OTP Morning Brief: U.S. indexes rose despite tensions with Iran
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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 indexes fell yesterday; inflation in the UK accelerated in March in line with expectations; the Turkish central bank left its policy rate unchanged. U.S. stock markets rose on Wednesday as Donald Trump extended the ceasefire; Brent crude traded above $100; Boeing and GE Vernova shares advanced following positive earnings reports. Developed market bond yields were little changed on Wednesday; the dollar strengthened against the euro, while regional currencies weakened. Today, European and U.S. purchasing managers’ indices are due, along with the release of the usual weekly initial jobless claims data in the United States.
European indexes fell yesterday; inflation in the UK accelerated in March in line with expectations; the Turkish central bank left its policy rate unchanged
European equity markets weakened yesterday as investors weighed developments related to the extension of the Iranian ceasefire. Sentiment was further dented by the German government halving its 2026 growth forecast, now expecting GDP growth of just 0.5% for this year, while cutting its 2027 growth projection to 0.9% from 1.3%. The Ministry for Economic Affairs attributed the deteriorating outlook to the Middle East conflict and the de facto closure of the Strait of Hormuz, noting rising costs for households and businesses. At the same time, inflation is forecast at 2.7% this year and 2.8% next year, both remaining above the ECB’s target. Geopolitical uncertainty was reinforced by U.S. President Donald Trump’s decision to extend the two-week ceasefire with Iran while maintaining the U.S. blockade on Iranian ports, prompting Tehran to reject further negotiations. On the corporate front, there were nevertheless some positive surprises: Dutch chipmaker ASML reported quarterly revenues above analysts’ expectations and achieved a record operating margin.
In the euro area, consumer confidence deteriorated by 4.3 points to -20.6 in April compared with March, according to preliminary estimates, marking the lowest level since December 2022 and a larger-than-expected decline relative to market expectations. The deterioration was driven by rising economic uncertainty, exacerbated by the prolonged Middle East conflict and inflationary pressures stemming from persistent supply disruptions. Across the European Union as a whole, consumer sentiment also weakened sharply, falling by 4.2 points to -19.4, likewise coming in worse than expected. In both the euro area and the EU, consumer confidence remains well below its long-term averages, which could weigh on a recovery in domestic demand in the near term.
In the United Kingdom, annual inflation rose to 3.3% in March from 3% recorded in the previous two months, in line with market expectations. The acceleration was driven mainly by higher transport costs (4.7%, the fastest pace since December 2022), with fuel prices in particular jumping by 4.9%, partly due to the impact of the conflict involving Iran. As a result of a 95.3% surge in household heating oil prices, housing-related inflation accelerated to 4.3% from 4.2% in the previous month. Meanwhile, the price index for food and non-alcoholic beverages increased to 3.7% from 3.3%, while services inflation rose to 4.5% from 4.3%. By contrast, clothing prices fell by 0.8%, marking the largest decline since March 2021. On a monthly basis, the consumer price index increased by 0.7% compared with February.
The Turkish central bank kept its policy rate unchanged at 37%, in line with market expectations. According to the central bank’s statement, underlying inflation dynamics eased in March, while preliminary indicators point to a renewed mild acceleration in April. High and volatile energy prices continue to add to inflationary risks. The statement reaffirmed that the central bank will maintain tight monetary conditions until price stability is restored, that is, until the 5% inflation target becomes attainable.
Regional indexes closed mixed yesterday: the BUX was the only index to post gains, while the Prague and Warsaw indexes declined. Domestic blue chips closed in positive territory with the exception of OTP.
U.S. stock markets rose on Wednesday as Donald Trump extended the ceasefire; Brent crude traded above $100; Boeing and GE Vernova shares advanced following positive earnings reports
U.S. equity markets closed higher on Wednesday after U.S. President Donald Trump extended the ceasefire with Iran, while stronger-than-expected corporate earnings also supported investor sentiment. President Trump cited divisions within the Iranian government when announcing the extension of the ceasefire but noted that the U.S. military blockade would remain in place, leaving the situation uncertain. As a result, uncertainty persisted: Iran’s navy seized two container ships in the Strait of Hormuz on Wednesday, contributing to Brent crude prices rising above $100 per barrel. However, equity markets have increasingly looked past Middle Eastern tensions, particularly in the technology sector, where several stocks posted strong gains. This was reinforced by a favorable start to the earnings season: Boeing shares climbed 5.5% after the company reported a smaller-than-expected first-quarter loss, while GE Vernova surged 13.8% after revenues beat analysts’ expectations. According to FactSet data, more than 80% of S&P 500 companies reporting so far have exceeded consensus forecasts, further strengthening the market narrative that investors’ focus is gradually shifting back to corporate fundamentals.
Developed market bond yields were little changed on Wednesday; the dollar strengthened against the euro, while regional currencies weakened
Crude oil prices continued to rise on Wednesday, with both WTI and Brent gaining around 3%, pushing Brent above $100 per barrel. Tensions in the Middle East have not eased: although the ceasefire was extended for an indefinite period, positions have not converged, with Iran’s Revolutionary Guard seizing two vessels in the Strait of Hormuz while the United States has not eased its blockade. Middle Eastern developments therefore remain in the spotlight, even as investors stay cautious following the extension of the ceasefire. In developed bond markets, there were no significant moves on Wednesday: the U.S. 10-year yield stayed near 4.3%, while the German 10-year remained stuck at 3%. At shorter maturities, however, yields rose more noticeably, with the German two-year yield edging up by 3 basis points and the U.S. two-year by 4 basis points. Interest rate expectations also shifted slightly, with futures markets now pricing in two rate hikes by the ECB with high confidence for this year, while the first Fed rate cut is priced in for autumn 2027. Analysts’ expectations differ somewhat: amid inflation risks, the expected timing of the first rate cut in the U.S. has been pushed back, with a Reuters survey suggesting that it may take another six months before the Fed delivers its first cut. On news of the ceasefire extension, the dollar strengthened, with EUR/USD slipping 0.3% to around 1.17.
In line with regional currencies, the forint weakened slightly on Wednesday, with the EUR/HUF exchange rate closing the day at around 364. In the domestic secondary bond market, yields declined, with the more pronounced moves this time concentrated at the short end of the yield curve. The Wednesday Treasury bill auction was deemed successful: demand for the six-month T-bill was nearly three times the offered amount, the issued volume was doubled, and the average yield came in at 5.94%.
Today, the Government Debt Management Agency (ÁKK) will issue 12-month Treasury bills as well as bonds maturing in 2036 and 2038, in amounts of HUF 30 billion, HUF 10 billion, and HUF 15 billion, respectively.
Today's highlights
After early gains, Asian indexes turned sharply lower this morning following reports that U.S. forces had intercepted at least three Iranian oil tankers in Asian waters, increasing the risk of a continuation of the conflict.
Today, European and U.S. purchasing managers’ indices are due, along with the release of the customary weekly initial jobless claims data in the United States.
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