The Ibex suffered through a lot of pain in August, dropping 9.5% in a quasi-crash that anticipated a relapse of global economic crisis. Still, in the last few days the Spanish stock market has calmed down and even regained support despite some lackluster economic figures.
Why? Every day it becomes likelier that the Fed will decide to apply another stimulus. Even though this measure will not fix the myriad, deep issues plaguing an economy that is losing competitiveness and wrestling with an enormous deficit, a stimulus could at least provide a quick spike for the stock markets. Further, some analysts believe that markets probably overreacted to recent economic data and from a long-term perspective, shares might be cheap right now.
There is a lot of capital sitting on the sidelines and waiting on conditions to improve. The environment will be tough when this money enters the markets with the debt relief already in progress.
