“The market is showing optimism despite fears of war”

Despite an international context marked by geopolitical conflicts, which have worsened this week with the escalation between Israel and Iran, financial markets have maintained a positive trend in recent months. According to Alberto Matellán, General Manager of La Financière Responsable, “the market is trending in optimism despite fears of war.” In general, Matellán explained, “fears of war are quickly forgotten in the market,” once the worst scenarios have been averted.

This optimism is also being shown with respect to trade tensions, which have resulted in peaks in volatility; however, as immediate fears dissipate, investors have once again focused on “the bottom of the matter”: growth, inflation and interest rates. In this regard, in statements this Wednesday, Matellán expressed the view that there is “a situation for a certain upward trend to return.”

With regard to the energy market, the executive stressed that “what a war scenario contributes to oil is a lot of volatility,” but what ends up defining its price is global demand, linked to economic growth. Although demand is slowing down, there has not been a significant decline, suggesting that “it is normal for the price of oil to stabilize a little below what it is up to now, and most importantly without volatility, which is what does damage.”

With regard to monetary policy, Matellán has praised the decision of the Chairman of the Federal Reserve, Jerome Powell, to delay the lowering of interest rates. “It's showing independence, which is what a central bank has to demonstrate,” he says. "From the macro reality, it would not be justified. Maintaining rates is a completely reasonable decision. "

In Spain, the National Statistics Institute confirmed growth of 0.6% in Spanish GDP in the first quarter of the year, one tenth down on the previous quarter. For Matellán, this slowdown is expected and is not cause for alarm: "Spain continues to see the strongest growth in Europe. The trend will be weaker, but nothing dramatic."

On the impact of the increase in public defense spending, he acknowledged that it may boost GDP in the short-term, but for it to be profitable “each euro of public money invested must return more than one euro of growth.” And, with the planned spending on weapons throughout Europe, this “won’t necessarily be the case.” He also indicated that the short-term economic stimulus that it could bring is already discounted by the market.

Regarding the tariff war and the impact on the performance and valuation of companies, Matellán pointed out that its impact is uneven: "The impact is very biased. This is one of the cases in which individual analysis mas a big contribution to make." Certain companies could see their profits reduced, but “the global impact is quite limited, although this may already be visible.”

Finally, the General Manager at La Financière Responsable set out his expectations for the remainder of the year: “We expect more stability moving forward in relation to tariffs and the fear of war.” In this context, many investors could opt for less defensive strategies. In the case of MAPFRE, which follows a conservative investment philosophy, “we will wait for the trend to really change,” but if stability is here to stay, “it may be time to become a little more adventurous.”