Global financial market changes
If you invest in the European and American companies’ stocks, you’ve woken up in a better mood today. The inflation report released in the USA today indicates that the Fed would slow down the key rate increase policy. But the markets always reflect the future situation, not the current one. Thus stock indices have renewed their growth regardless of the upcoming key rate increase.
The European DAX traded above $14 250, EURO STOXX 50 registered above $3850, it’s strongest opposition level, while the American Dow Jones (us 30) has fallen short below $34000. All of that took place due to an expected direction change in the Fed and ECB policies.
Last trading session leaders and outsiders:
DAX:
Top: Zalando SE +5.53%, PUMA SE +5.11%, Vonovia SE +4.11%
Flop: Deutsche Telekom AG -2.43%, Bayer AG -1.96%, Beiersdorf Aktiengesellschaft -1.9%
EURO STOXX 50:
Top: Hermes International S.A. +9.26%, KONE Corp. (New) Cl.B +8.99%, Kering S.A. +7.63%
Flop: Deutsche Telekom AG -3.15%, Banco Santander S.A -2.59%, Bayer AG -2.49%
Dow Jones (us 30):
Top: Home Depot Inc. +5.15%, Walgreens Boots Alliance Inc. +2.45%, Apple Inc. +2.44%
Flop: Merck & Co. Inc. -1.4%, McDonald’s Corp. -1.16%, Boeing Co. -0.82%
One should consider that it is all about not the pace slowing down, but also a change in the overall direction. The further decline in inflation shall provoke the monetary policy revision. This would lead to the 10-year yields profitability returning to their 2019-2020 values. Consequently, the stocks and commodities demand would grow, including gold.
Bond market:
The 10-year yields profitability dropped remarkably this Thursday, however this trend does not continue on Friday. German yields are teared with a 2% discount, French — 2.5%. Just a few days ago they had a profitability 0.4-0.5% higher than the current one. Its further slowing down can considerably improve the buyers activity for riskier assets. This is first of all related to stocks, but to commodities too.
This scenario shall be implemented only in case the inflation decreased in Europe and the USA.
Oil market
Oil also reacted to the new info about the US inflation being reduced by its growth. The growth of key indices makes the oil quotes go up, but it is yet too early to speak about a persistent trend. The thing is that the biggest oil importing country, China, continues to stick to the 0 COVID cases policy. The lockdown limitations lead to decreased business activity and consequently apply pressure on the oil quotes.
Considering the above, the most probable scenario for the oil market is the price movement in a very wide block. It may even end up above $10-15.
