The return of the holidays will bring a series of clouds to the small and medium investors who are going to find some cheaper prices on stocks. Because the hot spots on which equity markets depend have been rekindled. To the point that they can lead the selective equity index to trade at the lows in recent years. In a very worrying situation that invites you to undo positions to avoid greater evils.
To all this must be added that all economic indicators they warn about a scenario of economic crisis that does not play in favor of the interests of small and medium investors either. Where all financial analysts point out that one should act with greater caution in stock market operations than before. Because indeed, it is true that at these levels we have more to lose than to gain. And under this premise we must channel our investment strategies.
Of course, the outlook for equity markets is not very positive for the next few years. Because we can enter a downtrend that will hinder operations in financial markets. Although the question that at the moment small and medium investors are asking is how long this recessionary period will last. At least everything seems to indicate that next year will be immersed in a recessive scenario for the stock market. With many doubts in front, as you will be able to verify from now on.
Bad omens around the holidays
The first event that is disturbing the equity markets is the trade war between China and the United States. This time it seems that he is serious and has moved into a war between their respective currencies that may deepen the economic crisis that is about to begin, yes it has already done so. To the point that it's knocking down the bags all over the world in the me of August and the prospects are certainly not favorable to take positions. Despite the fact that the price of some shares is at very competitive levels, such as opening positions to make the savings profitable.
On the other hand, the commercial war between China and the United States it can become entrenched or even worse, which continues in its protectionist spiral. Because in effect, this time things are getting very ugly and that is how small and medium investors have understood it. Where the selling positions are imposing very clearly on the buyers. With increasing lows in the weekly closings and in this way it does not go up. A trend that can undoubtedly flare up after the holidays.
Stop in the European economy
It is a fact that the economic recession is already a verifiable fact in the old continent. Where the most worrying thing is what is happening in the European locomotive, Germany, which is already in a recessionary phase in its economy. The downward revisions to the reports show that this can be a very difficult situation for the equity markets and where the profits of listed companies may suffer from now on. With the consequent adjustment in the prices of the actions that can cause another new stampede on the part of the small and medium investors.
In this general and worrisome context, the best choice is to be absent from any kind of operations in the financial markets. At least until there are signs of reactivation that invite you to change your investment strategy. But this does not seem to happen in the next few months, much less next year. In other words, there can be a very bearish pull in equity markets. Although of course it will generate business opportunities as a consequence of this price adjustment.
A tough and traumatic Brexit
Another fact that can bring down international stock markets is the departure of Great Britain from the European Union after the Boris Johnson's arrival at Downing Street. It may be the final trigger for a sharp downtrend to emerge in stocks. With foreseeable collapses in some of the most relevant values of the national parks and those outside our borders. It is a reality that small and medium investors must have from now on. Beyond other considerations of a technical nature and perhaps also from the point of view of its fundamentals.
While on the other hand, a hard and traumatic Brexit it can take the Ibex 35 even below the levels of 8.000 points and thus visit its all-time lows. That is, you would lose a lot of money if you open positions at these precise moments. In this sense, it should be noted that the change in trend can be very intense to make you rethink any investment strategy at this time. In a situation that certainly does not invite optimism in investments in the stock market.
Very deteriorated technical analysis
To all this must be added the technical complication by the main stock market indices. In many of the cases, they have gone from bullish to bearish in a few days and anticipating that the stock price may continue to fall in the coming months. Even with great intensity as a consequence of the virulence of these movements. Where the most sensible thing is to be in complete liquidity and not carry out operations on the stock market.
Because a selling current of a certain intensity and that it can harm you in the portfolio of securities that you have formed up to now. All the figures warn of this and, in addition, vitally important supports have been exceeded, where the values show very relevant downside potentials. Even with great intensity as a consequence of the virulence of these movements. Where the most sensible thing is to be in complete liquidity and not carry out operations on the stock market.
Lower interest rates
The Fed prepares the way to lower rates and prolong the expansionary phase of the cycle, point out from the Bankinter analysis department. Where it is shown that the shift to a more accommodative policy will put a brake on the appreciation of the dollar in the second half of the year. At its last meeting the Fed released a dovish (soft) message: It revised down its assessment of economic activity to moderate from solid. He recognized that uncertainties are growing and that there are no inflationary pressures; it removed the word "patient" from the statement, indicating that it was prepared to act to keep the cycle expanding.
On the other hand, Bankinter's analysis department points out that the dotted diagram showed that 8 out of 17 members see interest rate cuts this year (8 unchanged and one contemplating an increase). In addition, he emphasized that members who do not see cuts this year recognize that the conditions for a more accommodative monetary policy have strengthened in recent weeks. Our baseline scenario includes two rate cuts this year to the 1,75% and 2,0% range. The Fed doesn't want to risk acting too late. Despite the fact that the unemployment rate is at its lowest in the last 50 years (3,6%), job creation has cooled, the manufacturing sector is weak, global growth is weakening and inflation remains below its objective.
Dollar as a safe haven currency
The report from the commercial bank also alludes that the return to a more constructive tone in trade negotiations makes the dollar less attractive as a safe haven. These reasons could put a brake on the trend of slightly appreciation of the dollar vs the euro that we have seen in the first half of the year (+1,8%). However, we do not expect this major weakness to be very marked. Lower economic growth in EMU and the possibility of additional stimulus from the ECB (rate cut, new debt purchase program) will depress the euro's momentum. We expect a range for the EURUSD of 1,11 and 1,17 by the end of 2019 and between 1,14 and 1,20 by the end of 2020.
On the other hand, the total admitted to trading in the primary fixed income market In July it amounted to 26.811 million euros, which implies a growth of 14,6% compared to the previous month and 11,2% in the aggregate of the year. The outstanding balance grew by 2,4% compared to the end of December 2018 and reached 1,55 trillion euros. Where it has also been shown that the financial derivatives market increased trading by 9,6% until July compared to the same period of the previous year. Trading rose 3,7% in the Ibex 35 futures contracts and 5,2% in the Ibex 55 Mini futures. Where the trading in options on the Ibex 35 has grown by 40,5, XNUMX% in the month.