Markets enter the day after a tense week marked by comments from Fed Chairman Jerome Powell that interest rate cuts were inevitable. “The time is now,” the US central banker said on Friday, marking a turning point. Ibex starts Monday in a dead heat, up 0.15% early in the day to hold 11,200.
Oil prices are up 1.9%, with Brent, Europe’s benchmark, approaching $80 a barrel. The new gains come after Israel and Hezbollah exchanged a fresh round of airstrikes on Sunday, raising concerns about supply disruptions if the conflict escalates.
The outlook for the start of the week in the US is positive. S&P 500 futures rose 0.08% and Nasdaq 100 futures rose 0.17%. This comes after several days of all-time highs that appear to have left the turbulence of August behind them.
Stock markets in Asia were unsteady on Monday. The Nikkei index, which measures 225 of the Asian nation’s largest companies, fell 0.8% on Monday, weighed by expectations of a stronger yen, which is weighing on shares of major Japanese exporters.
In Europe, the red numbers are repeated across the main indices. The CAC 40, the main index of the French stock market, starts the week with a rise of 0.80% and is an exception on the Old Continent.
Repsol shares were the biggest gainers after oil prices rose, up 1.5%.
Merlin and Satir also rose 1.5%.
In the opposite direction, ACS (-1.4%) stands out after the state of Texas decided to reclaim ownership of SH-288, the major highway it operated with Abertis in the world’s leading economy. Santander and Alantra cut their price targets on ACS shares today due to the U.S. setback.
Economists at Dutch bank ING said Friday’s market strength had held up at the start of trading this morning despite heightened geopolitical tensions. “Israel’s pre-emptive strike on Hezbollah over the weekend has reignited concerns about the Middle East. Any recovery from these events is expected to be short-lived unless Iran intervenes more actively, as this would further increase oil supply risks,” they said in a research note.
As for the Fed’s next steps, ING notes that it is not clear “whether the Fed intends to start with a 50 basis point cut instead of 25.” They say this depends on “significant data support through September.”
Bankinter’s research department points to Wednesday as the key moment of the week, with Nvidia’s results due out, which they say will have “some tension but no objective reasons for pessimism”. “The company itself is well aware of the risk it runs if it is disappointed after the brief profit taking by tech companies at the beginning of August, so it will try to avoid that at all costs,” they note.
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