European markets have taken on a somewhat constructive tone in early trade today, with commodity focused equities helping to lift the FTSE 100 in spite of a circa 10% decline for NatWest. Better than expected growth data out of Spain has helped prop up EURGBP despite the ECB’s move to end their tightening phase after a historical ten consecutive rate hikes. However, the big picture still points towards a slowing Spanish growth rate, with a spike in tourism revenues being offset declining investment. This kick-starts a period of European data that will culminate in the eurozone GDP and CPI release on Tuesday. Forecasts point towards a sharp decline for eurozone inflation (from 4.3% to 3.1%), further allaying fears of any further upside for interest rates.
Yesterday’s Amazon.com earnings brought yet another twist in an already tumultuous week for US equities. A 1.76% slump for the Nasdaq came off the back of 2-3% declines across tech giants Apple, Meta, and Tesla. Meanwhile, Microsoft, Nvidia, and Alphabet also found themselves being targeted, as the safety net of the so-called magnificent seven turned into an anchor driving markets lower. Yesterday saw both the Nasdaq and S&P 500 reach correction territory, losing over 10% since their July peak. Investors will hope for some reprieve today, as shorts are closed ahead of yet another weekend of uncertainty.
Energy markets continue to play a key role in sentiment, with US Natural gas prices on the brink of a nine-month high we head into winter. This surge in both European and US gas prices raise fears of another surge in household costs, despite reserves being well stocked for now. Once again, the potential impending escalation of the Israeli offensive in Gaza looks to be providing upside for energy markets, with crude pushing higher in early trade.
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