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Notes from the Trading Desk – Europe

Last week saw a strong end to the month, which helped many equity indices claw back some of the first half of year losses and have their best monthly performance for some time. There was a glut of corporate earnings and some better-than-expected results from index heavyweights in the United States helped sentiment.

Notes from the Trading Desk – Europe

European equity markets proved resilient last week despite a larger-than-expected ECB rate hike, weak macro data and regional political uncertainty (Italy and United Kingdom). Sentiment was helped somewhat by Russia resuming gas flow via Nord Stream 1 following a maintenance shutdown and some reassuring US corporate earnings.

Notes from the Trading Desk – Europe

Political events take centre stage in the week ahead. After Johnson announced his intention to resign as UK prime minister, the ruling Conservative Party must now choose a successor. The timetable for that contest is expected within days.

Notes from the Trading Desk – Europe

Last week’s rally was a welcome relief for equity investors, but questions remain as to the reasons for the move. It seems likely that the market bounce was driven by some month- and quarter-end positioning from oversold levels, but hopes rose that we could be approaching peak inflation thanks to declines in commodity prices.

Notes from the Trading Desk – Europe

Global equities sold off hard into the end of last week as inflation and growth fears continued to weigh on sentiment.

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

Given recent declines, there is much discussion around what is priced into market. With global markets declining for six consecutive weeks, there is an increasing debate over how much bad news is priced in, and whether markets are now oversold.

Notes from the Trading Desk – Europe

Last week saw some extreme moves in equity markets as investors digested several central bank announcements, most notably the Federal Reserve meeting on Wednesday. In Ukraine, the Russian advance in the east made marginal gains, and with no mention of peace talks anymore, a long, drawn-out campaign into the summer seems probable. The impact of this on commodity and food prices is clear.

Notes from the Trading Desk – Europe

Last week saw lacklustre performance for many equity markets as focus turned to hawkish rhetoric from the Federal Reserve (Fed), COVID-19 concerns in China and uncertainty around the outcome of the French presidential election. In addition, the war in Ukraine continues to grind on with little or no sign of progress in peace talks.

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

Events in Ukraine will continue to be a key driver for investor sentiment, with markets likely to see-saw on any meaningful news. It is a busy week for central banks too, with the Federal Reserve policy meeting on Wednesday and Bank of England on Thursday and Bank of Japan on Friday.

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.