Yesterday's session was dominated by the news that the Trump administration will impose harsh sanctions on two large oil companies in Russia, in an attempt to pressure Moscow into negotiations over the war in Ukraine. As a consequence, Brent prices rose +5% to $66/barrel and sovereign yields advanced globally, especially on the long side of the curve.
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Investors kicked off the week with a risk-on session driven by optimism that China and the U.S. will announce a trade deal as Trump and Xi Jinping are set to meet at a summit in South Korea. Global stocks advanced, with the S&P 500 hitting a new all-time high, and the Ibex-35 surpassing its 2007 record. The dollar weakened and gold prices fell below $4,100/ounce.
Financial markets started the week with a risk-on session, as fears about the risk that the spread of the omicron variant could lead to more severe restrictions eased. In addition, China's central bank said it would cut the amount of cash that banks must hold in reserve, releasing 1.2 trillion yuan in long-term liquidity.
In the last session of the week, investors focused their attention on the ECB and Fed officials’ speeches, which tried to push back against the expectation for early interest rate cuts.
In the last session of the week, investors traded cautiously in Europe amid dramatic economic sentiment data in Germany (Ifo sentiment fell to the lowest recorded level) and the absence of a clear EU-wide proposal to fund the recovery in Thursday’s European Council meeting.
Yesterday’s FOMC meeting boosted investor sentiment as the Fed sent a strong signal that the hiking cycle is over and that its members expect at least two rate cuts in 2024 (according to the median of the Dot-plot projections). This caused government bond yields to fall across the board, especially US Treasuries.
Friday’s session registered losses in nearly all major stock markets as investors reassessed elevated valuations in the technology sector. On the macro side, the University of Michigan Consumer Sentiment Index fell to a three-and-a-half year low, as worries about the economic consequences of the longest government shutdown ever increased.
In a session in which the focus was expected to be the FOMC meeting and the Q1 2020 US GDP release, investors shifted their attention to the expectations of an effective COVID-19 treatment.
Investors took a breather from the recent buying spree in government bonds during Thursday’s session, pushing yields higher on both sides of the Atlantic. Despite data releases yesterday showing inflation cooling more than expected in the Eurozone and the US, investors were cautious ahead of comments from some central bankers.
Investor sentiment improved in the last session of the week despite the release of April's U.S. employment report, which showed the largest job's loss since the Great Depression.
Financial markets closed the week with a sell-off session amid concerns of a new coronavirus variant identified in South Africa. The main concerns are the speed at which this variant can spread and whether it will be immune to the vaccines. Volatility rose and demand for safe assets increased.
Investors started the week on a downbeat note, with sovereign bond yields falling across the board on both sides of the Atlantic, as expectations grew that major central banks may be done with interest rate hikes. In the Eurozone, however, Lagarde stressed that strong wage growth does not yet allow the ECB to declare victory over inflation.
The week began with a risk-off session as investors awaited several US tech mega-cap earnings reports amid concerns about high valuations in the sector. Stocks sold off globally, while sovereign yields edged lower and the dollar strengthened, as President Trump's decision to exempt a large list of agricultural products from reciprocal tariffs barely impacted the market.
Investors traded cautiously in the last session of the week amid rising concerns between the Chinese-US relations and mounting uncertainty on the economic recovery after the COVID-19.
The sour mood in equity markets extended for another session amid continued worries about high valuations in the tech sector. Global stock indices fell, with losses led by euro area equities, and accumulated losses of over 3% in a week. The VIX volatility index is up 42% week-over-week and trading above 24 points. Amid risk-averse sentiment, the dollar rose.
Global stock markets were mixed as investors gauge the implications of the latest changes in the Trump administration, especially after the declarations of the new White House economic adviser Larry Kudlow that signaled support for a strong dollar and took a tough line on China.
Investors continued to trade with caution in anticipation of further monetary tightening by the Fed, despite ISM service sector survey in August was consistent with very solid growth in Q3. In the euro zone, the surveys anticipate the ECB will hike interest rates by, at least, 50 bp on Thursday.
In yesterday's session sovereign bonds took center stage once again. Yields extended their declines both in the euro area and in the US, where higher-than-expected weekly jobless claims pointed to a cooling labor market and gave investors further reasons to believe the Federal Reserve is done hiking rates.
Investors started the week with mixed sentiment in Europe and optimism in the U.S., driven, respectively, by weaker-than-expected economic data releases on one side and the perception that activity is recovering on the other.
Volatility declined and markets favored risk assets in a light economic calendar day. Stocks rose across advanced and emerging economies as investors focused on the prospects of a new fiscal package in the U.S. and the release of the accounts of the ECB's September meeting.