OTP Morning Brief: The drop in oil prices brought relief to the markets
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OTP Morning Brief: Uncertainty stemming from the still-unresolved Middle East conflict weighed on Monday's trading
Crude oil prices rose due to the ongoing uncertainty surrounding the still-unresolved Middle East conflict and the closure of the Strait of Hormuz, reinforcing concerns over higher CPI and potential interest rate hikes. Major European indices ended Monday's trading session with modest moves. The BUX ended in the middle of the pack among CEE stock exchanges, posting a marginal decline. Major US indices moved into negative territory. Developed market bond yields moved higher, while the dollar strengthened against the euro. The long end of the Hungarian yield curve also shifted upward, and the forint weakened against major currencies.
OTP Morning Brief: Rate hike expectations eased on signs of weakness in the US labor market, lifting markets
Friday’s biggest surprise came from labor market data that were significantly weaker than expected, prompting a reassessment of rate hike expectations and boosting equity market performance on the final trading day of the week. Several European indices, including the Stoxx Europe 600, closed at record highs. In addition, favorable economic activity data were released for Germany. The BUX also posted gains. US indices also recorded substantial gains on Friday. Weaker labor market data pushed developed market yields lower, while the US dollar weakened. The other major surprise on Friday was Hungary’s CPI reading of 1.2%, which also came in below expectations. Asian markets also followed the rally. Several key data releases will be in focus this week, including European confidence indicators, detailed Q2 GDP figures and employment data, while in the US, investors will be closely watching the latest CPI release.
Global market sentiment improved on Wednesday, with European stock indices climbing to nearly two-week highs, while US markets rebounded after a three-day decline. Investor optimism was supported by hopes of easing tensions with Iran, along with a decline in oil prices and bond yields. In Hungary, the BUX closed slightly lower, while the forint strengthened against the euro.
European stock markets closed at nearly two-week highs
European markets closed with solid gains on Wednesday. The Stoxx 600 rose 1.5% to 620 points, while German and French indices also posted increases exceeding 1%. Technology, banking, mining stocks, and the defense sector led the market higher. In the UK, the inflation reading supported sentiment: April CPI slowed to 2.8%, and following the better-than-expected data, the UK 10-year yield also moved lower.
Dutch ASML surged more than 6% after the company’s CEO said that demand for AI chips will remain robust in the coming years, as robotics and satellites could provide new drivers of growth, exceeding the industry’s production capacity.
The BUX closed 0.2% lower. Among blue chips, OTP rose 1% to HUF 41,100 on the last trading day before dividend payment. MOL declined by 1.8%, triggered by the sharp drop in oil prices.
US indices rebounded
After a three-day slide, US equity markets managed to rise, with all three major indices closing more than 1% higher, supported by falling oil prices and declining bond yields, while Brent is trading around $107 this morning. US President Donald Trump said yesterday that negotiations with Iran have entered the final stage, while also warning of further attacks if Tehran does not accept the peace agreement.
Nvidia released its earnings after Wednesday’s close, drawing strong investor attention. Despite reporting better-than-expected results, the stock slipped more than 1% in after-hours trading, highlighting that expectations were at extremely high levels. Revenue rose 85% to $81.6 billion, while EPS came in at $1.87 (vs. $1.76 expected). Demand for the company’s AI chips remains very strong. In contrast, software firm Intuit reported weaker-than-expected quarterly revenue, sending its share price down 13%.
Yields declined
Following news yesterday afternoon suggesting that an agreement between Iran and the US may be closer, energy prices and bond yields fell sharply. Oil and European gas prices dropped by 5–6%, while yields in developed bond markets declined by 10 basis points. The US 10-year yield fell to 4.6% and the German yield dropped below 3.1%. The dollar weakened slightly against the euro, moving toward 1.163.
Regional currencies strengthened somewhat against the euro, with the forint leading gains, rising 0.6% and pushing EURHUF below the 360 level. Reference yields published earlier by the Government Debt Management Agency (ÁKK), set before the drop in oil prices, remained broadly unchanged compared to Tuesday’s levels, with the 10-year benchmark yield at 5.6%, although yields declined on the domestic market later in the day. At the ÁKK’s six-month T-bill auction, the full announced amount of HUF 30 billion was sold at an average yield of 5.72%, while HUF 60 billion worth of bonds changed hands at switch auctions.
Today's highlights
Asian markets are moving higher, tracking yesterday’s US gains, with the strongest increases seen in Japan (+3.6%) and South Korea (+8.3%).
Ahead of today’s US open, Walmart will release its earnings, offering insight into the state of US retail, while weekly jobless claims, housing starts data, and manufacturing PMI readings are also due.
Today, the Government Debt Management Agency (ÁKK) will offer one-year T-bills, as well as 10- and 11-year bonds, with announced volumes of HUF 30 billion, HUF 15 billion, and HUF 20 billion, respectively.
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