Fed Cuts: New Boost for the Ibex 35?The recent 50 basis point reduction by the Federal Reserve (Fed) has had a significant impact on global financial markets, including the Ibex 35. This cut, which comes on top of 18 similar occasions since the turn of the century, seeks to stimulate the economy in times of economic uncertainty. For the Ibex 35, the Fed's move has generated positive momentum.
The Spanish index has shown strength, and this effect is expected to spread to other indices such as the Ibex Medium and Small Caps, bringing them closer to their annual highs. The Ibex Small Caps, in particular, is close to reaching a crucial upward trend line, which could trigger a significant rally in Spanish equities.
The Fed's monetary policy, by cutting interest rates, not only affects the US dollar, but also has a knock-on effect on international stock markets. In Europe, the EuroStoxx 50 is approaching key resistance, while in the US, indices such as the S&P 500 and the Dow Jones could surpass their annual highs, driven by the same monetary policy that favors stock markets.
Currently, the IBEX35, is currently at highs again at 11,881.43 points with a strong trading zone between 11,195.46 points and 10,931.36 points respectively, and initial support at 10,491.19 points. The next support rests at the upper zone of the indicated trading range at 11,195.46 points. The RSI shows an overbought level of 77.16%, evidencing the positive impact of the Fed's decisions on the Spanish spread. The upcoming Spanish bond auctions and Schnabel's speech will be crucial to determine the future direction. If the trend continues, we could see an upward extension, although Fibonacci projections suggest that the index may not exceed 11,906 points (161.80% of the original momentum).
In summary, the Fed's rate cut is positively influencing the Ibex 35, providing a favorable context for the Spanish index, along with other European and US indices, to approach its highs and experience a potential rally.
Ion Jauregui - Analyst ActivTrades
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