This year, the euro can become a very relevant financial asset to determine the evolution of equities in the coming months. Because in effect, there is a new positive element in the scenario that can benefit the appreciation of the selective index of the stock market, the Ibex 35. It is none other than the fall of the single European currency against the US dollar. For what reasons? Well, for something as simple as that this fact favors the exports of Spanish companies, as is the case with others in our closest economic environment.
In this sense, there are some companies listed on the Ibex 35 that base their business lines on the exports of their products. They are the ones that would mostly benefit from an appreciation in the value of their shares. To the point that they have a higher revaluation potential than the rest. With levels that can even reach 20% or even with more intensity. Not surprisingly, they can be the great surprise that this year can bring us.
In addition, it cannot be forgotten that since last March there are certain values of the Ibex 35 that are describing figures of inverted shoulder-head-shoulder. But the most important thing is that they are showing the first symptoms that lead them to a frank recovery scenario. With what they can have an important recovery of their valuation with respect to the previous exercise. It can be the starting point to enter the equity markets to make the savings profitable in the most optimal way. At least it should be one of the objectives in the strategies that you are going to apply from these precise moments.
Effects of a decline in the euro
A depreciation of the single European currency, especially against the U.S. dollar, may be good news for small and medium investors. Especially in those securities that have their point of view focused on investments. To the point that these stock market proposals may have a better performance with respect to the remaining values of the national equities. It is in these companies where you have to focus your investments if you want to obtain a reward for your performances in the financial markets.
On the other hand, you should bear in mind that this decline in the euro may be merely temporary. Or what is the same, it will have a certainly limited period of validity. This in practice means that your operations on the stock market you should take them in the short term. Everything that is not like that will be an added risk that you will have to face from now on. Because for these same reasons, the aforementioned companies must have a cut in their prices. In some cases under a great intensity in the movements. With which, your income statement may suffer to the point that the capital invested in these financial assets decreases.
Levels to watch in the stock market
In any case, technical analysis will also be very relevant to support this special investment strategy. To help you in this task, nothing better than to monitor which are the most important levels that Spanish equities have ahead in the coming months. From this perspective, it is entirely feasible that the first resistance on the Ibex 35 passes through the important 10.200 point level. To then set yourself on much more ambitious goals that will lead you to set yourself in the zone of maximums for this year, which is around 10.600 and 10.700 points.
With the fulfillment of these scenarios, that is, a weaker euro than before and the overcoming of these resistance zones, the way would be clear for more ambitious goals. Although taking the precaution of incorporating some security measures to preserve your operations in the financial markets. At least this is the strategy you should take for the next few months of this year and especially in regard to the third and fourth quarters of the year. So that in the end the balance of your operations on the stock market is more positive than you initially anticipated in January.
Formation of a pullback
It is also very interesting that you know that the market seems to be describing, most likely a pullback to the 2016 highs zone. In this sense, it should be remembered that this stock market figure so highly valued by small and medium investors is more than just a parameter to act effectively in financial markets. It's about a recovery movement that the price of an asset does after losing a support zone in its fall. That is, it is about movements back to that lost support. For this reason it can have very strong bullish implications at this time.
But one of the biggest problems you have is how to identify it to apply it to your equity operations. Of course, it is not an easy task, but on the contrary, it requires a high learning in technical analysis. Not surprisingly, it is the same process, in one case in upward movements and, in the other, downward movements. To the point that you have to detect the levels where they originate to adjust both the sales and the purchases of the shares.
Implications of a bearish euro
A single European currency has many positive implications for channeling investments and they arise from different scenarios that you should take into account from now on. Not only in regard to the advantages that exporting companies have, but also to other kinds of actions that you must assess at any time. As you will be able to check below with the details that we are going to expose you.
- As you can well suppose, in this characteristic scenario, many opportunities are offered for those who dedicate themselves, in its many forms, to the currency speculation. With the possibility of successfully making this kind of operations profitable.
- These kinds of scenarios can trigger a bullish move in equity markets. Because it benefits the export capacity of companies and that is transferred with an increase in the price of the affected securities.
- Of course, there are companies whose activity is centered outside the common space of the old continent. Well, in this case your business lines would benefit above normal. This in practice means that their market value will be higher than until now and of which you can take advantage of by taking positions in these values.
Values to win on the stock market
Within this general context, there are a series of stocks that are more prone to appreciating in the event of a possible depreciation of the euro against the US dollar. In this sense, if one had to indicate a company that most analysts point to as the main beneficiary of the strength of the dollar, that would undoubtedly be Griffols. It would be one of the values to have in the investment portfolio for the remainder of the year and maybe even a little more.
Another of the proposals that meet this characteristic is undoubtedly the construction company ACS. Not surprisingly, one of the regions with the greatest preponderance in its business is North America, which accounts for 40% of the turnover. Ferrovial will also enter this list for investment. Its main reason lies in the fact that its main business in North America is highways, and it would benefit from a fall in the euro against the dollar.
Other options to monetize
Cie Automive is of course another of the alternatives that you have at the moment to take advantage of this monetary scenario. You cannot forget that it has a strong presence in the United States, and therefore you should notice the positive effects of the appreciation of the dollar due to the influence that exports play on your results. On the other hand, Acerinox is another of the safe bets if you want to operate in this special scenario. In this case, for reasons that are very easy for small and medium investors to understand. Where more than half of the operating profit and a good part of its turnover depends on America. Reason more than enough to open positions in some of these values that we have exposed to you.
On the other hand, you should also bear in mind that this scenario may disappear at some point or another. And the effects will be diametrically opposite. In other words, the shares of these listed companies will decline, and perhaps with particular intensity. To the point that you can generate large losses in your income statement. With a very obvious risk that you can carry out unwanted stock trades. For example, formalizing advance sales at a price far removed from purchases. As a consequence of a relaxation in your actions in the financial markets. The worst thing you can do on the stock market.