The Ibex 35 of the Madrid Stock Exchange has started the session this Monday with a decrease of 0.3%, which has caused the loss of the threshold of 19,800 points and its placement at 19,781.5 units, after last Friday it closed with an increase of 0.9% that took it to 19,838 points.
Investors remain very attentive to the situation in the Middle East after the temporary closure of the East-West pipeline in Saudi Arabia announced this Saturday, a factor that continues to push crude prices up. The barrel of Brent is already above 107 dollars.
The Saudi East-West pipeline suffered several attacks on Thursday in the regions of Riyadh and Medina, launched from Iraq, which led Saudi Arabia to decree its preventive closure this Saturday. This infrastructure connects the fields in the east of the country with the export terminals of Yanbu, on the coast of the Red Sea.
The relevance of this energy corridor has grown since the beginning of the war between the United States and Iran and the closure of the Strait of Hormuz, as Saudi Arabia has used the pipeline to divert around five million barrels of crude oil daily that, under other circumstances, would have exited through terminals in the Persian Gulf.
Thus, this facility has consolidated itself as an alternative strategic route to the maritime route through Hormuz and has allowed maintaining an outlet for part of Saudi oil production to international markets without depending on that strait.
Brent at four-month highs
The temporary closure of the pipeline and the rise in tensions in the region, with new attacks on tankers this weekend, have led Brent to mark new highs of the last four months. Military actions between Washington and Tehran are taking place alongside the U.S. sanctions campaign aimed at suffocating the Iranian economy and isolating it from international markets and the global financial system.
The president of the U.S., Donald Trump, raised this Sunday the possibility of "staying" in Iran and "taking the oil, like in Venezuela," instead of withdrawing the American forces deployed around the Islamic Republic after a hypothetical end to the war that in the last week he has insisted on placing around the U.S. midterm elections, the 'midterms', on November 3.
In this scenario, the price of Brent, the reference in Europe, was advancing by 2.7% at the opening of the stock exchanges of the Old Continent, up to 107.4 dollars per barrel, while West Texas Intermediate (WTI), the reference in the US, was rising by 2.8%, up to 102.8 dollars per barrel.
The Fed, the Bank of England, and the Bank of Japan, in focus
In the macroeconomic sphere, the key event of the week for the markets will be the meeting on Wednesday of the Federal Reserve of the US (Fed), before which the majority of analysts expect an increase in interest rates of a quarter of a point. Likewise, the Bank of England will meet on Thursday and the Bank of Japan will do so on Friday to decide on its monetary policy.
In this context, in the early trading hours of this Monday on the Madrid Stock Exchange, the largest advances within the Ibex 35 corresponded to Repsol (+2%), Amadeus (+1.3%), Indra (+0.5%), and Telefónica (+0.4%).
On the downside, the largest corrections at the start of the session were for ACS (-1.8%), Arcelormittal (-1.7%), IAG (-1.6%), Acciona (-1.5%), and Merlin (-1%).
The main European markets began the week with mixed behavior. While Frankfurt fell by 0.1% and Paris dropped by 0.2%, London rose by just over 0.5% and Milan decreased by 0.6%.
In Asia, the stock exchanges recorded widespread declines this Monday. The Japanese Nikkei has lost almost 0.6%, the Seoul Kospi has dropped nearly 3.3%, and the Shanghai stock market has decreased by 0.1%. The only index in positive territory is the Hang Seng of Hong Kong, which is up by 0.4%.
In the foreign exchange market, the euro was depreciating against the dollar, trading in the markets at 1.1554 "greenbacks," while in the debt market, the yield on the Spanish ten-year bond rose to 3.99%.