Perhaps the most heard expression in the elevators of investment banks, managers and analysis firms is being that of the dead cat bounce. The situation in Ukraine, despite the apparent rapprochement of positions between invaders and invaded, is far from being resolved and, therefore, the downward pressure on the stock markets is something that will still be present in the market.
However, the European stock markets have rebounded strongly in the last two and a half days, so many investors are taking the opportunity to continue building their portfolios after the sales that had been seen recently. This recovery has been favored by the drop in volatility, which yesterday fell several points from its maximum levels, not seen since January 2021. Bonds also showed signs of a certain calm and sales prevailed in the main European references.
These signs clear the way for stock markets to continue their recovery from the last few days. Yesterday the Ibex scored 4.88%, while the EuroStoxx gained 7.44%, percentages that represent the highest rise in the Ibex since the appearance of the Pfizer vaccine in November 2020 and the highest in the case of the European index since the rebound after the Covidcrash. This helps recover some of the heavy losses they have accumulated since the war began. However, despite the rebound from Monday's intraday lows already exceeding 11% in the EuroStoxx and 12% in the case of the Ibex, more than 5 percentage points have still been lost since the beginning of the invasion in the case of the European reference.
These signs of a certain relaxation have their explanation, in part, in the closure of coverage, total or partial, that many professional investors have carried out and that, given the sharp falls in the market, they have now taken advantage of to introduce a little more risk in the portfolios , while managers are also taking positions again, albeit cautiously.
Experts explain that "we decided to be more cautious at the end of last year and start the year with a more prudent vision, including hedges in the portfolio, at a time of low volatility and in which the cost of these hedges was low. At the time of greater volatility have given us a lot of support and we have been gradually withdrawing coverage in the worst moments of the market, gaining exposure and being more constructive with risk assets, as market falls have intensified".