OTP Morning Brief: Markets resume growth as tensions ease
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OTP Morning Brief: Declining expectations for US interest rate hikes improved market sentiment
European stock indices advanced, while Trump's remarks and easing expectations for US interest rate hikes improved sentiment; the rise in European producer prices accelerated. Major US stock indices rose on the back of declining expectations for interest rate hikes; initial jobless claims came in line with expectations, while the ISM Services PMI exceeded forecasts. Developed market yields declined following gains in previous days, after dovish remarks from a Federal Reserve governor and a conciliatory statement by President Trump; the forint strengthened on reports that the MNB may pause its rate-cutting cycle and lower its CPI target. Several labor market reports are due from the US today, with the change in nonfarm payrolls standing out among them. Germany will release industrial orders data, while retail sales figures are scheduled from both the euro area and Hungary.
OTP Morning Brief: US treasury yields snap multi-day rise
Geopolitical tensions continued to influence major market moves on Wednesday, particularly in Europe, where equities posted modest declines. In contrast, the main U.S. stock indices advanced by around half a percent, breaking the negative streak seen over recent days. Investors also welcomed the end of the recent rise in U.S. Treasury yields, which had weighed on market sentiment in recent sessions. The move was supported by a weaker-than-expected ADP employment report, although some of the positive impact was offset by higher Brent crude prices, adding to uncertainty. Domestically, bond yields continued to increase, while the forint managed to strengthen slightly against the euro. Asian markets showed a mixed performance this morning, although China's services PMI improved in August.
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.
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