OTP Morning Brief: Markets resume growth as tensions ease
Related content
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.
Europe’s stocks rose on Donald Trump's backtracking, the CEE region had a bright trading day. The easing of tensions helped US markets climb higher, the November gauge of consumer prices was in line with expectations. European bond market calmed down after Donald Trump's speech. The HUF’s strengthening drove the EUR/HUF to 382.5. Bank of Japan left its key interest rate unchanged. PMIs and Russia-Ukraine-USA negotiations will be the main focus today?.
European stocks picked up after Donald Trump's backtracking, CEE markets saw upbeat trading
In Europe, stocks recovered sharply after Donald Trump backtracked on Greenland by rejecting military action and abandoning tariffs on European countries. This came after the US President held talks with NATO Secretary General Mark Rutte and said a deal was starting to take shape, which would build on a previous agreement from 1951 between Denmark and the USA. The Stoxx 600 jumped 1%, as Germany's DAX (+1.2%) and France's CAC40 (+1%) grew. The clear winner of the day was the automotive sector, which advanced 2.2%, mainly thanks to a 6.5% rebound in Volkswagen as Europe's largest carmaker reported better-than-expected net cash flow for 2025. The banking and telecommunications sectors both soared 2%. The latter benefited from the 7% surge in Norway’s Telenor, following the sale of its Thai subsidiary. In the eurozone, the consumer confidence index rose to -12.4 points in January, exceeding the -12.9 forecast and the previous month’s reading of -13.2 points.
The sentiment was also remarkable in the CEE region, where Czechia’s TX (+2.0%), Poland’s WIG (+2.4%), and Hungary’s BUX (+3.2%) all excelled. The latter was fuelled by MOL’s 5.9% jump, but the other three blue chips also posted impressive gains, with Richter surging 2.9%, MTelekom growing by 2.5%, and OTP soaring 2.4%; the banking share closed at an all-time high again.
US markets rose further as tensions eased, November’s PCE was in line with expectations
Donald Trump's softer rhetoric was also appreciated by US investors: America’s stock markets increased for the second day in a row, with the S&P500 and Dow closing 0.5% higher and the Nasdaq gaining 0.9%. Procter & Gamble shares grew by 2.6% after the release of quarterly results, while Intel, which reported after the close, upped 0.1% before plunging 7% in after-hours trading as its revenue fell short of investors' expectations because it failed to keep up with demand for chips used in servers. Abbott nose-dived 10%, in its biggest single-day drop since 2002, after the medical technology company forecast weaker-than-expected quarterly profit. GE Aerospace slumped 7.4%, even though the company raised its full-year profit forecast higher than the consensus thought. All Magnificent Seven shares grew, particularly Meta (+5.7%) and Tesla (+4.2%).
Several macroeconomic data were released on Thursday. The 0.2% monthly change in the core PCE inflation, an index closely watched by the Federal Reserve, was in line with both analysts’ forecasts and the previous month’s figure, indicating some stability in US prices. US consumer spending also rose 0.5% in November, as expected; this may contribute to the US economy’s performance in the fourth quarter. At the same time, personal income data showed 0.3% monthly increase, slightly below the 0.4% rate projected by analysts. Weekly jobless claims rose slightly to 200,000, but fell short of analysts' forecasts. Oil prices slipped nearly 2%, hitting a weekly low, on news suggesting de-escalation.
Europe’s bond markets calmed after Donald Trump’s speech; the forint strengthened to 382.5 against the euro
Following Donald Trump's Wednesday speech, Europe’s bond markets saw a calm trading day on Thursday, with no significant or clear movement in bond yields. France’s 10Y government bond yield sank, that of Italy rose, and the German yield was flat, the latter remained slightly below 2.9%, near the upper edge of its post-covid trading range. In the USA, the ten-year yield rose due to the revision of third-quarter GDP growth from 4.3% to 4.4%; the yield surpassed 4.25% again. As tensions eased, the euro regained some ground from the dollar, driving the EUR/USD higher, towards 1.173.
The forint appreciated by almost 0.5% against the euro, to 382.5. There was particularly strong demand at the ÁKK's auction of 3Y, 5Y, and 10Y bond yesterday, when the agency offered a total of HUF 70 billion debt, bids exceeded HUF 250 billion. The ÁKK sold nearly HUF 140 billion worth of securities, with average yields a few basis points below Wednesday's benchmark yields. Ultimately, benchmark bond yields eased by 2-4 basis points, with the ten-year yield sinking below 6.7%.
Today’s highlights
Today, the Bank of Japan raised its growth forecast and maintained forecast for higher inflation, but left its key interest rates unchanged. Meanwhile, Japan’s inflation data for December showed an annual price increase of 2.1%, down from 2.9% in November, the lowest since March 2022, mainly due to falling energy prices. Core inflation was 2.4%. The Nikkei rose 0.3% on the news, but most Asian markets also benefited from the easing of global tensions.
Today’s important publications include the HOCB and S&P purchasing managers' indices for the eurozone, the United Kingdom, and the USA. Hungary releases wage and unemployment statistics.
On the geopolitical scene, the first trilateral meeting of representatives of Russia, Ukraine, and the USA may take place in Abu Dhabi. The summit was announced by President Zelensky in Davos, and it is expected to last from Friday to Saturday, even though Russia has not yet officially confirmed its participation.
Get more out of your investments!
Global Markets Services
OTP Global Markets offers a broad range of services in the field of local and international money and capital markets.
Read morePrivate Banking Services
Personal care and expertise with OTP Private Banking, along with the knowledge, security, and innovations of a multinational banking group.
Read more