Market Commentary |
18 April 2023

Evolution of main indexes:

Ten-year interest rate evolution:

Stoxx 600 weekly sector performance:

Standard & Poor's sector performance:

Evolution of exchange rates:

"This time it's different. This is one of the phrases that has lost the most money throughout history."

Yesterday's session was diametrically opposed in Europe and the United States. While in the first case the stock markets went from better to worse, with banks deflating as the day progressed, Wall Street went from worse to better and ended with slight rises. For their part, bonds lost ground in both regions, which led to a significant rise in yields.

However, interest rates once again set the pace for the markets yesterday. During the day, two surveys of economists were released, in which the majority of them expected further increases in official interest rates, both in the US, where they expect the average terminal rate to stand at 5.125%, which means only a further 25 basis points hike by the Federal Reserve, and in the Eurozone, where analysts expect the ECB to increase its rates by a further 75 basis points. Moreover, and this is the point that investors "least liked", economists expect both banks to keep their rates at high levels for some time, at least for the remainder of the year.

In addition, several US regional banks released their quarterly results yesterday, with investors reacting positively. It seems that, in general, the market has considered the crisis of confidence generated by the SVB to have been overcome. In fact, the index that measures market volatility in the US, the VIX, stood at 17 points yesterday, its lowest level in the last three years and reflecting the calmness in which we are ensconced.

Also, early this morning, China published its 1Q2023 GDP, whose growth exceeded analysts' expectations by some margin (4.5% versus the 4% expected), suggesting that the recovery of this economy, following the reopening of the country, is continuing. In addition, a set of macroeconomic figures for the month of March was also published in the Asian country, which were generally positive, especially highlighting the strength of retail sales.

We believe this data will have a positive impact on different sectors such as luxury, automotive and some industrial companies.

Finally, today we will pay attention to the battery of results that we will know in the US: Bank of America, Goldman Sachs, Johnson & Johnson, Netflix or United Airlines. They will undoubtedly mark the future of the indices.

European stock markets remain cheap compared to the U.S.

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