The markets ended once again on a stable note (Stoxx600: -0.1% and S & P500: -0.6%) after a difficult start to the week following the North Korean nuclear test. Market reaction was ultimately more measured than expected, and investors seem to continue betting on a diplomatic outcome. Moreover, new sanctions are under study and the United States wants to establish an oil embargo to strangle the regime, despite the reluctance of Russia and China. Whatever happens, the decision of a military intervention against North Korea seems to be decided only by Seoul.
Another dramatic phenomenon, the giant hurricanes Harvey and Irma have devastated the Antillas and Irma is now reaching Florida. The impact on the market is primarily focuses on insurers and reinsurers, while the amounts of damage are likely to be huge but are not known at this stage, which in turn benefits the oil sector (material damage, constrained production).
Insurance sector hurt by BCE and hurricanes (ETF Lyxor INS), weekly data
The ECB, which met on Thursday, does not seem in a hurry to normalize its monetary policy for now because of the weakness of inflation and the rise of the euro which threatens the growth of the zone. The main lines of its policy will be known in October and will probably consist on a further reduction in the amount of monthly redemptions (for example from € 60 to 40bn per month) and an extension in 2018. These statements weighed negatively on bonds and financials.
Among good news, a surprise deal was reached between Donald Trump and the Republican and Democratic Congress leaders on extending the debt ceiling and government funding until December, thereby avoiding the risk of Shutdown that threatened if an agreement had not been reached before the end of September. This only postpones the problem, but allows for new negotiations for the end of the year, which increases the chances to reach an agreement.
European rates decreased in the wake of the ECB comments and US and European statistics slightly weaker than expected, while the Euro / USD continued to strengthen to 1.20 after topping 1.21 in intraday.
Commodities were mixed this week with a drop in copper and gas while gold and a number of agricultural and metals have performed well.
Overall, many news this week, but the markets remained rather non-directional. We expect a more directional phase in the next few weeks, rather upwards as the market seems to react very well to bad news while some cyclical sectors (Automotive and Energy) seem to be starting again.
European Automotive sector bounced back (ETF Lyxor AUT), weekly data
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The markets ended once again on a stable note (Stoxx600: -0.1% and S & P500: -0.6%) after a difficult start to the week following the North Korean nuclear test. Market reaction was ultimately more measured than expected, and investors seem to continue betting on a diplomatic outcome. Moreover, new sanctions are under study and the United States wants to establish an oil embargo to strangle the regime, despite the reluctance of Russia and China. Whatever happens, the decision of a military intervention against North Korea seems to be decided only by Seoul.
Another dramatic phenomenon, the giant hurricanes Harvey and Irma have devastated the Antillas and Irma is now reaching Florida. The impact on the market is primarily focuses on insurers and reinsurers, while the amounts of damage are likely to be huge but are not known at this stage, which in turn benefits the oil sector (material damage, constrained production).
Insurance sector hurt by BCE and hurricanes (ETF Lyxor INS), weekly data
The ECB, which met on Thursday, does not seem in a hurry to normalize its monetary policy for now because of the weakness of inflation and the rise of the euro which threatens the growth of the zone. The main lines of its policy will be known in October and will probably consist on a further reduction in the amount of monthly redemptions (for example from € 60 to 40bn per month) and an extension in 2018. These statements weighed negatively on bonds and financials.
Among good news, a surprise deal was reached between Donald Trump and the Republican and Democratic Congress leaders on extending the debt ceiling and government funding until December, thereby avoiding the risk of Shutdown that threatened if an agreement had not been reached before the end of September. This only postpones the problem, but allows for new negotiations for the end of the year, which increases the chances to reach an agreement.
European rates decreased in the wake of the ECB comments and US and European statistics slightly weaker than expected, while the Euro / USD continued to strengthen to 1.20 after topping 1.21 in intraday.
Commodities were mixed this week with a drop in copper and gas while gold and a number of agricultural and metals have performed well.
Overall, many news this week, but the markets remained rather non-directional. We expect a more directional phase in the next few weeks, rather upwards as the market seems to react very well to bad news while some cyclical sectors (Automotive and Energy) seem to be starting again.
European Automotive sector bounced back (ETF Lyxor AUT), weekly data