Stocks: Two Spanish Banks Are up, Bright Spot on Tough Day

Let us check the stocks. On Friday, merger talks for two Spanish banks drove up Europe’s financial sector. Thus, it proved a bright spot in a tough session. It is because investors remained stymied on the heels of a selloff. It was driven by losses for high-flying technology stocks.

The Stoxx Europe 600 index SXXP, +0.71% was flat at 366.37, a day after tumbling 1.4% in a late slide. It was vacillating between gains and losses and headed for a loss of just over 0.5%. The French CAC 40 PX1, +0.65% increased 0.4%. Furthermore, the FTSE 100 PX1, +0.65% rose 0.4%. Nevertheless, the German DAX DAX, +0.66% eased 0.1%.

Spain’s IBEX 30 IBEX, +0.00% is an outperformer among regional indexes. It climbed by 0.7%. Meanwhile, Bankia BKIA, -2.07% jumped 23%. CaixaBank CABK, -2.26% surged 11%. It happened after the Spanish bank said late on Thursday that they are in talks over a possible merger. Potentially it can be the biggest tie-up in the banking sector of the country in years.

That filtered with the gains for the rest of the sector. Shares of Sabadell, SAB, -2.96% rose 11%. Shares of Bankinter BKT, -1.51% was up 5%. Banco Bilbao Vizcaya Argentaria BBVA, -1.42% BBVA, -1.59% each rose over 4%. Banco Santander SAN, -1.00% SAN, -1.48% rose 3%.

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Stefan Nedialkov and Anand Demble are City analysts. They said in a note to clients that Spanish banking consolidation has seen several false starts. They think that consolidation becomes much more of an imperative given low rates; COVID fallout; and relaxation of merger requirements by the European Central Bank/Single Supervisory Mechanism) ECB/SSM.

Citi has neutral on CaixaBank and a buy rating on Bankia.

On Thursday, the Dow industrials DJIA, +0.87% tumbled by more than 800 points. It was driven by a tech-led selloff that whipped 5% off the Nasdaq Composite COMP, +2.55%. Thus, investors remained focused on United States markets. All three indexes marked the worst one-day drop since June 11, along with S&P 500 SPX, +1.64%.

For Friday, stocks remained in the red. The August United States gains data that came in with a better-than-forecasted gain of 1.4 million. The forecast was 1.2 million gain. Furthermore, on Friday, the government said that the unemployment rate decreased from 10.2% to 8.4%.

Data showed German manufacturing orders losing steam in July in Europe. Nevertheless, they rose for the third straight month.

One notable element of Thursday’s trade: standout advances of this year were among the worst performers.

That is the current news for the stocks. Let us wait and see what will happen in the future. Now the situation is more or less normal and on track.