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Sharp falls on the Ibex while fear persists over the economic impact of the virus

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He IBEX 35 falls 3.6% to 6,850 points, while fear persists due to the economic impact of the coronavirus. The International Monetary Fund (IMF) warned on Tuesday of the very strong economic shock expected from the virus. The agency said the world economy will likely suffer in 2020. the worst financial crisis since the Great Depression due to the pandemic. In Spain, the IMF foresees a fall in GDP of 8% and a strike of 21% this year. Furthermore, it coincides with those experts who consider that the crisis will be worse in our country than in the rest of Europe.

IMF is waiting now the world economy to contract by 3% in 2020. Faced with this, in January it had predicted a world GDP expansion of 3.3% for this year. For Spain, it has anticipated this Wednesday that the public deficit will skyrocket to 9.5%, to drop in 2021 to 6.7%.

And while the warnings continue, measures to curb the economic impact of the virus also continue. The People's Bank of China one of its key interest rates has dropped again this Wednesday. He has cut by 20 basis points, from 3.15% to 2.95%, the interest rate on bank loans, in what is its biggest reduction since it was implemented in 2014.

For his part, Donald Trump has followed through on the threats and has announced that suspends funding to the World Health Organization (WHO). The US president believes that the international health agency has made many mistakes in managing the crisis that have caused many deaths worldwide. The Secretary General of the United Nations, Antonio Guterres, responded by appealing to the unity and solidarity, and said that this is not the time to reduce resources in the fight against coronavirus.

Investors are still pending this Wednesday of signs of reopening of economies throughout the world. After France and Italy have chosen to prolong their closings, German Chancellor Angela Merkel will celebrate today consultations with heads of state on possible opening measures. The Danish and Austrian governments have already announced a cautious opening of their respective economies for this week.

In the United States, Trump's reopening wishes clash with reality. Larry Kudlow, economic adviser to the President, stated on Tuesday that He will make a very important economic announcement in the coming days about the reopening of the economy.. Morgan Stanley warns that reopening the US economy will be a very complicated process and believes that the country will not return to normal in this regard until the end of next year.

The new economic data published in the US has been appalling. For example, retail sales for March, one of the lungs of the economy, 8.7% have plummeted; and industrial production is down 5.4%.

For their part, the experts at CMC Markets warn that the Libre Beige, which will also be released today, "will be horrendous." In Spain, the CPI has been at a low since August 2016 after falling seven tenths in March, more than expected.

This Wednesday will continue to see results in the US. Bank of America and Citi fall after earning 45% less from the pandemic.

IBEX 35 ANALYSIS

"This Tuesday we comment that the Ibex had partially filled the bearish gap of 7,450 points and that experience had shown us that in most cases this type of 'gaps' was not used to close / cancel the first time it appeared. And today we can see the sharp turn downwards in prices, "he says. José María Rodríguez, analyst at Bolsamanía.

"The truth is that it is advisable to be cautious again because, for example, Dax and S&P 500 have bounced around 50% from the previous slide. That is, many of the weight indexes have rebounded considerably more than the Ibex, reaching levels similar to those of 8,000 points of our selective (50% adjustment) and this means that we are weaker than the stock market as a whole, "adds this expert.

"Something that on the other hand comes from far away and therefore shouldn't surprise us in the least. I also don't like that the daily stochastic momentum oscillator is overbought and turning lower. Let's trust that the support of the 6,580 points (bullish gap) act as a brake on very short-term falls, "concludes Rodríguez.

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