OTP Morning Brief: Oil Prices Continued to Fall
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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.
European indices closed mostly higher; Mercedes and Unilever reported better-than-expected results, while ASML shares declined. Major US indices closed mixed; capital rotated out of certain technology stocks and into traditional industries. Coca-Cola reported better-than-expected results, while Boeing's loss exceeded market forecasts. US yields declined, while oil prices fell amid easing tensions in the Middle East. Today's focus will be on the Fed's interest rate decision, alongside corporate earnings reports.
European indices closed mostly higher; Mercedes and Unilever reported better-than-expected results, while ASML shares declined
European equities advanced for a third consecutive session on Tuesday, with the STOXX 600 index gaining 0.4%. Market sentiment was primarily supported by the consumer sector after several major consumer-focused companies reported better-than-expected earnings, while banking and technology stocks lagged behind. Among the top gainers, Unilever surged 9.1% after reporting second-quarter revenue growth that exceeded market expectations. Mercedes-Benz shares rose 2.9% following a 22% increase in quarterly operating profit. Luxury goods group LVMH posted 3% quarterly revenue growth, lifting its stock by 0.8%. In the technology sector, investor sentiment weakened after reports that China had begun production of its own immersion DUV lithography machines, potentially intensifying competition for European semiconductor equipment suppliers. ASML shares fell 2.9%, while weakness among Asian chipmakers added further pressure to the sector. In banking, Barclays lost 4.2% despite reporting a 17% increase in first-half profit that exceeded analysts’ forecasts.
Investors' attention turned to the Federal Reserve's interest rate decision due on Wednesday. Markets expect rates to remain unchanged; however, a 25-basis-point rate cut by year-end has already been largely priced in, while the probability of a second cut is estimated at around 50%.
Sentiment was negative across the Central and Eastern European region, with the Budapest, Warsaw, and Prague indices all closing lower. Among Hungary’s blue chips, only Magyar Telekom posted gains, while the other three heavyweight stocks ended the session in negative territory.
Major US indices closed mixed; capital rotated out of certain technology stocks and into traditional industries. Coca-Cola delivered better-than-expected results, while Boeing's loss exceeded market expectations
Major US indices delivered mixed performance on Tuesday. The Dow Jones moved higher, supported by strong corporate earnings, a sharp decline in oil prices, and capital rotation from technology stocks into more traditional sectors. The S&P 500 also closed in positive territory, while the tech-heavy Nasdaq Composite slipped lower. Coca-Cola released its earnings report before the opening bell, beating expectations on both earnings and revenue. Management also raised its full-year guidance and noted that the FIFA World Cup had provided a valuable opportunity to strengthen its brands. The stock closed 5% higher. Boeing reported a larger-than-expected loss, although both revenue and aircraft deliveries increased from a year earlier. However, a $280 million loss related to the long-running Air Force One program weighed on results. Despite this, Boeing shares rose 4.8%. The technology sector remained under pressure, with Micron among the weakest performers, falling 8.9%, while AMD declined 8.1%.
Among macroeconomic releases, the Case-Shiller 20-City Home Price Index rose 1.6% year-on-year in May, accelerating from the 1.2% increase recorded in April and surpassing market expectations of 1.3%. This marked the strongest annual pace of home price growth since August 2025. However, in real terms, home prices declined for the twelfth consecutive month, as CPI of 4.2% outpaced nominal price growth. Meanwhile, the Conference Board Consumer Confidence Index fell to 90.8 in July from 92.2 in June, missing the market consensus of 92.3. The weaker-than-expected reading suggests that households remain cautious in their assessment of economic conditions. The present situation index deteriorated for a third consecutive month, while the expectations index remained in territory typically associated with recession risks. According to the survey, consumers viewed current business conditions less favorably and also reported a somewhat weaker assessment of the labor market. Looking ahead, respondents did not anticipate a meaningful improvement in business conditions over the next six months, although expectations for the labor market improved slightly. Households’ income expectations also moderated, but overall they remained optimistic about their personal financial situation.
US yields declined, while oil prices fell amid easing tensions in the Middle East
US Treasury yields declined further on Tuesday as investors awaited the Fed's interest rate decision on Wednesday and welcomed signs of easing tensions between the US and Iran. The yield on the 10-year US Treasury note fell by nearly 4 basis points, while the policy-sensitive 2-year yield declined by 4.1 basis points. The drop in yields was partly supported by lower oil prices. Market sentiment improved following reports of constructive talks between the US and Iran highlighted by President Donald Trump. Investors also responded positively to news that Iran had held discussions with Saudi Arabia and Oman regarding developments in the Strait of Hormuz. Against this backdrop, WTI crude prices fell by 4%.
The EUR/USD pair was little changed during yesterday's trading session, with the euro posting only a marginal gain against the greenback. The Hungarian forint fluctuated around the 360 level against the euro and closed slightly below it. In the bond market, yields on maturities longer than one year declined by 4-6 basis points, with the yield on the 10-year Hungarian government bond falling to 5.41%.
Today's highlights
Trading in Asia was mixed. South Korea’s benchmark index extended its decline despite strong results from SK hynix, which nevertheless failed to meet elevated investor expectations. Japanese equities also moved lower, while Indian and Chinese indices traded in positive territory. Oil prices resumed their rise this morning following reports that Iran had launched several missiles, all of which were successfully intercepted and destroyed.
Today's focus will be on the Fed's interest rate decision, alongside corporate earnings reports, with results from Microsoft, Meta, HSBC, and Procter & Gamble among the key highlights.
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