OTP Morning Brief: Stock markets opened the week higher, precious metals hit new highs
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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.
President Trump's provocative political approach is boosting demand for safe-haven assets; gold and silver closed at record highs on Monday after Donald Trump’s tariff threat for Canada. This morning, precious metals hit highs again on news of US tariff increases against South Korea. Nevertheless, stock markets did well on Monday, with cautious trading in Western Europe and benign sentiment in the USA, where investors prepare for the Fed's rate decision on Wednesday and important corporate earnings reports this week. Hungary’s BUX and Poland’s WIG20 have climbed to all-time highs. Bond markets also adopted wait-and-see approach ahead of the Fed meeting, but welcomed data indicating strong growth in US durable goods orders. The EUR/USD closed near 1.19 as the dollar weakened on Monday. Hungary’s FI and FX markets were buoyant ahead of today's policy meeting of the MNB. The CEE region’s currencies have slightly appreciated against the euro. Today’s important releases include US real estate price statistics, and earnings reports from international corporations. In Hungary, the MNB makes rate decision today.
Cautious trading on Western European stock markets, mining companies gained momentum; the BUX and the WIG20 hit new highs
Monday’s trading started cautiously in Western Europe’s stock exchanges, and the major indices ultimately nudged higher: the Stoxx600 was up 0.2% at the end of the day, while the FTSE100 and DAX inched up 0.1% each. However, the French and Dutch benchmarks slipped into the red. The turbulent events of the past week made investors cautious. Even though US President Donald Trump withdrew his tariff threat against European countries over Greenland, the risk continues to worry investors. Accordingly, safe-haven assets were sought on Monday: gold price surpassed the 5,000 USD/ounce mark, which benefited Europe’s mining companies. Fresnillo, which operates precious metal mines, jumped 6%, Endeavor soared 3.5%, but the sentiment also brightened the broader commodity mining sector: Antofagasta jumped by 5%, Anglo American advanced 2%, and Rio Tinto closed with 1.5% gain. Despite geopolitical tensions, defence companies have weakened: BAE Systems nose-dived 3% and Rolls Royce gave back 1%. Of the Stoxx600 sector indices, the travel & leisure sector suffered the biggest loss, while commodities performed best. Ryanair descended 1.3%, despite forecasting robust profit growth for this year in its latest report. At the same time, it announced that the roughly 7% fare increase planned for the next financial year may be 1-2 percentage points higher. Danone plunged almost 6%, to a year-to-date low as it had to recall one of its baby formula products. Aircraft manufacturer Airbus sank nearly 2% after an internal memo was leaked in which the company's CEO warned of the need to adapt to disturbing new geopolitical risks. Car manufacturers' share prices somewhat declined, despite reports that India plans to reduce the 110% tariff on cars imported from the EU to 40%.
The January gauge of Germany’s IFO economic research institute’s business climate index stagnated, dashing hopes for a slight improvement.
On Monday, the TTF natural gas futures price dipped 0.4%, to below 40 EUR/MWh.
Unlike in Western Europe, the sentiment in the CEE region was positive on Monday: Warsaw’s WIG20 (+1.7%), Hungary’s BUX (+1.3%), and Czechia’s PX50 (+0.8%) all gained. Of Hungarian blue chips, Mol and OTP were the main drivers of the BUX’s growth, but Richter (+1%) and MTelekom (+0.6%) also contributed to Monday's record high.
