The main European markets are still shaken mainly by the issue of energy and proposed state interventions. In the beginning, it looked like a positive reaction in the belief that a common solution would alleviate the energy crisis, and with it the effects on the economy. Gas and electricity prices in Europe also headed down. Subsequently, however, the improved mood fades and the initial gains of the main stock indexes thin out. Most of them are already trading only slightly above zero. For America, which will start after yesterday’s holiday, futures are predicting about half a percent growth so far.
Oil broke yesterday’s rise. While OPEC is ready to prevent prices from falling too far, slackening demand is acting on the other side. The market’s attention is currently focused not only on the prospects for Europe, but also on further closures in China, which will reduce consumption there.
European bonds switched to mixed development after yesterday’s negative. Overseas earnings, meanwhile, are making up for the holiday shortfall with their growth. In our opinion, the main risk for the market now is the ECB, which is dealing more and more intensively with the dilemma of whether to defend the euro by raising rates quickly, or to keep over-indebted governments afloat by slow progress.
German industrial orders fell again in July and only emphasized the problems with energy and one of the key problems of the euro – the failure of the German export machine. However, the reaction of the euro is not great, the exchange rate is holding at 0.9955. The Czech koruna has a similar problem, which was also confirmed by today’s data: Industrial production fell more than expected, and foreign trade continued to increase the deficit. Even in this case, however, we do not see a negative reaction to the currency – on the contrary, the koruna strengthens slightly below 24.60 per euro.
The afternoon program includes the U.S. ISM services sector index, which is expected to deteriorate but still point to solid sector expansion. In addition, of course, the energy crisis remains in the spotlight; we are likely to see more behind-the-scenes information that can move the markets by Friday.
Overview of exchange rates of the most important currencies today at 11:02 CET:
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Note Current exchange rates can be found in the section Currencies & Rates – Online – Currencies