This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Following almost two years of contraction, it is a welcome sign that Spain is finally trying to turn a corner after its flash gross domestic product data showed growth. Unfortunately, any bullish sentiment this might have had on the Spain 35 has been eroded by the worse-than-expected EU consumer price index inflation figure.
With the European Central Bank embarking on a wait-and-see policy, it is debatable whether the markets can be that surprised as market conditions saw many commodity prices cool.
Although Spain’s GDP figures have continued to show strength, this has not been replicated in all of the economic data that it has posted. Earlier in the week, Spanish unemployment crept back up to almost 26% when it had been expected to fall. With one in every four unemployed, it will be difficult for the other barometers to maintain any recovery.
Individually, the index has been hit by Banco popular Espanol SA posting first-quarter figures that are down by 40%. Subsequently, shares in the €11.5 billion bank have fallen by almost 4%.
The Spain 35 is still some way off its year highs, but it will struggle to exceed these with internal unemployment levels remaining high and Ukraine woes still hanging over the markets. There could still be a little more on the upside but, ultimately, testing bulls convictions looks to be likely.