Reported by Jaime Sicilia Martínez
Tonight’s skirmishes between Iran and the United States in the Strait of Hormuz have not hindered the continuation of negotiations nor altered market expectations regarding a final agreement. In Europe, the main indices have maintained a consolidation trend following six consecutive sessions of gains. Past experiences of breakdowns when an agreement seemed imminent are prompting investor caution, in a market vulnerable to profit-taking in AI-related stocks following the rally of recent weeks.
In terms of indices, the 1% fall in the French CAC 40 stood out, although this was partly due to the ex-dividend date for various companies. The Ibex 35 fell less, by 0.5%, thanks to Repsol and the electricity companies. Meanwhile, the Euro Stoxx 50 fell by 1.2%.
Ferrari led the falls in Europe following the launch of its new electric model, the Ferrari Luce. Industry analysts and social media influencers criticised its design, arguing that the five-seater, four-door model looks more like a mass-market vehicle than a luxury car, given its €550,000 price tag.
The Q1 earnings season in the US has broken all records for growth and positive surprises, being the key factor in the recent US market rally. With the season drawing to a close, Salesforce and Hewlett Packard are reporting today at the close. The software company is among those hardest hit by fears of AI disruption, whilst the computer manufacturer has seen significant rises recently and the market is expecting signs of AI-linked growth in the coming years.
At the close of the European session, the S&P 500 is up 0.5% and the Nasdaq Composite 0.8%.
The new impasse in the Iran talks has today led to a slight rise in Eurozone sovereign yield curves following their recent declines. In the United States, declines are being recorded as the market was closed yesterday. Awaiting clearer signals from central banks in June, the market appears to be settling on a projection of 50 bp of rate hikes by the ECB and 25 bp by the Fed in the coming months.
The yield on the 10-year German bond has risen by 3 basis points to 2.98% and theyield on the 10-year US Treasury bond has fallen by 6 basis points to 4.50%.
The July-delivery Brent crude barrel has risen by 4% and is once again close to the $100/barrel mark following tonight’s attacks between the US and Iran.
The dollar has recently been boosted by the widening interest rate differential between the US and the Eurozone, although the EUR/USD appears to be stabilising above 1.160.
