Energy sector is in a huge advantage
Last week’s end wasn’t that favorable for the stock market. Sellers almost managed to return what they’ve lost from the start of the week. The European DAX has only one security that tested in a plus on the last day of the trading session. Other indices also show the buyer direction.
Besides, the market’s leaders are the energy companies still. And it is not only the European bond market, but also the American securities. It was quite an obvious outcome; we’ve spoken about it earlier. The rising oil prices help energy sector companies to keep up.
The growing inflation negatively affects retail sales, especially the sportswear sector.
Last trading session leader and outsiders:
DAX:
Top: Continental AG +2.02%
Flop: adidas AG -5.17%, PUMA SE -5.11%, Siemens Energy AG -2.59%
EURO STOXX 50:
Top: Total S.A. +2.27%, ENI S.p.A. +2.02%, Sanofi-Aventis S.A. +0.64%
Flop: ASML Holding N.V. -5.56%, Infineon Technologies AG -4.3%, adidas AG -3.87%
Dow Jones (us 30):
Top: Chevron Corp. +1.7%, Merck & Co. Inc. +0.78
Flop: Intel Corp. -5.13%, Microsoft Corp. -5.54%, Walgreens Boots Alliance Inc. -0.54%
Inflation
USA, Germany, Spain and France inflation reports are released this week. Economists are optimistic about the USA and France data. Spain on the other hand is having a pessimistic consensus forecast. Considerably serious changes in the inflation and especially a decline from the forecast may have a very negative outcome on the stock market. Inflation growth affects the stocks negatively.
Bond market:
The overall market mood is bullish. Moreover, there are no grounds to suppose it is going to change; the probability of the Central Bank increasing the key rates is still elevated.
There will be a bunch of reports from the FED, ECB and Bundesbank. If they do not change their trajectory, the yields profitability will keep on growing affecting the stocks. This scenario is considered to be probable.
Oil market
The OPEC+ decision to cut off the extraction rates in 2 mln barrels daily has had a great support in the oil quotes. Brent finished this week at $98.5, while his American counterpart WTI tested above $93.
Even though it is still hard to tell if the oil prices are going to continue to grow, one should not rely on the trend being a long-term one.
