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After a series of announcements done by the Fed, ECB and the Bank of England, the attention of the traders has been shifted to the financial reports of the US biggest tech companies. Apple, Alphabet (Google) and Amazon, as well as a variety of other companies already reported their financial indicators showing worse values as of in the last quarter of 2022. This is indeed a piece of bad news for the key European indices, since the ECB is about to continue adjusting the rate to fight the inflation.

In simple words, yesterday we received a serious signal suggesting a real worsening of the financial state of the major tech companies. This suggests chances of further business activity reduction, which in turn would slow down the world’s economy development and reduce the level of enthusiasm towards the risky assets. Let’s remember that stocks are considered risky.

PMI – Purchasing Managers’ Index

The report on the business activity changes in most of the EU countries services field has become a restraining factor for the majority of the sellers. For instance, Italy, Spain and Germany registered growth of the services business activity in January, which is a good piece of news. At the same time one should consider that this index represents the situation in the month/month ration. This implies, in January the index grew in comparison with the December values, which has been worse than the 4 preceding months. In this case it is Germany, the largest EU economy.

That’s why to verify the stability of recovery of the currency block, one should register at least 2-3 consequent growths in the business activity.

Bond market:

Shifting to the bond market, let’s pay our attention to the rapid 10-year yield profitability recovery of most of the EU countries. After a harsh decline, the mood changed the moment the ECB announced their key rate decision. The demand for the protection assets boosts the value of the bond instruments, pressuring the stocks market.

Oil market

Let’s also consider the decline in the oil prices. However, the situation stabilized with the EU session opening. That’s why it is vitally important to wait till the NY session is also open. The sales of the American fund indices may apply extra pressure on the oil quotes.

Also, a critically important factor is China and India. Shall these two economies slow down, this would produce negative effects on the energy carrier market.

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