Spain's Ibex-35 stock index opened Tuesday with a moderate rally and remained at its highest levels in more than six years, against a backdrop of growing investor confidence about a lower borrowing cost horizon this year in both Europe and the United States.

A litmus test of these hopes will come later in the day with the release of the US consumer price index (CPI) (12:30 GMT), which if it confirms the moderation of inflation could pave the way for the Federal Reserve (Fed) to cut interest rates.

In any case, market observers point out that, regardless of the ups and downs of inflation in the short term and the moment at which the monetary turnaround will begin, the path of rate cuts in the medium term is clear, although predictably not as fast as initially thought.

"Central banks are under almost no pressure to lower rates because not only is the economic cycle very comfortable (somewhat less so in the EMU, of course) and inflation is receding, but also, in practice, unemployment is non-existent and real estate prices suffer almost nothing despite the rate hikes applied," Bankinter analysts said in a report.

"That combination results in a context without social pressures on central banks to lower rates urgently... they prefer to leave things as they are for as long as possible so as not to incur risks (lowering rates when there is no unemployment could reactivate inflation) and not to consume ammunition they might need later."

These analysts point out that, in any case, "U.S. inflation would have to disappoint on Tuesday for the stock markets to lose their underlying bullish momentum".

The markets now expect a 71.8% chance that the Fed will cut rates in June, according to IRPR, LSEG's rate futures tool. As for the European Central Bank (ECB), IRPR futures point to more than an 85% chance of lower interest rates in June.

Against this backdrop, at 08:11 GMT on Tuesday, Spain's selective Ibex-35 stock market index was up 40.60 points, or 0.39%, to 10,366.30 points, the highest level since early 2018, while the FTSE Eurofirst 300 index of large European stocks advanced 0.40%.

In the banking sector, Santander was up 0.50%, BBVA scored 0.85%, Caixabank advanced 0.32%, Sabadell gained 0.49%, Bankinter appreciated 0.60% and Unicaja Banco was up 0.45%.

Among the large non-financial stocks, Telefónica gained 0.34%, Inditex advanced 0.57%, Iberdrola dropped 0.18%, Cellnex fell 0.26%, and the oil company Repsol rose 0.93%.

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