"Stock markets could be set to behave well from here to the end of the year"

The week was positive for stock markets and is expected to remain so, despite the fact that economic uncertainty is been heightened by geopolitical tensions. This is the belief of Alberto Matellán, chief economist at MAPFRE Inversión. In his opinion, the latest U.S. Consumer Price Index (CPI) data (down to 3.2% for the general index and 4% for the underlying index) confirms the end of interest-rate escalation in the world's leading economy and the market is already anticipating possible cuts before the summer of 2024.

As a result, markets, mainly debt markets, reacted aggressively, even too extremely, in the expert's opinion. The interest rate on the U.S. debt dropped that day to below 4.50%, nearly 20 basis points less than the previous day and far from the recent 5% level we’ve seen. “There are growth problems, but markets are pricing in the end of rate hikes by the Fed and have even brought forward future cuts, which has much more weight,” Matellán adds. That said, he warns that we need to be careful, because this, on its own, “is not enough to provide solidity to those increases.”

This economic weakness manifests itself mainly in the eurozone. This same week, Q3 GDP, which contracted 0.1%, reviving fears of a possible recession scenario. "More than the data itself, I'm surprised that this weakness has arrived earlier than expected. It’s clear that this trend will continue over the coming quarters, because the consensus has already projected weak data for next year (around 0.8%)," he adds. Perhaps Spain could be the exception, with differential growth compared to other countries and better forecasts for 2024. However, he warns that “the political problems facing the country could take their toll in the future.”

Japan is also in a delicate situation (with a GDP contraction of 0.5% in the third quarter). "Japan has been doing this for several quarters, but it’s true that this time the data was worse than expected, for two reasons: lower consumption and very negative real salaries. There has also been destruction of inventory and little investment. This shows Japan's economic problems."