Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Italy, Spain stocks hit peaks after over 20% rally in 2023

Published 11/30/2023, 09:38 AM
Updated 11/30/2023, 09:41 AM
© Reuters. People walk near the Milan stock exchange building, in Milan, Italy November 27, 2023. REUTERS/Claudia Greco

By Matteo Allievi and Danilo Masoni

GDANSK/MILAN (Reuters) - Italian and Spanish stocks hit multi-year highs on Thursday following a rally of over 20% so far this year that has placed them among the top-performing indices in Europe.

Milan's FTSE MIB index hit its highest since June 2008 on Thursday, two weeks after ratings agency Moody's (NYSE:MCO) lifted the country's debt outlook to stable. By 1204 GMT, it rose 0.4% on the day, bringing year-to-date gains to almost 26%.

The IBEX in Madrid scaled its highest since May 2018 after a rally of almost 23% in 2023. It was last up 0.3%.

Both Milan and Madrid equities have benefited from a heavy weighting towards bank stocks, which have enjoyed better profits and delivered stronger investor returns this year on the back of rising interest rates.

Traders, however, were wary of the risk of profit taking.

Giuseppe Sersale, fund manager at Anthilia in Milan, said equity markets in southern Europe have also been supported by cheap valuations and a relative strength of their economies, compared to Germany and other parts of Europe.

"Tactically, some profit taking is possible. In the medium term, we have to see how the economy goes. The starting point, though, is not as attractive as it was a year ago," Sersale said.

Moody's left the Italian rating at Baa3, one notch above junk, but upgraded the outlook to stable from negative, in an unexpected boost for Prime Minister Giorgia Meloni's government.

The ratings agency said the upgrade reflected a stabilisation of prospects for Italy's economic strength, the health of its banking sector and Rome's debt dynamics.

In Spain, the parliament voted to make Pedro Sanchez prime minister for another term earlier in November, ending a four-month deadlock after an inconclusive general election in July.


Italian banks have soared over 40% this year with UniCredit leading the way with a 89% surge.

Among Italy's top performers are also defence group Leonardo and luxury carmaker Ferrari (NYSE:RACE), both up over 66% this year. Europe's STOXX 600 is up 8.6% in 2023.

Over in Spain, November's rally has brought the IBEX back above its pre-pandemic levels for the first time this week, after surpassing the key 10,000-point mark.

The index is still far below its all-time record of almost 16,000 points, set in November 2007.

"The big question now is whether this rally in such a short time is sustainable, which will depend on if the market expectations of an early rate cut will materialise or not," said Natalia Aguirre, analyst at Renta 4.

In late 2022, a wave of pessimism swept over the market when analysts saw a recession looming, both in Europe and in the United States, as rising interest rates were expected to damage the labour market and drag on the economy.

© Reuters. People walk near the Milan stock exchange building, in Milan, Italy November 27, 2023. REUTERS/Claudia Greco

However, a sharp drop in inflation and the economy's unexpected resilience restored optimism among traders, who - after finding refuge in safe-haven assets such as the U.S. dollar and gold - have regained their appetite for equities.

Together with pharma company Rovi, lenders BBVA (BME:BBVA) and Sabadell have risen the most so far this year, while Cellnex, Grifols and Solaria have been the top gainers in November.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.