OTP Morning Brief: Indexes rose on hopes of peace talks
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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.
European stock markets rose on hopes that negotiations could resume, while the BUX corrected after yesterday’s gains. The United States has begun a trade blockade against Iran. Stocks advanced on Wall Street as inflation fears eased. On hopes of peace, yields fell and the dollar weakened, while the forint corrected. Asian equities were in positive territory in morning trading. Today, attention will turn to euro zone industrial production.
European stock markets rose on hopes that negotiations could resume, while the BUX corrected after yesterday’s rally
Investors worldwide were reassured by signs of de-escalation in the Middle East. According to reports on Tuesday, the United States and Iran may resume negotiations after Washington took steps to impose a maritime blockade of the Strait of Hormuz. Consultations are currently under way on holding another round of talks before the expiry of the two-week ceasefire, with reports suggesting that the discussions could take place in Pakistan. Meanwhile, several tanker ships linked to Iran have passed through the strait, which is now also blocked by the U.S.; however, these vessels did not dock in Iran and therefore were likely not subject to the blockade targeting Iran’s foreign trade.
On the back of the positive news, major European indexes closed higher, with the DAX up 1.3%, the CAC 40 gaining 1.1% and the FTSE rising 0.2%, lifting the pan-European STOXX 600 by 1.0% by the end of the session. Gains were led by the media (+2.4%), travel (+2.1%) and banking (+2.0%) sectors, while the energy sector slipped 1.5% on the back of lower oil prices. Meanwhile, the personal and household goods sector edged down 0.1%, with shares of LVMH easing slightly after the luxury group said the Iran war had reduced group-wide sales by at least 1% in the past quarter due to weaker spending in the Gulf region. Shares of Imperial Brands plunged around 4.8% after the Davidoff cigarette maker warned that the impact of the Middle East conflict could disrupt its performance in the second half.
Sentiment was also positive across the CEE region, with both the PX and the WIG 20 rising 1.1%. The BUX, however, underwent a mild correction after Monday’s rally, slipping 0.4%. The decline was driven in part by losses in OTP (-1.7%), Magyar Telekom (-1.4%) and Richter (-0.2%), while MOL gained 0.5% to reach a new high. Beyond the oil company, a stronger positive correction was seen in stocks that had fallen sharply on election-related news, with Opus jumping 21.3% and 4iG climbing 10.0% on Tuesday.
Stocks rose on Wall Street, inflation fears eased
Wall Street indexes extended their gains on Tuesday, with the Nasdaq rising 2.0%, the S&P 500 adding 1.2% and the Dow climbing 0.7%. Of the S&P 500’s 11 major sectors, only three closed in negative territory, led lower by the energy sector, which fell 2.2%. Within technology, software stocks advanced for a second consecutive session, ending the day up 1.6%, while the Philadelphia Semiconductor Index gained 2%, marking its fifth straight record close. On the earnings front, shares of BlackRock rose 3% after the asset manager reported an increase in first-quarter profit, supported by strong inflows into ETFs and a sharp rise in performance fees. Citigroup shares closed up 2.6% after its first-quarter results topped analysts’ expectations. By contrast, JPMorgan’s first-quarter earnings received a more muted market reaction, while Wells Fargo shares declined after net interest income fell short of expectations. In the airline sector, United Airlines gained 2%, while American Airlines shares surged 8% following unconfirmed internal sources about a potential merger between the two companies.
The positive sentiment was further supported by data from the U.S. Bureau of Labor Statistics showing that the producer price index (PPI) rose by 0.5% month on month and 4.0% year on year in March, well below the market consensus of 1.1% and 4.6%, respectively. Core PPI increased by 0.1% on a monthly basis and by 3.8% year on year. Similar to the March CPI figures published last Friday, the PPI release indicated that the surge in oil prices linked to the Iran war had a significant impact on headline inflation measures, while its effect on core inflation was more limited. On Tuesday, the International Monetary Fund (IMF) downgraded its growth outlook due to the energy price shock and supply disruptions triggered by the Iran war, warning that the global economy could be pushed to the brink of recession if the conflict were to escalate and oil prices were to remain sustainably above $100 per barrel through 2027. The IMF’s most optimistic, so-called baseline scenario in its World Economic Outlook assumes a short-lived Iran war and projects global real GDP growth of 3.1% in 2026, which is 0.2 percentage points lower than its January forecast.
On the back of positive war-related news, oil prices declined again, with Brent futures falling 4.6% and slipping back below the $100-per-barrel mark, while WTI dropped 7.9%. Meanwhile, the International Energy Agency (IEA) said the conflict could wipe out global oil demand growth this year, which would mark the first annual decline since the pandemic, adding that prices do not necessarily yet reflect the full extent of lost capacity. The war has significantly damaged energy infrastructure and severely disrupted traffic through the Strait of Hormuz, with an OPEC+ report estimating that production fell by 7.9 million barrels per day in March.
Yields fell on hopes of peace, while the dollar weakened
Confidence in the resumption of peace talks pushed energy prices down by 5–7% yesterday. In line with this, bond yields declined across developed markets, with the U.S. 10-year falling by 4 basis points to around 4.25%, while the German 10-year dropped 6 basis points, moving closer to 3%. The dollar continued to weaken, slipping 0.3% against the euro, with EUR/USD approaching the 1.18 level.
The forint slightly corrected after Monday’s strong post-election rally, easing from levels last seen before the war in Ukraine to above 363.5. Bond yields continued to fall, by around 10 basis points. The reference yield curve flattened significantly, with most benchmark tenors – including the 10-year – clustered around the 6.15% level. At the Government Debt Management Agency’s auction of three-month treasury bills, HUF 40 billion worth of securities were sold amid solid demand, at an average yield of 6.15%.
Today's highlights
Trading in Asia was also positive, with the Nikkei up 0.9%, the SSEC gaining 0.3% and the Kospi rising 2.2%.
Today, attention will focus on euro zone industrial production data for February and the New York Fed’s manufacturing index, as well as the Fed’s Beige Book based on reports from its regional banks. In addition, companies such as ASML, Bank of America and Morgan Stanley are set to report earnings.
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