Reported by Nicolás Lopez Medina
With US markets closed for a public holiday, European indices ended a positive week with a session of minimal fluctuations. Iran’s decision to delay the start of negotiations on a permanent peace treaty, scheduled for Friday, cast a note of caution, although the impact on oil and the stock markets was minimal.
Amidst the minimal fluctuations in the indices, the UK stock market fell by 0.4% after Manchester’s mayor, Andy Burnham, secured a resounding victory in a by-election, winning a parliamentary seat that will enable him to challenge Prime Minister Keir Starmer for the leadership.
At sector level, the energy sector’s rebound stands out following the falls seen in previous sessions, as Brent crude stabilised at around $80 per barrel and Israel launched a new military incursion into Lebanon. Car manufacturers rebounded moderately following yesterday’s declines.
At the close, Italy’s FTSEMIB led the gains with a 0.3% rise. Meanwhile, the Euro Stoxx 50 closed down 0.5%.
Market highlights
The week drew to a close, marked by the interim agreement between the US and Iran to end the conflict that began in late February. Over the week as a whole, European indices rose by around 2% on average, with the Euro Stoxx 50 and the Stoxx 600 reaching new all-time highs. The key highlight of the Fed meeting was a conventional message from Kevin Warsh, which reinforced market expectations of a possible interest rate rise before the end of the year.
Sector performance since the announcement of the agreement reinforced the lead of AI-related stocks, alongside cyclical sectors such as Financials and Industrials, whilst investors continue to shun defensive sectors such as Healthcare and Consumer Staples.
Fixed income
The possibility that Andy Burnham might challenge Prime Minister Starmer for the leadership triggered a rise in UK bond yields, which spread to the rest of the European markets. Burnham is seen as more in favour of interventionism and increased spending.
The yield on the 10-year German government bond rose by 6 basis points to 2.98%, and that on the 10-year UK government bond by 9 basis points to 4.84%.
Commodities and currencies
The price of Brent crude rose slightly for the third consecutive day, after Israel’s latest attack on Hezbollah led Iran to postpone the start of peace talks. Although Israel and Hezbollah announced a new ceasefire at the close of trading, Brent rebounded by 0.5% to $80.3 per barrel.
The dollar closed virtually unchanged at 1.147.
