Coronavirus, IMF Outlook Paint Bleak Picture for Spain

IBEX 35, Covid, IMF Outlook:

  • Spain continues to struggle with virus containment as cases and deaths surge
  • European equities sell off as fears over rising cases, low vaccination rates shift sentiment
  • Cases, economic forecasts remain bleak, represent significant headwinds for Spanish economy

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The IBEX 35, Spain’s benchmark stock index, continued its recent slump on Tuesday as indices across continental Europe declined. The risk-off sentiment prevailed as fears grew regarding new strains of the coronavirus and issues with vaccination availability. The IBEX 35 declined by 1.41%, echoing the risk-off tone that was felt across Europe. So far in 2021, the index is down 2.74%. The DAX 30, FTSE 100, and CAC 40 declined over 1% on the same day.

IBEX 35 – 1 MIN CHART

IBEX 35 chart

Created with TradingView

Spain continues to struggle with containing the coronavirus, as the total number of cases has now exceeded 2.6 million. On Tuesday, the Spanish Health Ministry reported 36,435 new cases and 591 deaths. The new death figure represents a high for the third wave of the virus and reaches a level not seen since June 2020. The total reported death toll now stands at 56,799. New restrictions forcing the population to stay home may pose a significant headwind for the index, and perhaps push prices lower.

TOTAL CORONAVIRUS CASES IN SPAIN

Spain Covid cases chart

Courtesy of worldometers.info

The Spanish economy continues to bear the brunt of the coronavirus pandemic in the Eurozone. According to the International Monetary Fund (IMF), Spain will experience the largest economic contraction among Eurozone members. The IMF has forecasted an 11.1 percent contraction in the nation, while all other members are expected to have declines of less than 10 percent in 2020. Spain is also expected to experience a weaker rebound, as the economy relies heavily on tourism and related services. Should the virus subside and populations become vaccinated, the IBEX may represent an ideal combination of a value and a rebound play. However, much hinges on the containment of the virus and the willingness/ability of citizens to get vaccinated.

— Written by Brendan Fagan, Intern

Follow me on Twitter at @BrendanFaganFx

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