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Notes from the Trading Desk – Europe

Despite the overall strength last week, stock markets were really at the mercy of the headlines tied to Ukraine, which flip-flopped from one day to the next on the progress of peace talks.

Notes from the Trading Desk – Europe

Soaring commodity prices and the commensurate inflationary impact is alarming investors. The fear is that consumer confidence and spending will be hit, and we find ourselves in a stagflation environment, with stagnating economic growth (or recession) and soaring inflation.

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

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

The European economy is recovering fast from the COVID-19 recession. The relaxation in COVID-related restrictions has resulted in sharp growth in both services and manufacturing. The reflation trade appeared to be re-emerging.

Notes from the Trading Desk – Europe

Improving macro data and continuously dovish central banks have kept equity markets well supported. Given the push and pull, the market continues to react to specific headlines and announcements, rather than the reopening trade as a general theme.

Notes from the Trading Desk – Europe

The debate around rising inflation and the potential impact on central bank policy has been the key driver for financial markets of late, and last week was no exception.

Notes from the Trading Desk—Europe

Global equities traded marginally lower last week, with much of the focus at a company level as first quarter (Q1) earnings season progresses. Despite strong earnings and record beats, there was lacklustre price action, with significant divergence in each region.

Notes from the Trading Desk—Europe

Franklin Templeton’s Notes from the Trading Desk offers a weekly overview of what our professional traders and analysts are watching in the markets. The European desk is manned by eight professionals based in Edinburgh, Scotland, with an average of 15 years of experience whose job it is to monitor the markets around the world. Their views are theirs alone and are not intended to be construed as investment advice.

Notes from the Trading Desk—Europe

With a COVID-19 vaccine forthcoming, and many countries getting the situation under control in the meantime, many observers are optimistic about an economic rebound in Europe in 2021.