Shock in IBEX 35 after Fitch downgrade of US debt

The IBEX 35 is down 1.43% at midday to trade around 9,350 points, a level it broke three weeks ago after Fitch stripped its top-rated US debt and was impacted by the drawdown of benefits that followed the increases motivated by the half-year results.

At 12:00, its main index, the IBEX 35, loses 136.2 points, the said 1.43%, to 9,366.7 integers, reducing the cumulative year-to-date gains to 13.8%, according to those consulted by EFE market data .

At this point, only Acciona is trading positive, up 0.33%; Merlin, 0.12%, and Repsol, 0.04%, on a day when Brent oil, the benchmark in Europe, is up 0.6% and topping $85 a barrel.

Unicaja remains the most bearish, down 6.17% to €0.995 per share, adjusting to the price at which OceanWood sold most of its stake this Wednesday, one euro per share.

Meliá, the second-worst performing company in the index, fell 4.64% after performing well yesterday after reporting strong half-year results, and Grifols, the third-biggest company, fell 2.09%.

BBVA, the most penalized IBEX 35 in the last few days

To the great values ​​of the IBEX 35, Inditex down 2.27%; BBVA exits 1.69% and reinforces the decline of the last few days (yesterday the decline was the sharpest), Iberdrola 1.52% and Banco Santander 1.36%.

Since Monday, the IBEX has declined by 3.1% on the back of the profit-taking of the past few days, following gains recorded in the first-half financial results, which were compounded this Wednesday by the uncertainty surrounding the Fitch decision.

The agency, which downgraded the US credit rating to negative in May, has decided to reduce the country’s debt debt as it expects the fiscal position to deteriorate in the coming years and each year with recurring complications in the debt ceiling review brings. explains Renta4 in a market report.

Just before midday, the euro is trading at $1.098, down 0.3% from the previous close, and in the debt market, the 10-year bond yield is down around three basis points from the open, to 3.541%.

Fitch downgrades US credit rating

Rating agency Fitch on Tuesday cut the United States’ debt rating to AA+, one notch below its peak, after downgrading it to “negative” last May due to the debt ceiling standoff.

In a statement, the agency cited the “expected deterioration in financial conditions” over the next three years and the US government’s “increasingly high” level of debt as reasons for its decision.

“In Fitch’s view, governance standards have deteriorated over the past 20 years, including on tax and debt matters, despite the June bipartisan agreement to raise the debt ceiling,” the institution said.

The group asserted that the repeated clashes over the debt ceiling had therefore weakened confidence in the country’s budgetary management.

US Treasury Secretary Janet Yellen issued a statement criticizing the decision, saying it was based on “outdated data”.

“Fitch’s decision doesn’t change what Americans, investors and people around the world already know: that government bonds are the preeminent safe and liquid asset and that the US economy is fundamentally strong,” Yellen said.

Yellen defends Biden’s economic policies

The Treasury Secretary also defended the Joe Biden administration’s economic policies, assuring that his budget would reduce the deficit by more than $2 trillion.

Likewise, White House spokeswoman Karine Jean-Pierre stressed in a statement that “the rating model used by Fitch deteriorated during President (Donald) Trump’s administration and then improved under President Biden.”

“It contradicts reality to lower the US rating at a time when President Biden has delivered the strongest recovery of any major economy in the world,” said the spokeswoman, who attributed the main economic risks to Republican “extremism”.

Fitch put the U.S. credit rating on “negative” in May when Democrats and Republicans appeared unable to agree on an increase in the debt ceiling — the legal limit on the money the country can borrow — that only can be changed by Congress.

Finally, the White House agreed with the Republicans in the House of Commons to suspend the debt ceiling until 2025 and to limit government spending.

A very similar situation led to risk agency Standard & Poor’s downgrading the country’s credit rating from “AAA” to “AA+” in 2011.

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