OTP Morning Brief: President Trump threatened Iran with further attacks as the talks drag on
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OTP Morning Brief: Crude oil prices plunged sharply as the Middle East conflict eased
The first trading day of the week brought modest gains to the major European stock markets, as sectors benefiting from the easing of the Middle East conflict offset declines in the technology and energy sectors. Stock markets across the CEE region also moved higher, with the BUX gaining 0.7%. Wall Street indices closed mixed with minor moves, as investors turned their attention to the Fed's upcoming interest rate decision later this week and earnings reports from major technology companies. WTI crude futures fell by more than 7%, while Brent crude declined by over 8%. Developed-market bond yields declined as easing concerns over CPI, driven by lower oil prices, boosted demand for fixed-income assets. Domestic long-term bond yields also moved markedly lower. The EURHUF exchange rate is trading around the 360 level. Today marks the start of the Fed's two-day rate-setting meeting, while the earnings season continues with reports from several major companies.
OTP Morning Brief: Airstrikes eased in the Middle East
European indices advanced on Friday, allowing them to end the week in positive territory once again. The July PMI data painted a positive picture of the eurozone outlook, although Trump imposed new tariffs, including measures affecting Europe. The BUX declined on Friday, but still ended the week in positive territory. According to the HCSO, employment declined while unemployment increased. Airstrikes between Iran and neighboring countries eased over the weekend. This pushed oil prices back below $100 per barrel. The S&P declined on Friday and posted a loss for the week as a whole. The composite PMI also increased in the US. Developed market government bond yields retreated from their local highs. Hungarian bond yields increased, while the forint strengthened slightly. Q2 GDP data will be released this week for Hungary, the eurozone, and the US. In addition, investors will be watching eurozone and US CPI data, as well as the Fed's interest rate decision.
European indices closed mixed yesterday as uncertainty surrounding the Iran war persisted, while investors awaited today’s ECB rate decision. US indices declined yesterday following President Trump’s hawkish remarks; the correction in semiconductor stocks continued. May’s monthly core CPI came in slightly below expectations, while on an annual basis it remained above the Fed’s target, as headline CPI rose above 4%. Long-term yields in developed markets edged higher, while regional currencies weakened slightly. Today, the Turkish and European central banks hold rate-setting meetings, while in the US the focus will be on producer price index data and the usual weekly jobless claims.
European indices closed mixed yesterday as uncertainty surrounding the Iran war persisted, while investors awaited today’s ECB rate decision
Following volatile trading, European equity markets closed mixed on Wednesday, as investors priced in renewed tensions between the US and Iran, along with the upcoming ECB rate decision. The pan-European Stoxx 600 index ultimately edged lower by 0.08%, marking its fourth consecutive daily decline. The situation in the Middle East returned to the forefront of investor attention, with Brent crude stabilizing near $93 after one of the most significant incidents since the US-Iran ceasefire agreed in April. US President Donald Trump signaled that Iran had “dragged out the negotiations for too long,” while Tehran hinted at reconsidering diplomatic ties. At the same time, market assessments suggest that, for now, these developments point to isolated incidents rather than a broader escalation of the conflict.
Investors’ focus has increasingly shifted to the ECB’s two-day rate-setting meeting, where a 25 basis point hike is expected to counter the inflationary impact of rising energy prices. Market participants are primarily watching for signals regarding the future rate path.
Among sectors, mining and industrial stocks underperformed the most, both falling by more than 1%, while the technology sector declined by 0.7%, extending its recent correction. Volatility in global AI-related equities was more subdued in Europe due to lower tech exposure. On the corporate side, shares of Norway-based defense and technology company Kongsberg experienced significant fluctuations before ultimately closing down around 5%, after management’s profit margin outlook disappointed investors.
Amid the negative global sentiment, regional markets posted declines of around 1% yesterday, with all domestic blue chips ending lower, led by the steep drop in MO shares.
US indices declined yesterday following President Trump’s hawkish remarks; the correction in semiconductor stocks continued; May’s monthly core CPI came in slightly below expectations, while on an annual basis it remained above the Fed’s target, as headline CPI rose above 4%
US equity markets closed sharply lower on Wednesday after President Donald Trump delivered hawkish remarks, signaling that negotiations with Iran were dragging on for too long and raising the prospect of further military action. Market sentiment was further weighed down by reports that the US military carried out strikes on Iranian targets on Tuesday, following accusations that Tehran was responsible for downing a US military helicopter. Investor uncertainty increased amid the growing risk of escalation, making the outlook for energy prices particularly sensitive.
Within the technology sector, semiconductor stocks came under pressure again, with shares of Micron, AMD, and Broadcom all declining, as the segment continued the correction that began in previous days. The weakness was partly driven by profit-taking and partly by portfolio rebalancing ahead of the upcoming large-scale IPOs of SpaceX and other technology companies. Despite this, the semiconductor sector’s performance this year has remained outstanding.
On the macro front, US CPI in May rose by 0.5% month-on-month, in line with expectations, following a 0.6% increase in April, while annual CPI accelerated to 4.2% from 3.8%, also meeting forecasts, largely driven by the surge in energy prices caused by the shock related to the Iran conflict. In contrast, underlying trends remained more moderate: core CPI slowed to 0.2% on a monthly basis from 0.4% previously, falling short of the 0.3% forecast, while the annual measure rose to 2.9% from 2.8%, in line with expectations, marking the highest level since September 2025.
Long-term yields in developed markets edged higher, while regional currencies weakened slightly
CPI in May rose to 4.2% in the US, in line with expectations, while core CPI increased to 2.9%. Meanwhile, Middle East tensions intensified as Iran launched strikes on several countries in the region, pushing oil prices up by 2%. Bond yields edged higher by a few basis points, with the US 10-year around 4.55% and the German equivalent near 3.07%. The EURUSD exchange rate showed little movement, hovering around 1.155.
Regional currencies weakened slightly by 0.1–0.2%, with the forint depreciating to 356.5 against the euro. Bond yields rose by 5–6 basis points, with the 10-year yield reaching 5.5%.
Today, the Hungarian Government Debt Management Agency (ÁKK) will offer three-, five-, and ten-year bonds, with a planned issuance of HUF 20bn each.
Today's highlights
Asian indices mostly declined this morning as Middle East tensions continued to intensify.
Today, the Turkish and European central banks will hold rate-setting meetings, while in the US the focus will be on producer price index data and the usual weekly jobless claims.
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