Reported by Jaime Sicilia Martínez
European stock markets closed with moderate gains, buoyed by the fall in oil prices and expectations that the agreement between the US and Iran will help normalise part of the crude oil supply. The IBEX 35 has surpassed 19,400 points, rising by nearly 1.3%, whilst the Euro Stoxx 50 has gained 0.7%.
In Asia, the session was mixed. Japan closed higher, with the TOPIX buoyed by improved sentiment in the export and technology sectors. South Korea also rose, with the KOSPI climbing 1.6% on the back of a surge in semiconductor shares. Mainland China ended higher, with the CSI 300 rising by nearly 1.0%, whilst Hong Kong closed lower, with the Hang Seng index falling by around 0.7%.
Key developments of the session
Oil was once again the main market driver. Brent crude remained below $80 per barrel, a far cry from the highs reached during the conflict, following the emergence of new details regarding the agreement between the US and Iran. The prospect of Iran resuming crude oil sales immediately has eased concerns about inflation and interest rates.
The session was also marked by anticipation of the Fed’s next move. The market does not expect immediate changes to interest rates, but is looking for signals as to whether the central bank will prioritise patience or adopt a more hawkish stance should energy-related inflation rise again.
ASML noted that projects such as Terafab, the future chip factory spearheaded by Elon Musk, represent a growth opportunity, provided the company can avoid supply constraints. The group will collaborate on this initiative, aimed at meeting the semiconductor needs of Musk’s companies.
Fixed Income
Sovereign debt showed modest movements. The fall in oil prices eased some of the inflationary pressure, although investors avoided taking aggressive positions ahead of the Federal Reserve meeting.
The yield on the 10-year Bund remains at 2.93%, whilst the Spanish benchmark has fallen by 1 bp to 3.34%. At the close of European trading and ahead of the Fed’s announcement, the 10-year Treasury yield stood at 4.43%.
Commodities and currencies
Brent settled at around $80 per barrel, with a slight daily decline and remaining at its lowest levels in recent months. The market is pricing in the possibility that the agreement between the US and Iran may increase supply and ease restrictions in the Strait of Hormuz.
Gold was trading around $4,360 per ounce. Eased energy tensions have reduced demand for safe-haven assets, although metals remain supported by caution ahead of the Fed’s decision.
