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Stock markets mixed on Wednesday, as they remained broadly stable in the US, declined in the euro area periphery and advanced in Germany.

Investors took stock after the significant gains of the last sessions and stocks advanced moderately.

Stock markets posted gains across Europe and the US, while sovereign yields moved in opposite directions as they recorded mild declines in the eurozone and moderate increases in the US.

Investors have been relatively cautious as they continue to assess Trump's tax proposal. As a consequence, stock markets remained relatively stable.

Strong rebound in sovereign yields especially for the Treasury yields that reached the highest level in two month mainly on the announcement of Donald Trump's tax-cut plan.

International investors remained cautious with no further progress in equity markets and stability for the sovereign yields after the geopolitical tensions intensified again at the beginning of the week.

Equities and sovereign yields decreased slightly in most of the developed countries due to a spike of risk aversion on the renewed tensions between the US and North Korea.

Investors ended the week in a mixed mood as they weighed increasing coronavirus cases, vaccination progress and plans for higher taxes. On Friday, global stocks were mixed, the USD weakened, and sovereign yields nudged up. Italy's peripheral spread widened modestly ahead of S&P's rating review (unchanged at BBB and a 'stable' outlook).

World stocks fell, led by chipmakers and concerns over AI spending. Wall Street closed lower (the Nasdaq 100 dragged by semiconductors) and Asian shares hit a two-month low before steadying as the selloff eased. In Europe, the STOXX 600 touched a one-week high on softer oil and yields. US big-bank earnings (JPMorgan, Goldman Sachs, Wells Fargo) kicked off to mixed reviews.

Moderate risk-off sentiment prevailed across markets following the upside surprise in U.S. inflation, while oil prices remained elevated amid ongoing tensions in the Middle East. The CPI data came in slightly higher than expected, standing at 3.7% YoY, driven primarily by energy prices, particularly gasoline.

Markets suffered a risk-off session amid concerns over the debt ceiling in the U.S. Volatility jumped and stocks were lower across advanced and emerging economies as Republicans blocked a Democratic move to raise the debt limit. U.S. Treasury Secretary Janet Yellen warned that her department will run out of cash around October 18.

Thursday's session carried a cautious tone. Market concerns over the sustainability of AI investments weighed on chipmakers and technology equities, but the main U.S. stock market benchmarks ended higher while European indices were mixed. Brent oil and TTF natural gas prices nudged down.

Friday saw a mixed session across asset classes. Energy prices rose amid elevated geopolitical risks in Hormuz and Ukraine, keeping short-term inflation expectations under pressure, particularly in the US.

Risk sentiment weakened in Europe as persistent investor concerns over France’s fiscal outlook continued to weigh on equities, the euro and sovereign bonds. In contrast, U.S. equities advanced, led by gains in AI-related and semiconductor stocks.

French bond stress deepens The French spread reached 153bps, its widest since early October, as France's fiscal and political pressures continued to weigh on sovereign debt. The euro weakened as the French spread widened, with ECB Governing Council member Rehn acknowledging the spread had moved "somewhat”.

Investors started the week with a cautious mood as they wait for the release of this week's Q1 corporate results and the ECB monetary policy meeting.

In yesterday's session financial markets experienced risk aversion flows. Despite the positive results presented by some companies, the increase in COVID cases around the globe led investors to move from equities tied to the economic cycle to safer assets such as sovereign bonds, gold and safe haven currencies.

Markets ended the week in a mixed mood as investors pondered over the Fed's plans for stimuli withdrawal, risks from China's Evergrande and the announcement that Chinese authorities will ban all transactions and mining related to cryptocurrencies. Global stocks declined or closed flat while the USD rose against most AE and EM currencies.

Yesterday's FOMC meeting was received without major surprises by financial markets. The Fed announced, as broadly expected, that the tapering on asset purchases would start soon if economic indicators come in as expected and that net asset purchases would finish by mid-2022.