European Stocks Eye Higher Open as Ibex 35 Rally Gathers Steam

European stock futures are pointing to a higher open, with indices like the EuroStoxx 50 and Ibex 35 poised for another session of modest gains. Investors are monitoring tensions from the U.S. operation in Venezuela, but capital markets have so far shown little apprehension, even as some experts note a rise in uncertainty.

The positive sentiment follows a strong session in Asia, where major stock indices climbed more than 1%. Emerging markets are being positioned as a diversification alternative to the dollar, Wall Street, and European equities. “Valuations in much of Asia remain reasonable relative to growth, while U.S. technology is more controlled,” said Billy Leung, a strategist at Global X Management. European stocks, however, are also showing no signs of fatigue.

Spain’s Ibex 35 continues its relentless climb. After closing out last year with a 50% gain—a milestone not seen since 1993—the index has started the new year with the same powerful momentum. From a technical perspective, the Spanish benchmark shows no signs of weakness or exhaustion. Still, that doesn’t mean it’s the right time to buy into Spanish stocks, according to technical advisor Joan Cabrero.

“Despite the sense of strength the market is conveying, I am still clear that a pause after the intense stretch of gains in recent weeks cannot be ruled out,” Cabrero said. He believes it would be healthy and logical for the index to digest some of its recent profits before attempting further advances, particularly as Germany’s Dax and France’s Cac 40 approach their historical resistance levels of 25,000 and 8,330 points, respectively.

Technically, it would not be surprising to see the Ibex 35 find support along its accelerating upward trendline near the 16,600-point level. “Such an adjustment would fit perfectly within a long-term bullish structure and would, in fact, be the minimum required before considering new purchases with a greater margin of safety,” Cabrero explained. The first short-term signs of buyer exhaustion would emerge if the index closes below last week’s low of 17,140 points.

Rising Demand for Debt

In the fixed-income market, demand for the first U.S. Treasury auction of the year surpassed all expectations. The issuance of three- and six-month bills also triggered buying in the secondary market, pushing the yield on the six-month paper down to 3.55%. Recent weak economic data out of the United States prompted the market to favor short-term debt over longer-duration bonds.

“There was a strong rebound in auction demand after last week’s issues went poorly amid holiday season trading,” analysts at Oxford Economics commented. Meanwhile, the 10-year U.S. Treasury yield remains below 4.2%, with the 30-year bond trading below 4.9% in the secondary market.

Gold Rebalancing

Gold is rallying toward $4,455 an ounce, fueling speculation of a new all-time high above the $4,500 mark. The precious metal continues to serve as a key safe-haven asset and a hedge against U.S. dollar weakness. However, investors in the space face a new short-term dilemma.

Passive investors must prepare for a significant shift in the commodities landscape, as major benchmarks like the Bloomberg Commodity Index (BCOM) are set to rebalance their weightings. Specifically, the widely tracked Bloomberg index will reduce its allocation to gold to below 15%, down from a previous 20%. The move could potentially curb the index’s recent rally, which has been heavily supported by gold’s surge.