OTP Morning Brief: AI optimism and falling oil prices propelled stock indices to new highs
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OTP Morning Brief: Trump's de-escalation comments drove equity markets higher
Trump postponed a potential attack on Iran and signaled the prospect of diplomatic talks, helping to boost market optimism. European markets advanced, including the BUX, which closed at a record high. German retail sales disappointed. In contrast, US equities posted a strong rally, with the Dow also closing at a record high. At the same time, bond yields declined. The yen continued to strengthen following Friday's intervention.
OTP Morning Brief: Eurozone CPI rose in line with expectations
European indices rose in July; eurozone CPI accelerated in line with expectations, while core inflation came in above forecasts. Favorable corporate earnings reports supported gains in US indices during the last two trading days of the week; oil prices rose in the second half of the week, although signs of easing tensions in the Middle East re-emerged from the US side over the weekend. Rising oil prices pushed bond yields higher, while the forint ended the week near 365 against the euro. Today's focus will be on German retail sales data, while later this week attention will primarily turn to changes in US nonfarm payrolls, as well as developments in US wages, productivity and job openings. The eurozone will release retail sales figures along with German industrial production and export data, while in Hungary, July CPI data will be published on Friday.
Favorable earnings reports and continued AI optimism provided further support for equity markets, with both the STOXX 600 and the BUX climbing to new highs, while among the major US indices, the Dow and the S&P 500 also reached record levels. One of the biggest winners of the earnings season was Palantir, whose shares soared nearly 30% yesterday. Investor sentiment was further boosted by optimism over easing tensions in the Middle East, which led to a sharp decline in oil prices and lower bond yields. In the foreign exchange market, the EUR/USD rose to a seven-week high, while the Hungarian forint also performed strongly, with EUR/HUF falling close to 361. OTP Group reported excellent first-half results this morning. Later today, attention in the US will focus on the ADP employment report and the ISM Services Index, while corporate earnings will remain firmly in the spotlight. In Europe, companies reporting today include Novo Nordisk, Infineon and Glencore, while in the US we will be watching results from Berkshire Hathaway, Eli Lilly and Sandisk.
Earnings reports propelled European markets higher
European equity markets traded in a positive mood, with investors primarily focused on corporate earnings reports and improving profit outlooks. The pan-European STOXX 600 index gained 0.7% compared to the previous close, climbing to a record high of 656.85 by the end of the session. The DAX advanced 0.8%, the CAC 40 rose 0.6%, while the FTSE 100 added 0.2%. Among the STOXX 600 sector indices, basic resources delivered the strongest performance, with mining stocks surging on the back of higher metal prices, further supported by a weaker US dollar. The technology sector climbed 2.8%, led by semiconductor companies after Berenberg upgraded BE Semiconductor to a buy rating, sending the stock soaring more than 8%. Other sector peers, including Soitec, ASML, Aixtron and Infineon, also finished the day higher. Defense stocks likewise posted solid gains. During the earnings season, UK oil major BP also reported better-than-expected results, with its second-quarter profit more than doubling to USD 5.73 billion, driven by higher energy prices and stronger refining margins. Among individual stocks, Bayer gained 2.4% following stronger-than-expected quarterly results, while Lufthansa and Zalando were among the day's biggest laggards, falling 8.2% and 13.3%, respectively, due to worsening profit outlooks.
Regional markets also posted strong gains, with the BUX rising 1.2%, the WIG20 advancing 1.4%, and the PX Index adding 1.0%. The BUX reached a new record high.
All Hungarian blue chips finished the day in positive territory. MOL was the strongest performer among the blue chips, gaining 3.1%, while Magyar Telekom advanced 1.2%. OTP, which is set to publish its earnings report on Wednesday, rose 0.5%, while Richter closed the session with a 0.2% gain.
OTP Group 1H 2026 Results
In the first six months of 2026, the OTP Group continued its outstanding financial performance. Profit after tax amounted to HUF 580 billion, while return on equity (ROE) reached 21.0%. These indicators were calculated taking into account the pro-rata effect of special items recognised upfront for the full year.
Core banking revenues shaped nicely with semi-annual FX-adjusted consolidated net interest income expanding by 19% y-o-y, while net F&C improving 3%. 1H net interest margin reached 4.61% improving 31 pps y-o-y. The Group’s risk profile remained favourable: the ratio of Stage 3 loans declined by 0.2 pps q-o-q, standing at 3.2% at the end of June.
FX-adjusted performing (Stage 1+2) loan volumes increased by 5% q-o-q, thus ytd growth exceeded 8%. As for the geographical distribution of this growth, Ukraine, but also Bulgaria and Hungary excelled themselves with an 18%, 11% and 10% growth rate in the first six months. Retail portfolios remained the main growth driver: mortgage loans increased by 12% ytd, while consumer loans grew by 7%. Within the framework of the “Home Start” subsidised mortgage scheme launched in September 2025, by 2Q 2026 OTP Bank registered HUF 797 billion loan application, while the contracted volumes reached HUF 723 billion and the Bank’s market share reached 42%. Consolidated corporate (including MSE) loans expanded by 7% ytd, while leasing exposure grew by 9%, respectively.
Consolidated FX-adjusted deposits grew by 6% ytd. Notably, the Hungarian deposits increased by 10% for the first six months. The Group’s net loan-to-deposit ratio stood at 78% at end of 2Q 2026, by 2%-points higher than end of 2025.
The volume of issued securities increased by 8% ytd. As part of this, the OTP Bank issued a EUR 500 million Senior Preferred unsecured bond in February 2026, followed by the issuance of a EUR 500-500 million mortgage bonds by OTP Mortgage Bank in February and June. Furthermore, the Bank issued EUR 1 billion subordinated bonds (Tier2) in June, the biggest ever transaction by the issuer.
