What are the reasons for the Ibex is about to fall to annual lows in October?
There are a host of factors, with the falling price oil as a last and main trigger. On returning from the summer slowdown in economic recovery in the euro area, which investors had begun his bet at the start of the year was confirmed. And although markets rebound tried, and have even groped the year-end rally, new elements have emerged. The concern about the slowdown in the Chinese economy and the recent volatility of the political future of Greece and the possibility of a Syriza government contrary to the prescriptions of the troika deflated last week the Ibex towards 10,000 points. The unstoppable and sharp drop of oil and its devastating effect on the price of oil is the determining factor in the fall of today.
Why cheaper oil takes its toll on the stock?
What is actually a relief to economies such as Spanish is also being a negative factor for equities. The European oil sector today was the hardest hit, with a decline of 3.06% and accumulated a loss of 17% in the last month. The radical drop in oil prices of more than 40% from the highs of June, is motivated by the firm stance of OPEC not to increase production and -opening a price war with which torpedo fraking in the US and by the decline in demand for this commodity globally, symptom of a fragile economic recovery that fails to materialize.
This is the aspect that most worries investors who find fresh reasons to doubt the recovery of some economies, especially emerging. So, cheaper oil lows over five years poses a serious threat to Russia, which will enter into recession in 2015. Its GDP will shrink 0.8% next year, estimates and the Russian government, against the increase of 1.2% estimated earlier. The Russian recession and the extreme scenario of a default, weigh on Bags and German.
What role can have the oil to boost the stock?
The experts agree that, in net terms, the decline in oil prices is a positive factor. That is, what his fall implies declining demand and the bill for oil, it is an element in favor of cheaper energy costs. “The effects of lower oil prices on bonds and stocks are mostly positive,” says strategist at Robeco Peter van der Welle.
What implications does fall today the route planned for the Ibex 35?
For now, give shelve the expected year-end rally. With the decline today, the Ibex has perforated the support at 10,000 points and the Eurostoxx has also sprayed his, at 3,000 points. This opens the floodgates for new sales, according to technical analysis. In addition, the shorter-term outlook is not much rosier. Investors face new episodes of volatility this week. Wednesday is celebrated in parliament in Athens the first ballot to elect a new president and the government of Samaras need significant support to push through its candidate and now lacks. There will be three rounds of voting, which will end on December 29. If the bet Samaras fails, general elections will be called Syriza could win.
How Can the ECB to stabilize the situation?
The great Investors hope for the beginning of 2015 is that the ECB already decided at its first meeting of the year, on January 22, activation of a quantitative easing to include purchases of sovereign and corporate debt . That liquidity boost to the stock and definitely bonds, outside the stock market correction and sustained by that expectation.
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