Report by Singular Bank
European stock markets closed slightly lower on Friday following a turbulent week in the markets due to tensions in the Middle East.
During the session, the Ibex 35 rose by 0.3%, whilst the Euro Stoxx 50 fell by 0.2%.
At sector level, the banking and telecommunications sectors stood out, the latter driven by Vodafone, which rose by more than 12%, recouping losses from recent weeks. Technology was the worst-performing sector during the session, with semiconductor stocks under pressure.
At the close of European trading, Wall Street showed no significant changes compared to the previous session.
The key development this week was Trump’s statements that the ceasefire with Iran is “over”, although he confirmed that talks would continue. Several days of US air strikes and Iranian retaliatory strikes caused intraday volatility in oil and European equities. The market pared its losses upon learning that negotiations were set to continue.
Tanker traffic through the Strait of Hormuz was disrupted during the week, although by the close of trading it was confirmed that at least two supertankers had crossed the route under US protection, partially alleviating supply risks.
Meanwhile, a package of measures aimed at reviving the economy of the eurozone’s largest economy was announced in Germany this week, which had a positive impact on the DAX, although this effect was later diluted.
Markets remain focused on central bank decisions in the face of a potential scenario of energy-driven inflation.
During the session, 10-year bond yields fell, a sign of a flight to safety, although it is worth noting that, generally speaking, yields have risen somewhat due to the prospect of interest rate hikes triggered by the energy shock.
On Friday, the yield on the 10-year German government bond fell by 2 basis points to 3.06 per cent.
In Spain, the 10-year bond yield fell by 2 basis points to 3.51%.
At the close of European trading, the yield on the 10-year US Treasury note also fell by 1 basis point to 4.55%.
Brent crude retreated towards the $75.5 per barrel mark following this week’s sharp rise. The Strait of Hormuz remains the most significant factor affecting the market.
