Reported by Jaime Sicilia Martínez
The main European indices have recorded declines following the failure of the latest proposals from Iran and the United States, and Trump’s threat of a possible end to the ceasefire. Investors’ defensive stance has favoured gains in Energy, Consumer Staples and Healthcare, whilst the major cyclical sectors have been the hardest hit.
The technology sector has been dragged down by the US market, and the next hardest hit has been the financial sector, driven by British banks, amid speculation of possible tax rises in the event of a change of government. Political instability in the UK has pushed the yield on the 10-year bond above 5%, its highest level since 2007.
The industrial sector is being dragged down by defence stocks, which are falling for the fourth consecutive session, amid growing expectations of peace in Ukraine.
The German DAX fell by 1.6% due to the negative performance of its three main sectors: Industry, Financials and Technology. The British FTSE 100 remained flat due to its more defensive bias. Meanwhile, the Euro Stoxx 50 fell by 1.5% and the Ibex 35 by 1.6%.
The US CPI rose by 0.6% month-on-month and 3.8% year-on-year in April, one-tenth of a percentage point higher than expected. The core rate rose by 0.4 percentage points over the month and 2.8% year-on-year, compared with 2.6% in March. The figures are slightly higher than expected, contributing to the negative tone of the session.
Declines and profit-taking at the open of US indices
In the US, indices began the session with declines due to profit-taking in some technology stocks following recent sharp rises. At the close of the European session, the S&P 500 was down 0.8% and the Nasdaq Composite 1.7%.
European government bond yields have risen today due to political instability in the UK and higher-than-expected US inflation figures. Additionally, the parties in Germany’s governing coalition face decisive negotiations on pension reform.
The yield on the 10-year German government bond has risen by 6 basis points to 3.10%, and that on the 10-year US Treasury bond by 4 basis points to 4.45%.
The Brent crude for July delivery has risen for the third consecutive session amid fresh uncertainties over the ceasefire in Iran. Futures contracts project a price above $90 by year-end and around $80 by the end of 2027.
Meanwhile, copper on the Comex rose by 0.5% to $6.44/lb, extending its run of record highs.
The dollar has remained stable in recent weeks, with EUR/USD trading in the 1.17–1.18 range.
