Winter has come to the market, but the European markets managed to shut their doors before the cold wind; however they had to open their windows to let some fresh air in in the morning today.
The thing is that if you have a look at the ending of the past trading day, the key European indices did not have any sales. EURO STOXX 50 has lost 2 bp, DAX was drawn down 0.2%. For comparison, the American S&P 500 index finished the day 1.44% lower than the opening price. The reason for it is that the investors started to fix their long positions after an unexpected report be the Fed regarding the necessity to elevate the key rate by 0.5%. At this moment the European session was already closed, which helped it to avoid the first wave of sales.
Last week leaders and outsiders:
Top: Airbus SE +4.91%, Deutsche Bank AG +3.94%, adidas AG -2.96%
Flop: Zalando SE -2.29%, Siemens Healthineers AG -2.10%, Vonovia SE -1.86%
EURO STOXX 50:
Top: SAFRAN +0.78%, Mercedes Benz Group AG +0.63%
Flop: Deutsche Post AG -2.65%, CRH plc -2.14%, Infineon Technologies AG -2.05%
As you can see the day started with sales and most likely it is going to end the same way. The attention of the participants will be concentrated on the following American regulator’s comments. If the Fed is prepared to rise the key rate by 0.5%, this would produce considerable pressure not only on the American fund market, but also on the overall enthusiasm regarding the high-risk assets.
This scenario is also utterly negative for the gold investors too.
Investors show that they are worried about the short term rather than the long term. This is clearly viewed via the 10-year yields profitability with different cancellation terms. As an example, the German 9 month yields have already reached 3%. While 10-year yields are traded with the profitability close to 2.54%. In France the situation is a bit different, the profitability of the 1-year and 10-year yields are almost identical. This also points out at the investors’ uncertainty and high risk level in the short term. Consequently, one should not really rely on sustainable growth of the fund market.
The stocks market experiences mild panic which’s led to sales on the oil market too. The American oil WTI has reached $77, while the European counterpart Brent is traded below $83.50. If the Fed representatives continue to discuss the key rate elevation by 0.5%, the oil would return to the current year’s minimums swiftly. Consequently, all the attention is drawn not only to the supplies data, but also to the American regulator’s comments on the monetary policy, the labor market state, inflation and the economy in general.