The Federal Reserve finally decided to raise the reference interest rate by 75 points, to the range of 3.00%/3.25%. But, in addition, it drastically revised downwards the GDP estimates: in 2022 from the previous 1.7% to 0.2%, while for 2023 it lowers them from the previous 2.2% to 1.2%, it also reduces the 2024 from 2.0% to 1.7%.
didn’t like it either the inflation outlook that Jerome Powell raised: up to 5.4% from 5.2% for 2022, the same magnitude for 2023, from 2.6% to 2.8%, and less in 2024. In addition, the Fed president said that the process of controlling prices will be difficult: “I wish there was a less painful way to do this, but there isn’t,” he said.
The most negative view of growth and inflation weighed on Wall Street, which fell around 1.75% and also weighed on European stock markets today at the open.
As explained by Rafael Ojeda, from Fortage Funds, the Fed really should have carried out a hike of 100 points, given that inflation is out of control, but the market could have overreacted even more.
haven for investors
In the current environment, you have to look for sectors or companies that do well in a scenario of rate hikesOjeda points out. “What they are going to reward is basically going to be companies that have the ability to set prices, that can pass on the increase in costs to the final customer and that have a controlled debt, little debt on their balance sheets,” he explains.
In recent years, we have come across companies that have taken on a lot of debt because the cost of debt was lower in a scenario of low rates and now the burden for these companies is to refinance that debt with high rates.
With all this in mind, for the expert the best option would be Inditex, “an option that I would certainly have on the radar”. The Galician textile recently presented accounts. It achieved a profit of 1,794 million euros in the first fiscal semester (between February 1 and July 31), an increase of 41% compared to the same period a year earlier. Both profit, sales and Ebitda have reached an all-time high.
so it has moved Inditex on the stock market so far this year:
The consensus covering the stock gives it a buy advice and a target price of €27.70, giving it a potential upside of more than 25% from current prices.
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