The fear isn’t here
The so called Fear index VIX has returned to the middle of the price range, where it remained from the beginning of the year. The lower it goes, the more attractive the riskier assets would become. First of all these are stocks, but commodities too. This scenario supposes the 10-year yields profitability to go down.
The key European stock indices ended the week with little growth. This was due to the investor’s uncertainty about the Fed continuing their aggressive key rate policy. In this case the ECB would also slow it down or even pause it. As a conclusion, the 10-year yields profitability would be decreasing, making riskier assets more attractive.
Last week leaders and outsiders:
DAX:
Top: adidas AG +21.38%, Continental AG +9.49%, Covestro AG +7.55%
Flop: Qiagen N.V. -1.65%, Hannover Rück SE -0.96%, Deutsche Börse AG -0.75%
EURO STOXX 50:
Top: STELLANTIS NV +8.29%, Inditex +2.72%, Philips Electronics N.V. +2.18%
Flop: Intesa Sanpaolo S.p.A. -0.9%, Linde plc -0.7%, Total S.A. -0.68%
Dow Jones (us 30):
Top: DOW Inc. +2.82%, Nike Inc. +2.53%, American Express Co. +1.85%
Flop: salesforce.com Inc. -8.25%, Apple Inc. -4.44%, UnitedHealth Group Inc. -3.29%
Adidas AG securities skyrocketed by 21% on Friday after a long decline and a loss of approximately 60%. This was a result of rumors around Adidas negotiating with the Puma director, who is retiring soon. Considering the Adidas AG stocks are being resold, the success in these negotiations may provoke more rapid growth.
Let’s also remember the energy sector securities. The oil prices rising up makes an additional support for this sector.
Bond market:
There aren’t any considerable changes on this market, but there’s still a risk of soft profitability decline for bond instruments of the most economically stable countries of the monetary block. This scenario supposes growth of the fund indices.
Oil market optimism
The American WTI ended the last week at $93, the European counterpart, Brent, a bit below $99. The key growth accelerator was the piece of info regarding China being ready to soften their quarantine policy. Also the greenback loosing its value helps the oil quotes. Consequently, the further oil prices growth is only possible if China recovers rapidly and there be no another dollar growth wave.
Current week may become volatile. Another shortage of the oil reserves may make a short term support to the oil quotes, but one should also keep in mind the US inflation report. It’s unexpected reduction may pressure the USD and also support the oil quotes at the same time.
