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Notes from the Trading Desk – Europe

It’s been a tough start to the week for European equities as they catch up with the US move lower on Friday. Looking ahead, all eyes will be on the Fed meeting on Wednesday and a number of bellwether corporate earnings reports in the United States.

Notes from the Trading Desk – Europe

There has been a clear focus on central bank rhetoric at the start of the new year, with investors wary of the speed and extent to which monetary policy will begin to tighten.

Notes from the Trading Desk – Europe

The first half of 2022 brings some European political events to keep an eye on, namely appointment of a new Italian president and French presidential elections. A return to a more combative Italian government could create tensions within the European Union—another potential headwind for equity markets.

Notes from the Trading Desk – Europe

Whilst there has been a lot of noise around the new Omicron variant, we are still waiting for full clarity on the severity of illness, vaccine efficacy and the likelihood of reinfection. Market volatility remains high.

Notes from the Trading Desk – Europe

News of the COVID-19 variant that emerged in South Africa (named Omicron) shook sentiment late last week prompting sharp declines. Looking ahead, it will be important to watch how this latest COVID news feeds into central bank thinking, with money markets already repriced the timeline for potential interest rate hikes further out.

Notes from the Trading Desk – Europe

Inflation remains front and centre. Strong US inflation data raised fears that the Federal Reserve is behind the curve and would need to take more hawkish action in the future.

Notes from the Trading Desk – Europe

A dovish tone from several central banks has helped support equity markets, alongside positive news on a Pfizer COVID-19 treatment. Earnings season continues to be supportive, with more companies beating than missing on earnings metrics.

Notes from the Trading Desk – Europe

The focus as we progress through earnings season is around supply chains and inflation. A number of companies have already noted they have been able to pass cost increases onto customers.

Notes from the Trading Desk – Europe

Equities in Europe treaded water ahead of the European Central Bank (ECB) meeting this week, where any hints of tapering will be closely observed. The spread of the Delta variant continues to weigh on sentiment,

Notes from the Trading Desk – Europe

After a steady grind higher through the summer, global equities stumbled last week as several headwinds weighed on sentiment. Concerns over the negative impact of Chinese regulatory crackdowns hit a number of sectors, the Federal Reserve’s July meeting minutes and rising concerns over the spread of the Delta COVID-19 variant were all cited as reasons for a pullback.

Notes from the Trading Desk – Europe

It seems the adage of “never be short a quiet market” held true recently as European equities saw their tenth consecutive all-time high, their longest run of record high sessions since 1990.

Notes from the Trading Desk – Europe

Global equities traded weaker overall last week with much of the focus on the latest round of corporate earnings releases, which look good so far and were surprisingly positive. It was also a week where China widened its regulatory net on big technology companies, which weighed on market sentiment.