Reported by Nicolás Lopez Medina
European stock markets have started the quarter on a weaker note following recent gains. The Euro Stoxx 50 has fallen by around 0.7%, and the IBEX 35 by nearly 0.3%, dipping below 19,400 points during the session.
Oil has remained the key barometer of the session. Brent crude has hovered around $72 per barrel, buoyed by technical talks between the United States and Iran and signs of greater crude oil availability. This relief eases cost pressures, but is not enough to sustain the market following the quarter’s strong rally.
Warsh’s speech at the central bankers’ meeting in Sintra was significant for risk assets: he acknowledged that inflation risks have eased, but avoided providing explicit guidance on the next interest rate decision. This approach keeps the market focused on US employment data.
June’s eurozone inflation figures were lower than expected, reflecting the impact of the fall in oil prices. The headline year-on-year rate fell by four tenths of a percentage point to 2.8%, and core inflation by two tenths to 2.4%. Although the moderation will be gradual over the coming months, the peak in the headline rate is likely to be behind us.
In Spain, the IBEX 35 has seen a moderate correction following a very strong quarter. The fall in oil prices is weighing on oil companies, whilst the more defensive and consumer-oriented sectors are holding up better, although not strongly enough to reverse the index’s direction.
In the United States, Wall Street was trading slightly lower at the close of European markets. The market continues to keep a close eye on technology, spending on AI and Kevin Warsh’s remarks in Sintra, which left the door open to interest rate decisions without offering clear guidance.
Sovereign bond yields have risen moderately due to the lack of a clear signal of easing from the Fed.
The yield on the 10-year German Bund stood at around 2.88%, up by around 2 basis points despite the positive inflation data. In Spain, the yield on the 10-year bond rose to 3.37%, around 3 basis points above the previous close.In the United States, the yield on the 10-year Treasury note has remained largely unchanged at around 4.46%.
Commodities and currencies
Brent crude has fallen back to the $71.4 per barrel range. The market continues to price in progress in talks with Iran and a further normalisation of energy flows.
In precious metals, gold has rebounded towards $4,080 per ounce.
In currencies, the EUR/USD has fallen to 1.139, with the dollar slightly firmer.
