Singular Bank reports
European stock markets closed with slight fluctuations, showing greater resilience than Wall Street thanks to the support of a strong corporate earnings season, which offset the sharp sell-off suffered by the semiconductor sector. The Stoxx 600 remained close to its all-time highs, with approximately half of the companies in the index that have already reported results exceeding market expectations.
Among the key performers, Unilever stood out, surging by nearly 8% after reporting higher-than-expected sales growth. On the downside, ASML once again led the fallers after it emerged that a Chinese state-backed company has begun mass production of certain chip-making equipment that could compete with it.
The French CAC 40 stood out with a 0.6% rise, in a session characterised by rebounds in some of the lagging stocks in the consumer, consultancy and software sectors, amongst others. The IBEX 35 closed flat, with stocks that had been under pressure in recent months, such as Amadeus, Cellnex and Grifols, also featuring prominently. Meanwhile, the Euro Stoxx 50 also edged up by 0.1%, although there were significant divergences between individual stocks.
Fixed Income
The correction in the semiconductor sector intensified, accelerating the rotation away from large companies linked to artificial intelligence towards more cyclical sectors sensitive to economic growth. Whilst the Nasdaq fell by more than 1% at one point, most S&P 500 stocks were rising and its equally-weighted version hit new all-time highs,
At the close of the European session, US indices reversed their trend, with the S&P 500 up 0.4% and the Nasdaq Composite up 0.1%.
US government bonds recouped some of their losses, buoyed by the fall in oil prices. The market continues to show a high degree of uncertainty regarding the Fed’s decision, and derivatives continue to assign a probability of around 40% to a rate rise at this week’s meeting.
The yield on the 10-year German government bond has fallen by 2 basis points to 3.10 per cent, whilst that on the 10-year US Treasury bond has fallen by 6 basis points to 4.59 per cent.
Commodities and currencies
The price of a barrel of Brent crude for October delivery has fallen by 4.5% to $84.4 per barrel amid the ongoing lull in attacks and expectations of renewed negotiations.
The dollar has lost ground ahead of tomorrow’s Fed meeting. The EUR/USD exchange rate has risen by 0.2% to 1.140.
