The IBEX 35, which recorded its strongest gain in nearly seven months the previous day, opted to take a cautious stance at the opening of trading on Friday ahead of the release of key consumer price indexes from the euro zone and the United States.
Thursday's gains are expected to lift the index to a 0.9% gain for the week and a 4.5% gain for the month, but the inflation report could blunt or amplify those gains.
Euro zone consumer price inflation is due to be released at 9 a.m. for May. Analysts polled by Reuters had expected a 2.5 percent increase from a year earlier, potentially casting doubt on whether the ECB will cut interest rates after its June meeting when lower borrowing costs are already priced in.
Securities firm Renta4 said, “We need to be careful as services inflation may also remain high at around 4 percent.”
“This is a further sign that the 2% inflation target will be difficult to achieve sustainably, limiting the ECB's policy space beyond June. If the first cut comes next week (6 June, almost 100% chance of -25bps), a second cut (depending on data) would likely have to wait until September or October, given the accelerating business cycle and upside risks, especially in energy.”
Then at 12:30 GMT, the US consumer deflator (also known as the PCE index) will be released, which in real terms, excluding energy and unprocessed food, could be up 2.8% year-on-year and 0.3% month-on-month.
“Attention will be focused on whether the data supports current market expectations of one Fed rate cut in 2024,” said analysts at Renta4.
As of 7:15 a.m. GMT on Friday, Spain's IBEX 35-stock index was up 15.70 points, or 0.14 percent, at 11,353.90 points, while the FTSE Eurofirst 300 index of Europe's biggest stocks was up 0.12 percent.
For the week as a whole, the IBEX 35 rose 0.9% and for the month, it was up 4.5%.
The banking sector, which was the driving force behind the IBEX rally on Thursday on the prospect of higher-than-expected interest rates, was mixed on Friday, with Santander up 0.47%, BBVA down 0.16%, CaixaBank up 0.34%, Sabadell little changed, Banquintel down 0.20% and Banco Unicaja down 0.45%.
Among the big non-financial stocks, Telefonica rose 0.40%, Inditex added 0.23%, Iberdrola fell 0.08%, Cellnex rose 0.83% and oil company Repsol rose 0.81%.
(Information by Tomás Cobos; Editing by Javi West Larrañaga)