The sentiment was also bright in US stock markets, durable goods orders grew stronger than expected
America’s stock indices also ended Monday's trading with slight gains: the Dow (+0.6%), the SP500 (+0.5%) and the Nasdaq Composite (+0.4%) all closed higher. For the S&P and Nasdaq, this was the fourth consecutive day of gains, which is unprecedented this year, while market investors await the Fed's two-day meeting starting on Tuesday and the corporate earnings reports due out this week. In megacap stocks, Microsoft, Apple, Alphabet, Broadcom, and Meta all rose by 1-3%, helping the S&P gain, while Nvidia, Amazon, and Tesla weighed on the index. Chipmakers Micron, AMD, and Intel suffered losses of 3-6% on Monday. Of the S&P 500 sectors, telecommunications did best, while the cyclical consumer sector suffered the biggest losses. Extending Friday's 17% drop, Intel lost nearly 6% of its value after the chipmaker reported lower-than-expected revenue and profit forecasts last week. Shares in USA Rare Earth shot up nearly 8% after reports that the US government had acquired a 10% stake in the mining company as part of a USD 1.6 billion debt and equity investment package. CoreWeave surged 5.7% after Nvidia announced it would invest USD 2 billion in the cloud infrastructure company. The GEO Group (-9%) and CoreCivic (-7%), which operate prisons and have contracts with ICE, plunged on Monday after reports that US Senate Democrats would oppose the funding bill of the Department of Homeland Security, which oversees ICE, following the events in Minneapolis.
Apple, Meta, Microsoft, and Tesla will release their quarterly reports this week, which will be an important test of the AI-driven rally. Of the S&P 500 companies, 64 had reported by Friday, and nearly 80% of them beat analysts' expectations, according to LSEG data.
The biggest event on the commodity market yesterday was that the price of gold crossed the 5,000 USD/ounce mark. An almost 1% rise took silver price also to a new high. In the crude oil market, Brent and WTI futures prices slightly slipped on Monday, reversing last week's rise. The decline was influenced by the imminent restart of production at the Tengiz oil field in Kazakhstan; the Caspian Pipeline Consortium (CPC) also said that production would return to full capacity after repairs at the port. The CPC terminal manages 1.5% of global oil supplies.
Bond markets are waiting for the Fed's rate decision on Wednesday; the EUR/USD is heading for 1.19 and the EUR/HUF traded below 382
On Moday, the markets were waiting for the Fed's decision and other important data. In Europe, bond yields fell sharply from their previous highs due to the weaker-than-expected IFO index from Germany. France’s and Italy’s 10Y bond yields eased by 5 basis points and German yields shed 3 basis points, the latter sank below 3.9%. In the USA, yields dropped by 1-2 basis points, partly due to stronger-than-expected, healthy growth in durable goods orders. However, this was not enough to stop the decline of the dollar: the EUR/USD grew by half a percent, drawing near 1.19, heading for a five-year high.
The sentiment in Hungary’s bond and foreign exchange markets was also sanguine ahead of today’s rate decision of the MNB. The forint, along with other CEE currencies, appreciated slightly against the euro, pushing the EUR/USD to 381.5. Bond yields also eased further (by 6-7 basis points); the ten-year yield hit a nearly-one-year low of 6.56%. The heightened expectations of interest rate cuts brought along strong demand at yesterday's auction of discount Treasury Bills, where nearly HUF 50 billion worth of T-bills changed hands, at an average yield of 6.06%.
Today’s highlights
The sentiment was benign on the stock markets of the Asia-Pacific region, even if gold and silver marched higher: silver jumped by 6% this morning and gold added 1.6%. Japan’s Nikkei increased by 0.9% before today’s close, propelled by the strengthening of chip manufacturers, while the yen’s weakening continued. China’s Shanghai Composite inched up 0.1%, while the Hang Seng rose by 1.3%. South Korea’s benchmarks were up 2-4% despite President Trump's Monday announcement to raise tariffs on South Korean imports from the current 15% to 25% because South Korea is not complying with its agreement with the USA.
Index futures pointed to a mixed start in the USA, while the index futures for Europe were in the green.
In Hungary, the MNB’s Monetary Council is holding its January interest rate-setting meeting today. The central bank is not expected to change base rate, which has been at 6.5% since September 2024, but it may share more information about the interest rate path in the near future.
The ÁKK is offering 3M discount T-Bills worth HUF 30 billion today.
In the USA, the Case-Shiller real estate price index and consumer confidence index will be released today. On the corporate front, quarterly reports from United Health, Boeing, Texas Instruments, Rtx, Northrop Grumman, and GM may be of interest in the USA, while in Europe, earnings figures from Louis Vuitton, Christian Dior, and Sweden's Atlas and Sandvik may make an interesting reading.
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