Last week …
Was a little mixed with reasonable volumes on Monday and Tuesday, followed by a busy Wednesday and then a really quiet end to the week with subdued volumes on Thursday and Friday.
Madrid was our most traded market accounting for 39% of turnover. Our three most traded stocks, Santander, BBVA and IAG were all Spanish.
Oil prices jumped 5% after the situation in the Middle East escalated on Wednesday and Donald Trump declared that the ceasefire was over.
Wednesday was unsurprisingly our busiest day with the graph below illustrating the jump in activity in our two biggest energy stocks, Repsol and Total Energies.
Thursday and Friday saw much lower volumes with many retail investors possibly dissuaded from participating by the heightened levels of uncertainty.
The Stoxx 600 fell 1.8% last week whilst the DAX finished down 2.8% and the CAC 40 dropped 2%.
The Transportation sector recorded the biggest weekly gain in activity with a 44% increase on the previous week, mainly driven by IAG and Air France.
This week …
Has the potential to see higher levels of volatility in markets.
We have a much fuller economic calendar this week with US inflation numbers due on Tuesday, Chinese growth figures on Wednesday and US retail data being released on Thursday.
This week also marks the beginning of the Q2 earnings season with several large US banks announcing results on Tuesday and Wednesday.
There is the potential for some Tech sector volatility with ASML and TSMC also releasing results mid-week. There have been large swings in technology stocks in recent weeks with South Korea’s KOSPI index providing a good insight into the sector. The index is heavily weighted towards technology stocks and fell 7.6% last week. That was the third week in a row of losses, yet the index is still up 77% year to date. Fears of a tech sector bubble persist and this week’s results will come under heavy scrutiny.
The Middle East uncertainty will continue to cast a shadow over markets. Whereas at the start of the conflict we saw wild swings in markets with every news update, now escalations appear to be subduing market activity as investors choose to wait for calmer waters. I’m not sure how much markets will react to the next peace announcement as there will be limited confidence in it lasting.
So several different possible catalysts for volatility this week. I’m going to predict higher volumes than last week. It could be an interesting one.
That’s all from me, until next week… Happy investing!
Carl
