How does the situation of the economy affect the Spanish stock market?

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«Es la economía, estúpido» Esta célebre frase del ex presidente estadounidense Bill Clinton muestra la gran relevance de esta disciplina en todos los ámbitos de la vida. ¿Y cómo podría ser menos, además en el investment world and relationships with money. To the extent that it can be said that the conditions of the economy are very relevant to establish the evolution of stock indices worldwide. Being the trigger for them to take one or another trend. Not surprisingly, it should be established as one of the parameters for taking positions in the equity markets.

Investors take into account aspects such as the level of unemployment, inflation or economic growth to open or undo positions in the financial markets. Play a role equal to or perhaps more important than the technical aspect presented by securities, sectors or stock indices. With a very important factor that you should pay attention from now on. It is none other than financial markets anticipating the reality of the economy. Its effects on the stock market occur with some anticipation and therefore it is always ahead of the economic reality.

If you are looking to formalize this type of operations correctly, you will have no choice but to pay attention to the economy at any time. Not only in expansive periods, but also in recessive. To the point that it will generate a change or maintenance in the trend of the stock indices. And how could it be less this also happens in Spain. Where the economy plays a very important role in the behavior of equity markets. Are you interested in knowing what are some of the most relevant reasons? Well, pay a little attention from now on because it will be useful information that you will be able to put into practice to get the most out of your personal or family assets.

Why is the economy essential?

Its importance is determined by the fact that it is one of the engines of the equity markets. They can induce profit or loss They are installed in the securities and indices of the stock market. Regularly the interrelationship is more than evident and generates a series of very powerful signals that can help you shape your portfolio. Depending on the profile you present in those moments: aggressive, conservative or intermediate. In any case, you cannot forget the data that the economy provides you if you need to make mistakes in very few operations.

Is strategy es totalmente distinto a la que se genera a partir del análisis técnico de activos financieros. Para facilitar este trabajo será muy importante que definas los parámetros que más debes prestar atención a partir de ahora. Es muy importante que los conozca desde que market evolution variable income. Among all of them, the following data that we expose you below stand out.

First data: inflation

It never goes unnoticed because it defines the standard of living for an entire society. In this regard, at the moment inflation in Spain has risen in the last months of 2017 up to 1.8%. Produced mainly by the increase in food prices that is exerting obvious pressure on the rise in prices throughout the national territory. On the other hand, it cannot be forgotten that the best news is that core inflation, which excludes energy prices and unprocessed food, has remained in this period at a more than acceptable level of 1.2%.

However, Bankinter's analysis department shows that prices will continue during 2018 with a Consumer Price Index (CPI) of + 1.7%, compared to + 1.4% estimated in the previous quarter. Sea cual sea el caso, serían datos neutrales que no afectarían en modo alguno a la evolución de los mercados de renta variable. Siempre y cuando no haya sorpresas en los próximos doce meses. En este aspecto, se puede decir con cierta certeza que la inflación en nuestro país está bajo control. Y por tanto su impacto en la bolsa es menor.

Excessive levels of unemployment

It is undoubtedly one of the Achilles heels of the Spanish economy. To the point that the recovery of the national economy is weighing in a certain sense. Even though it does not have a very direct reflection of the securities that are listed on the national continuous market. Not in vain, it is a fact assumed by a large part of the financial agents of our country. Even when any improvement in work activity is well received by the financial markets. But yes, without the intensity that was desirable. As the main difference with other markets of the old continent.

Well, the level of unemployment in Spain at the moment is falling significantly, according to the latest data provided by the Ministry of Labor. Specifically, and regarding the last 12 months, unemployment se ha reducido en 310,115 persons, for which it maintains one more month "an intense interannual decrease rate of 8,34%", as highlighted by the Ministry of Employment and Social Security in a recent statement. Whatever the case, this is one of the data that has not been reflected in national equities either. Neither positively nor negatively. But with neutral effects on investors.

The relevance of GDP

But if there is a parameter by which the behavior of financial markets can vary, it is none other than the Gross Domestic Product (GDP). Especially since it is the indicator that measures the growth of a country. With periodic reviews that are followed in great detail by financial agents linked to these markets. As GDP rises, it will generate that the stock markets can develop a trend with greater guarantees of success. Anyway, you cannot forget when it comes to buying and trading stocks on the stock market.

Today, the Gross Domestic Product of Spain moves in very narrow margins that oscillate between 2.4% and 3.0%. However, the bad news for small and medium investors comes from the downward revision that Catalan procedure. And much more after the new composition of the Parliament of Catalonia after the holding of the elections on 21 D. This factor can harm the evolution of a large part of the companies listed on the Stock Exchange. Especially those of the banking and financial sector. Don't forget if you don't intend to make mistakes from now on.

Risk premium

Another fundamental parameter to assess whether or not it is time to have access to the equity markets. This is because they measure the financing that the State can obtain through official channels. Well today it has risen to 115 basis point levels as a result of the social and political procedure in Catalonia. On the other hand, the yield of the Spanish ten-year bond has increased from the previous 1,723 to 1.784%, its highest level since March. While, on the contrary, the German bond - whose difference with the national one marks the risk premium - took the opposite direction. To the point that it has fallen from the previous 0.463% to 0.453%.

At the same time, the national and international markets are attentive to what may happen in the United States. Regarding its strategy on interest rates and how much investors in Spain look at it. With a foreseeable rise during this year that has just begun. We will also have to be very attentive to what may happen in the euro zone. It is not surprising that the intentions of the president of the ECB announce a progressive withdrawal of stimuli for the community economy. Whatever the case, this is one of the data that national investors value the most. Above other technical and even fundamental approaches.

Non-payment of Spanish debt

Finally, a more specialized data and more difficult to understand for small and medium investors. It is none other than insurance of non-payment of Spanish debt ("Credit default swaps"). It is an amount that was a small surprise, but with little impact on the financial markets. Mainly because it has risen to $ 121,590. Below other economies in our closest environment. Whatever the case, it is not very indicative of how operations are configured in the Spanish equity markets.

In addition, it has been shown that the European Union (EU) has registered in the last months of the year, registering a surplus of 41,900 million euros in the current account balance. Well, this is another of the parameters that financial agents influence. So that from this dynamic you can carry out your operations with greater protection. Not only in purchases, but also in sales. With a much more reliable assessment than before.