OTP Morning Brief: The drop in oil prices brought relief to the markets
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OTP Morning Brief: US producer price index came in above expectations, yet the US 10-year Treasury yield still declined
Western European equities continued to advance despite ongoing pressure on the technology sector. Wall Street indices also rebounded, recovering some ground after Wednesday’s sell-off. Healthcare was the standout performer on both sides of the Atlantic. Eurozone industrial production declined by 0.5% month-on-month in August. In the US, the producer price index accelerated to 6.3%, delivering another upside surprise in inflation developments. US retail sales increased by 0.8% compared to August. The US 10-year Treasury yield declined by more than 10 basis points. The long end of the Hungarian government bond yield curve also declined by 7-9 basis points. In Hungary, August wage data will be released today, while in the US, September industrial production figures are due.
OTP Morning Brief: US CPI data came in above expectations
European equity markets advanced, supported by strong results from ASML and the outstanding performance of the healthcare sector. US equity markets came under pressure following higher-than-expected September CPI data. The annual CPI rate accelerated to 3.7%, driven primarily by a surge in gasoline prices, while core CPI rose by 0.3% month-on-month, supported by higher housing costs and rising transportation service prices. Oil prices rose amid escalating tensions in the Middle East and the impact of the IEA's oil market report. US Treasury yields retreated after an initial increase, driven by Fed commentary, while European bond yields generally moved higher. The US macro calendar will be busy today, with investors focusing on September retail sales and producer price index data, as well as the New York Fed Manufacturing Index, weekly jobless claims, and business inventories. August industrial production data from the euro area will be released today.
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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