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Markets went from risk off to risk on yesterday afternoon and we have since kicked on with some follow-up buying of stocks, gold and silver, while the dollar has also shown signs of weakness. Risk appetite turned positive after bond yields and oil prices both retreated yesterday.
Global indices managed to bounce back towards the end of the week as risk mood improved following Thursday’s drop in bond yields and a slight decline in oil prices. But by late Friday afternoon, oil prices had made back most of Thursday’s drop and the bond markets remained under some pressure as European bourses closed for trading.
GBP/USD falls below 1.32 after hawkish Fed minutes. DAX falls for a second day, testing a key support as bond yields rise.
EUR/USD falls to a 17-month low on French fiscal & Spanish political worries. DAX muted amid political instability in Europe.
GBP/USD struggles as UK government borrowing exceeds forecasts, putting pressure on Healey ahead of the Budget. DAX eases back after yesterday's gains as oil prices and political headwinds rise.
USD/JPY rises as U.S. Treasury yields rise above 5%. DAX slumps as bond rout continues and oil prices surge.
Following a weak handover from Asia, European markets and US indices were under pressure this morning, as rising oil prices and elevated bond yields once again weighed on risk appetite. Among the major European indices, the German DAX will be in firm focus this week, with the ECB’s rate decision coming up on Thursday. That decision is likely to be a hike, as rising oil prices threaten to re-accelerate inflation.
Oil rises amid escalating Middle East hostilities & as OPEC+ keeps output steady. DAX cautious after AfD election victory and ahead of ECB rate decision.
DAX rises as Nvidia boosts AI trade ahead of Jackson Hole. GBP/USD slips below 1.36 as Fed expectations shift.
But the question, of course, is how much further oil prices and bond yields can fall. For now, the combination is supportive of risk assets and is helping to sustain a relatively benign decline in the dollar. The focus today will be on US core PCE inflation, due for release shortly, while Nvidia’s second-quarter earnings will provide another test for risk appetite after the US markets close – not just for US indices but for global tech-heavy indices given the influence Nvidia has over the global tech and AI names.
DAX edges higher as German economy shows resilience. Oil falls despite Bessent’s plans for the economic isolation of Iran.
GBP/USD Rises After UK Inflation Ahead of FOMC Minutes. DAX Rises as Global Bond Sell-Off Eases.
If oil prices continue to rise, this could weigh on European markets which have been quite resilient of late. That could weigh on the German DAX forecast given the nation’s reliance on energy imports.
