrola gained 0.84%, Cellnex gained 0.82% and oil company Repsol lost 1.54% in a context of falling oil prices.

The price of a barrel of Brent crude oil was down 0.89% at the time of writing this article.

(Reporting by José Muñoz; editing by Darío Fernández)