The Spanish selective failed to rebound on Tuesday, despite a report by the Washington Post, later denied by Donald Trump, that the new US administration would impose lower tariffs than those anticipated by the president-elect. If confirmed, the decision would have been beneficial for European companies.
Uncertainty about the measures to be implemented by the Trump administration continues to generate doubts among traders, both in economic policy and geopolitically. On Tuesday, the president-elect did not rule out the use of force or economic coercion to take control of the Panama Canal or Greenland.
In addition to such concerns, investors are watching the divergence between the interest rate cutting cycles in the U.S. and the eurozone. While Europe continues to cut rates to stimulate growth, the United States is still fighting inflation and showing strength in the labor market and economic growth.
This disparity is evident in market projections for upcoming central bank meetings. According to LSEG's IRPR tool, by 2025, an easing of about 100 basis points is expected from Frankfurt, but only about 38 basis points from the Fed.
As for equities, Bankinter analysts expect the start of the year to leave "flat or slightly bearish balances" until the direction of inflation and rates becomes clearer, and point to weakness during the current week.
"The market will remain sluggish as long as IRRs (bond yields) remain elevated. And they will remain elevated because U.S. employment will continue to come out good this week and that will cool expectations of rate cuts by the Fed, which will lock the stock markets," they highlight in their Telegram channel.
In the eurozone, data on consumer confidence, services, as well as industrial and economic confidence will also be published.
At 08:15 GMT on Wednesday, Spain's selective IBEX 35 stock market index was up 29.80 points, or 0.25%, to 11,841.70 points, while the FTSE Eurofirst 300 index of large European stocks was up 0.13%.
In the banking sector, Santander rose 0.95%, BBVA gained 1.15%, Caixabank advanced 1.43%, Sabadell gained 1.88%, Bankinter gained 1.19%, and Unicaja Banco rose 1.01%.
Among the large non-financial stocks, Telefónica fell 0.48%, Inditex was flat, Iberdrola dropped 0.33%, Cellnex fell 0.85% and the oil company Repsol rose 0.13%.
(Information by Javi West Larrañaga; edited by Tomás Cobos)