Evolution of the international financial markets and evaluation of the main events and economic indicators of the previous day session. Available in English.
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.
Investors ended the week on an upbeat note. Euro area PMIs suggested activity expanded during October (the composite index rose from 51.2 to 52.2), leading to higher sovereign yields and gains in the main equity indices. Cooler-than-expected U.S. inflation reinforced expectations of a Fed interest rate cut and boosted stock markets. The EURUSD held close to 1.16.
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.
For the second consecutive day, markets traded without a clear direction. Government yields ended flat on both sides of the Atlantic while stocks mostly fell, with some exceptions in the euro area, amid reports that the Trump administration is considering to curb exports to China made with US software.
Without any significant drivers, markets traded without a clear direction during yesterday’s session, pausing the previous’ days strong risk-on sentiment. Treasury yields edged lower in the US ahead of the Fed’s meeting next week (expected to lower interest rates by 25bp). European government yields fell across the region, keeping peripheral risk premia constant.
Monday’s session extended the risk-on sentiment from Friday. Strong earnings results from US companies and the easing of trade tensions between China and the US boosted global stock markets, with volatility dropping.
On Friday, equity markets on both sides of the Atlantic opened with losses as investors weighed concerns about credit quality in the US after two US regional lenders disclosed loan issues. However, during the day those concerns eased, allowing the US indices to close with gains and the Europeans to partially recover.
Thursday saw another mixed session in financial markets. US Treasury yields declined after several Fed officials commented on further rate cuts, although they disagreed on the magnitude and pace of easing. Eurozone sovereign bond yields also fell, particularly Italian ones, following the Government’s submission of its Draft Budgetary Plan to the European Commission.
Wednesday saw another mixed session in financial markets. Eurozone sovereign bond yields fell, with curves flattening slightly, as August industrial production data in the eurozone surprised to the upside (though still contracted). The French spread also narrowed and sat below the Italian one, as Lecornu’s new government cemented its chances of survival.
Tueday saw a mixed session across markets. Fed Chair Powell acknowledged the resilience of the US economy but noted the labor market remains subdued, with limited hiring and firing activity, prompting a decline in short-term Treasury yields. Separately, the NFIB survey showed business confidence softened in September and many owners planned price increases.
Investor sentiment improved at the start of the week as President Trump softened Friday’s rhetoric on China and both sides signaled openness to resuming trade talks. Risk appetite also benefited from the de-escalation in the Middle East. Global equity indices advanced, led by the technology sector, while volatility declined sharply.
Investor risk appetite soured and global risk assets fell after President Trump threatened a “massive” tariff hike on Chinese exports, citing “hostile” export controls over rare earths. Equity indices declined across the Atlantic, with the tech-focused Nasdaq among the worst performers. Trump’s threats were watered down over the weekend.