Report by Singular Bank
European stock markets closed on a subdued note. The Euro Stoxx 50 fell by around 0.2 per cent, whilst the Ibex 35 retreated by nearly 0.8 per cent, driven more by dividend adjustments than by a general decline in risk appetite.
The session lacked a single strong catalyst. Lower oil prices are helping to contain costs and inflationary pressure, but have acted more as a backdrop than as the market’s main driver. The key theme is stock selection: companies with clear earnings prospects are being rewarded, whilst those with more demanding valuations are being penalised.
In the United States, Wall Street is trading mixed following the bank holiday, with quality technology and semiconductors performing relatively better, whilst investors remain more demanding of companies that are sharply increasing their spending on data centres and artificial intelligence.
The market continues to see a selective rotation. More traditional sectors, such as industrials, consumer goods, transport and tourism, are being supported by a less strained energy environment.
Within the technology sector, differentiation remains key. Semiconductors and critical infrastructure providers are holding up better due to structural demand linked to AI, memory, cooling and computing power.
In Europe, attention is focused on industrial and technology companies capable of capturing investment in physical AI infrastructure.
The next key event will be the earnings season in the United States. The market needs to assess whether current valuations are sustainable given sufficiently robust earnings and guidance.
Fixed income is seeing limited movement. Lower oil prices are helping to keep inflation expectations in check, but investors remain focused on macroeconomic data and the direction of monetary policy in the US.
The yield on the 10-year German Bund stands at around 2.95 per cent, virtually unchanged during the session. In Spain, the yield on the 10-year government bond remains close to 3.43 per cent, with a risk premium that is contained relative to Germany.
In the United States, the yield on the 10-year Treasury note is hovering around 4.48 per cent, with no significant changes.
Brent crude is trading at around $72 per barrel and WTI at around $69. The production increase forecast by OPEC+ and the passage of ships through the Strait of Hormuz are maintaining downward pressure on crude oil prices.
In precious metals, gold is trading at around $4,150 per ounce, down slightly from the previous close.
In currencies, the EUR/USD exchange rate remains at 1.143.