The OTP Group’s IFRS consolidated CET1 ratio declined by 47 basis points ytd and stood at 17.6% at the end of June, it is equal to the Tier 1 ratio. The Bank continues to safely comply with the supervisory MREL requirement applicable to the OTP resolution group: the MREL ratio reached 25.9% at the end of June 2026, compared with the 23.9% minimum requirement.
In light of the first-half 2026 performance and underlying trends, management revised its NIM guidance for 2026, thus the net interest margin may exceed 4.34% reached in 2025. The rest of the original 2026 Guidance remained unchanged.
AI optimism and falling oil prices drove US markets higher
US equity markets also posted strong gains on Tuesday. The Dow rose 1.7%, the S&P 500 advanced 1.8%, while the Nasdaq climbed 2.6%, with both the Dow and the S&P 500 reaching new all-time highs. Trading was primarily driven by better-than-expected corporate earnings and hopes for a de-escalation of the Middle East conflict. Technology stocks significantly outperformed, with the S&P 500 Information Technology sector index rising 3.5%, while the Philadelphia Semiconductor Index closed the day with gains of more than 6%.
Investor attention remained firmly focused on developments surrounding artificial intelligence-related companies. Palantir skyrocketed nearly 30% after once again raising its full-year revenue guidance and reporting stronger-than-expected quarterly results. Caterpillar gained 5.6% on the back of solid earnings and improved revenue prospects, with the company highlighting that the buildout of AI data centers continues to generate strong demand. Within the sector, Micron rose 8%, while Marvell Technology surged 13%, and Microsoft added 1%. Amazon, meanwhile, experienced a modest pullback following its strong performance in recent weeks. The overall picture of the earnings season remains favorable, with more than 85% of S&P 500 companies reporting so far beating analysts’ expectations.
Risk appetite was also supported by geopolitical developments. Positive statements regarding talks between the US and Iran increased expectations that progress could be made toward normalizing traffic through the Strait of Hormuz. As a result, oil prices declined sharply, with Brent falling to USD 79.36 per barrel and WTI dropping to USD 75.77. Investors interpreted the move as a sign of easing risks to global energy supplies, providing further support for the rally in equity markets.
On the macroeconomic front, weaker-than-expected data were released from the US economy. Factory orders declined by 0.3% month-on-month in June, compared to market expectations for a 0.2% increase, primarily reflecting a drop in orders for non-durable goods. Meanwhile, the JOLTS survey showed that job openings fell to 7.36 million, slightly below expectations, although hiring activity and layoffs remained broadly unchanged. Risks to the economic outlook continue to persist.
Bond yields declined in both the US and Europe; the euro strengthened to a seven-week high against the dollar, while EUR/HUF fell close to 361
US Treasury yields declined on Tuesday after encouraging comments regarding the reopening of the Strait of Hormuz helped push oil prices lower, easing concerns over CPI. Yields on both the 2-year and 10-year US Treasury notes fell by 6 bps, with the latter closing the session at 4.62%. Investors nevertheless remained cautious regarding the Fed’s rate path, as the inflationary impact of the earlier rise in energy prices may still pose risks.
European bond markets also saw yields move lower. Demand for German government bonds strengthened, with the yield on the 10-year Bund declining by 4 bps to 3.12%. Market participants continue to assess the ECB’s next policy steps and the outlook for CPI, while expectations of easing tensions in the Middle East contributed to an improvement in global investor sentiment. In the foreign exchange market, the EUR/USD rose by 0.2%, supported by a weaker dollar and improving risk appetite, allowing the euro to strengthen to its highest level against the US currency since mid-June.
The decline in energy prices and easing CPI concerns also led to lower long-term yields across CEE bond markets, with both Polish and Czech government bond yields moving lower. In Hungary, movements were mixed according to the Government Debt Management Agency’s (ÁKK) early afternoon quotes. The yield on the 10-year benchmark bond was unchanged at 5.47%, while the 5-year tenor declined by 2 bps, even as the long end of the curve edged slightly higher. In the foreign exchange market, the Hungarian forint strengthened markedly against both the euro and the dollar, outperforming its regional peers. The EUR/HUF fell 0.8%, closing near 361.
At Tuesday's auction of Hungarian three-month Treasury bills, demand was strong, with bids totaling nearly HUF 49 billion submitted against the planned HUF 30 billion offering. As a result, the Government Debt Management Agency (ÁKK) increased the issuance volume to HUF 40 billion. The average yield came in at 5.32%.
Today's highlights
A positive mood also prevailed across Asian markets, supported by Wall Street’s near-record performance, strong demand for technology stocks, and falling oil prices. South Korea’s Kospi led the region with a gain of more than 4%, while Japan’s Nikkei 225 advanced 3.2%. In contrast, Hong Kong’s market posted a modest decline of 0.4%, while China’s CSI 300 index was broadly unchanged.
In the early hours of trading, oil prices extended their decline, while optimism surrounding the technology sector remained firmly intact. Based on futures market performance, both European and US equity markets are poised for a positive open today. SpaceX, reporting earnings for the first time since its stock market debut, delivered a sharp rise in Q1 revenues, driven by strong momentum in its satellite and artificial intelligence businesses, both of which posted skyrocketing growth.
Today, investors are likely to focus on the US ADP employment report and the ISM Services Index, as well as the euro area's June Producer Price Index. On the corporate front, Novo Nordisk, Infineon and Glencore are scheduled to release quarterly results in Europe, while in the US investors will be watching earnings reports from Berkshire Hathaway, Eli Lilly and chipmaker Sandisk.
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