The Spanish stock index Ibex-35 was posting a slight advance on Tuesday, but the momentum was held back by tension as it awaits the news that the U.S. Federal Reserve (Fed) will bring on Wednesday.

The U.S. central bank could derail the recent uptrend in equities - the Spanish selective has advanced 6% so far in March - if it further delays the moment to start lowering interest rates due to the persistence of inflation.

Bankinter highlighted in a report that, given that the Fed will not make a move at this meeting, the focus will be largely on the update of the macroeconomic forecast table and the "dot plot", a graph of dots reflecting where Fed members (anonymously) expect interest rates to be in the coming years.

"Both documents (table and dot plot) could indeed provide new information with which to orient themselves because we think they are likely to revise up GDP 2024/26 (from +1.4%/+1.8%/+1.9% to ca. +2%), inflation (PCE from +2.4%/+2.1%/+2.0% to ca. +2.5%), and long-term Headline Rate (from +2.50% to ca. +3.0%)," said these analysts.

"That hypothetical new combination would be better for the economy in the medium to long term, in terms of structural diagnostics, but would be interpreted as 'hawkish'/hard in the short term (this week) because it would convey the message of fewer and later rate cuts... which is precisely what we have been advocating will occur since November 2023 or earlier, contrary to market consensus," they added.

In the meantime, investors will analyze the ZEW German economic confidence index (Tuesday) and, after the Fed meeting, the focus will shift to the Bank of England meeting and PMI business surveys (Thursday), and the German IFO index (Friday).

At 08:05 GMT on Tuesday, Spain's selective Ibex-35 stock market index was up 14.30 points, or 0.13%, to 10,611.00 points, its highest level since August 2017, while the FTSE Eurofirst 300 index of large European stocks retreated 0.05%.

In the banking sector, Santander was up 0.25%, BBVA scored 0.63%, Caixabank advanced 0.90%, Sabadell gained 0.47% and Bankinter appreciated 0.51%.

Among the large non-financial stocks, Telefónica gained 0.59%, Inditex advanced 0.47%, Iberdrola dropped 0.36%, Cellnex gained 0.38%, and the oil company Repsol rose 0.43%.

(Information by Tomás Cobos; edited by Javi West Larrañaga)