The uncertainty phase
The European stock market is continuing to recover. DAX has risen to 14450, EURO STOXX 50 to 3936. The optimism has gather ground from the reduced probability of further aggressive increases in the key rate by the Fed and ECB. This Thursday the Fed representatives made an announcement claiming it is necessary to continue rising the rates, but the market showed moderate reaction. This indicates at a bullish mood being predominant among the investors.
At the same time it is yet too early to speak about the buyers being ready for a skyrocketing growth, most probably they don’t want to be shifted by the sellers. This is clearly seen with the low DAX index growth volumes.
Last week leaders and outsiders:
DAX:
Top: MTU Aero Engines AG +3.26%, Mercedes Benz Group AG +2.97%, Daimler Truck Holding AG +2.62%
Flop: SAP SE -1.63%, Zalando SE -1.0%, adidas AG -0.4%
EURO STOXX 50:
Top: Schneider Electric S.A. +3.08%, Mercedes Benz Group AG +2.97%, ING Group N.V. +2.52%
Flop: PROSUS NV EO -1.79%, AHOLD DELHAIZ -1.78%, Adyen -1.58%
Dow Jones (us 30):
Top: Nike Inc. +3.38%, DOW Inc. +2.58%, Walgreens Boots Alliance Inc. +2.17%
Flop: UnitedHealth Group Inc. -1.03%, Amgen Inc. -0.72%
Bond market:
From the beginning of the current week the 10-year yields profitability in the USA, Germany and France has reduced, but not significantly. The investors show their optimism, which indicates at their expectations regarding the slow down of the key rates growth introduced by the Fed and ECB. It is a very important detail for financial markets, as the odds of a global financial crisis would decline.
As a matter of fact, any additional confirmation that the FED and ECB are about to finish their key rate policy in a couple of months may become the necessary support for the stocks market. Before that the most probable scenario would be the moderate growth with occasional corrections.
Oil market
From the start of the current week the WTI oil has lost more than 12%, while Brent is traded with an 11% discount. A fast decline in demand, or to be more exact, its prospect to remain at low levels, is the main reason for the sales.
First of all it is China, who is now preparing to reduce their lockdown limitations. China is still continuing to register the most of new or repeated COVID cases. Consequently, the government would have to introduce new limitations thus cutting off the oil demand even more.
The oil sales apply additional pressure at the energy sector stocks. But let’s keep in mind that the OPEC+ are about to intervene at any moment and save the oil quotes from hitting the historical minimum of the year.
