Markets are back in the red
The ECB has raised the key rate up to predicted 75 bp. This indeed is a bearish fundamental factor for the EU stock market. Nevertheless, there have not been any aggressive sales. This is subject to a change in the approach. The thing is that the line about the regulator’s intention to continue with the aggressive rate escalation has disappeared from the report. However, at this point in time it is early to talk about the monetary policy vector, but the probability of it changing is increasing.
Yet another bearish factor for global stock markets is the US GDP report. The 3rd quarter’s data pointed at the US economy restoration. The first two quarters concluded a 0.5% economy growth. This implies the Fed still has moral right to go on with the aggressive rate escalation.
Last week leaders and outsiders:
DAX:
Top: Deutsche Bank AG +5.11%, Vonovia SE +4.9%, Daimler Truck Holding AG +2.67%
Flop: Infineon Technologies AG -3.5%, Beiersdorf Aktiengesellschaft -3.5%, adidas AG -2.61%
EURO STOXX 50:
Top: AB InBev SA-NV +5.73%, Vonovia SE +3.73%, ENI S.p.A. +3.72%
Flop: Schneider Electric S.A. -3.53%, Infineon Technologies AG -2.66%, Adyen -2.12%
Dow Jones (us 30):
Top: Caterpillar Inc. +8.91%, Honeywell International Inc. +3.29, 3M +2.41%
Flop: Microsoft Corp. -3.08%, Apple Inc. -2.37%, Intel Corp. -0.54%
There’s a certain risk of moderate sales on the stocks market, up until the Fed key rate vote release and proceeding comments. Even a slight softening in the approach during the press conference would mean a significant support for the stocks and indices.
Bonds market:
The key bond market instruments loose their profitability even though the ECB key rate is rising. The trend is still ascending, so we can’t talk about the rates going down just yet. Considering this, there’s a chance the profitability would restore, which supposes extra pressure on the stocks.
Oil Market
The American WTI quotes tested above $89.5. But during the European session, on Friday this week, the sellers returned to below $88. The same is with the European Brent.
The US dollar softening and stock indices restoration generated moderate support for oil quotes. The OPEC report on oil demand would probably be a big event for the oil market too. It is going to be held on the 31st of October. Some of the media report that the OPEC expects growth in demand, even though the alternative energy is developing rapidly. The optimistic outcome may support the oil quotes.
