Reported by Nicolás Lopez Medina
European stock markets ended the week on a high, marking their fourth consecutive week of gains, buoyed by optimism that the Federal Reserve will keep interest rates unchanged this year following the recent cooling of US employment data.
Trading volume was low during the session due to Wall Street being closed for a public holiday, against a backdrop in which investors continue to draw on the strong market momentum since the announcement of the peace agreement between the US and Iran.
At sector level, the technology sector stood out on Friday thanks to a rebound in ASML, which recouped some of its losses from recent days. The industrial sector also recorded significant gains, with the sector index reaching new all-time highs on expectations of smaller interest rate rises.
The Ibex 35 rose by 0.92 per cent, closing the week at 19,852 points. The German DAX also stood out with a 0.8 per cent rise, led by industrial companies and utilities. The UK’s FTSE 100 lagged slightly behind due to modest declines in the defensive sectors of healthcare and consumer staples. Meanwhile, the Euro Stoxx 50 rose by 0.8% to new all-time highs.
Over the week as a whole, European indices stood out for their strength, with gains of around 3% on average, thanks to optimism regarding economic growth and moderating inflation. Contributing factors included the cooling of the US labour market in June, inflation data suggesting that the peak caused by the war in Iran may now be behind us, and a package of reforms in Germany that could help boost growth. Today, the US stock market is closed for the 4th of July bank holiday.
This week, yield curves in the US and the Eurozone have seen a slight steepening. Yields on short-term maturities have remained stable, whilst 10-year yields have risen by around 10 basis points. This reflects the fact that expectations of a further rate rise by the ECB and the Fed are already priced in, whilst the term premium is widening as confidence in economic growth increases. The yield on the 10-year German government bond has risen by 3 basis points to 2.93 per cent.
