Markets ignore the inflation
Buyers’ activity is reducing; however the key European indices are still in the green. Moreover, the last day of the trading session ended with a 5% profitability increase for a number of European companies. But keep the lowering buying activity in mind.
The economic and geopolitical situation in the region remains complicated, which increases the risks and consequently reduces the popularity of risky assets. Stocks are risky assets, so the yields profitability increase supposes a flow of capital. Consequently, a bearish scenario is prioritized in the long term perspective.
Last trading session leaders and outsiders:
DAX:
Top: Vonovia SE +6.51%, E.ON SE +3.25%, Deutsche Bank AG +3.0%
Flop: Bayer AG -1.6%, Infineon Technologies AG -1.31%, Siemens AG -1.03%
EURO STOXX 50:
Top: PROSUS NV EO -,05 +5.55%, Vonovia SE +5.37%, Banco Santander S.A +5.25%
Flop: ASML Holding N.V. -5.5%, Infineon Technologies AG -2.21%, Deutsche Börse AG -2.38%
Dow Jones (us 30):
Top: JPMorgan Chase & Co. +5.05%, UnitedHealth Group Inc. +3.93, American Express Co. +3.37%
Flop: Chevron Corp. -1.25%, Intel Corp. -1.02%, Walgreens Boots Alliance Inc. -0.59%
Oil sales pushed energy sector companies’ securities from the leading positions.
Bond market:
There haven’t been any considerable changes in the US and Europe bond markets. The 10-year yields profitability remains quite stable and has no sustainable dynamics towards growth or decline. I’ll remind that current profitability level isn’t that far from the 10 years maximum values. Still there’s a risk of key ECB and FED rates increasing which would prepare the ground for further growth of bonds’ profitability.
An increase in yields profitability is a bullish fundamental factor for currency and a bearish one for stocks market.
Oil market
The oil market is trying to form a side movement thus ending a wave of decline. The main driver of the oil quotes growth is the OPEC+ position. The cartel has already reduced the extraction volumes and most likely will keep on doing that in case the oil prices keep on falling. At the same time the world’s economy is slowing down which provokes a shortage in the real oil demand. Consequently the market has two very strong yet diverse fundamental factors. We can’t talk about sellers keeping the decline until the WTI and Brent prices are back at $85 and $91 and lower. The short term scenario is bearish.
