Reported by Nicolás Lopez Medina
European stock markets ended the week with a session of slight gains. Initial gains moderated after the indices failed to break through their annual highs. Investors’ cautious stance can also be attributed to the risks over the weekend in the context of the conflict in Iran.
Corporate results remain the focus of investors’ attention, with today’s highlights including the fall in Universal Music Group following disappointing results, and in Novo Nordisk following the failure of a phase III clinical trial. On the positive side, Amazon rose by 15% after reporting solid growth in its cloud division, which validates its strategy of heavy investment in data centres.
The French CAC 40 stood out with a 0.3% rise. Meanwhile, the Euro Stoxx 50 gained 0.2% and the IBEX 35 0.1%. Both indices reached new all-time highs during the session, although their gains moderated by the close.
July closed with little change in the indices, which mask significant rotations and extreme fluctuations in many shares. The most significant development has been the correction in the semiconductor sector, which has seen a fall of around 20 per cent – its worst month since 2008. However, it should be borne in mind that this correction follows an exceptional rally of over 100 per cent between April and June.
Volatility continued on Friday in the sector, which rose by more than 3% at the start of the session only to lose all those gains by mid-session. On a day without a clear direction, Amazon and Alphabet were the biggest positive contributors to the S&P 500, whilst Apple led the falls with an 8% drop after issuing lower-than-expected forecasts, citing supply issues.
At the close of the European session, the S&P 500 and the Nasdaq were trading with little change.
Fixed Income.
Bond markets saw yields rise following statements by some Fed members defending the need to raise interest rates to control inflation.
On Friday, the yield on the 10-year German government bond rose by 5 basis points to 3.20%, whilst that on the benchmark 10-year US Treasury note rose by 6 basis points to 4.73%.
Commodities and currencies
Brent crude rose by 1.0% on Friday to $90.0 per barrel in the absence of positive news regarding Iran. Despite this, it fell by 7% over the week as a whole.
The dollar lost around 3% against the yen and 2% against the euro, falling to 1.152, amid speculation that the Bank of Japan may intervene to defend the yen