The year was bitter. Also for the Stock Market. And more for the Ibex-35, which fell 15.45%, to close at 8,073.7 integers, its biggest decline since 2010. In Europe, only the British Ftse 100 (-14.34%) had a fall similar, since the French Cac 40 limited its decline to just over 7% and even the German Dax ended with a not inconsiderable gain of 3% and at record levels.
The end of the year for the selective, however, implies a rebound of 32% compared to the minimum of 6,100 points that it marked in March, after the start of confinement. But represents a loss of 20% from the maximum that it had reached in February of over 10,000 integers: before the globalization of the covid, the year seemed not to look bad.
The virus has had a very severe impact on the country and this was reflected in its Stock Market. Diego Morín, from IG, attributes the worst performance of the Ibex-35 to its composition, with a significant weight of banks and companies linked to tourism, the sectors most affected. Nuria Álvarez, from Renta 4, adds that, although at times of greatest tension everything fell, these were the sectors that suffered the most. This was reflected in the ‘photo finish’ of the year. Sabadell and IAG fired 2020 with losses of more than 60%. And Bankinter and Santander, with falls of 30%. Somewhat better closed CaixaBank (-21.82%) and Bankia (-14.35%), protagonists of the year’s merger. And BBVA (-14.42%), which did not achieve the integration of Sabadell.
Among the most bearish were other large stocks, such as Telefónica (-42.70%) or Repsol (-35.33%). Regarding the oil company, in a 2020 full of unusual, the market witnessed the drop in the price of a barrel of West Texas to negative territory for the first time in history: it was on April 20 when it reached practically 40 dollars negatives. The economic paralysis so sunk the demand for crude that the stock exceeded storage capacity and those who had purchased futures contracts preferred to pay to get rid of them.
Unusual and extreme
The fateful 2020, in addition to unprecedented phenomena, was lavish in extremism. Thus, the voluminous falls of banks and tourist companies coexisted with strong increases of companies linked to renewables, such as Solaria (247.65%) or Siemens Gamesa (112.20%); to the pharmacy, such as PharmaMar (66.56%); as well as companies with a traditional defensive profile, such as Cellnex (37.48%) or Iberdrola (35.29%).
But the winning sector of the pandemic was the technology, which highlights the fact that the Nasdaq ended the year with increases of more than 40%. The other US indicators, the S&P 500 and the Dow Jones, closed 2020 at all-time highs. Good balance also in Asia: the Chinese CSI 300 added 27% and the Japanese Nikkei recovered levels of three decades ago.
That it was a year of extremes is also verified by looking at the graph that the Ibex-35 drew. In 2020, it suffered its biggest daily drop in history: It was on March 12, when it fell 14%. It also witnessed a historic collapse in a month, that of March, when it fell by 22%, coinciding with the worst of the pandemic and the confinement measures to halt its expansion that meant, in practice, putting economies in a unpublished hibernation situation. In return, November was a record month in increases, adding 25%, thanks to the success of science in the generation of several vaccines against covid-19 that were being injected before the end of 2020, and the triumph of Democrat Joe Biden in the American elections.
These elements aborted renewed fears that fueled the second wave of the pandemic in October. In December the Ibex also faltered and could barely close in a draw. For Pedro del Pozo, from Mutualidad de la Abogacía, this was so because the indices “cleaned up the overbought and overheating carried over since the beginning of November.” In addition, he listed the new spike in infections and its new strain and tensions later resolved on the ‘Brexit’ and the additional fiscal plan that ended up being approved in the US.
Central banks, key
Despite the differences, as of December 31, all indices were above minimum. And away from the panic of spring. As Álvarez points out, this is due to the central banks that put all the meat on the grill and earlier than in previous crises. The US Federal Reserve lowered interest rates to 0% at record speed. And the European Central Bank launched an emergency plan against the pandemic. With this, according to data from Mirabaud AM, their balance sheets already represent 29% of world GDP. To this must be added, as highlighted by Félix López, from Atl Capital, the unprecedented effort made by governments to sustain jobs, income and companies, both alone and jointly: one of the great milestones of 2020 is the agreement in the EU to launch a common recovery plan.
From debt tension to ten years with negative interest
It has gone more unnoticed, but its evolution has also been very outstanding. Public debt was strongly stressed in the early stages of the pandemic due to the uncertainty that it aroused and the prospects for fiscal deterioration: facing the coronavirus would imply a sharp fall in income – due to the paralysis of activity – and an increase in expenses – to counteract its social consequences. Furthermore, during the worst of the crisis there were also liquidity problems in certain segments of fixed income.
But everything was reversed the moment the central banks pledged to give unconditional support – not without some blunder, like that of Christine Lagarde, president of the European Central Bank, who went so far as to say that her institution was not to contain risk premiums. The error was corrected, the ECB launched an emergency program that has already been extended twice, the interest of the Spanish bond, like many others, is at 0% and the Treasury has already held its first auction for that term at negative rates .