As we thought in the beginning of the week, it proved to be volatile. The German DAX and the European EURO STOXX 50 finish the week in red. The main bearish factor is the ECB monetary policy. Let’s remember, the European regulator has increased the key rate by 50 bp and will continue to elevate it in 2023.

Also, let’s consider that the American regulator is ready to increase the key rate in 2023, even though the inflation has slowed down. All of that is a bearish factor for the fund market, as the increase in the money value suggests a reduction in the risk related enthusiasm.

Last week leaders and outsiders:

DAX:

Top: MTU Aero Engines AG +1.55%

Flop: Sartorius AG Vz -3.64%, Vonovia SE -3.07%, Infineon Technologies AG -2.42%

EURO STOXX 50:

Top: ING Group N.V. +1.5%

Flop: PADDY POWER PLC -4.76%, Vonovia SE -4.31%, Inditex -3.41%

Consider the bearish mood dominance throughout the whole of the market. Only one security of the DAX index and only one of the EURO STOXX 50 ended the day with more than 1% profit. The outsiders, however, demonstrated significant losses. But today the mood remains bearish, the index is being traded lower than its closing price on Thursday.

The bearish scenario would remain predominant without any data indicating at the ECB being ready to finish the aggressive key rate evaluation.

Bond market:

Due to the ECB increasing the key rate and harsh comments to it, the 10-year yields profitability has grown. The German ones gained 2.2% - it is the month’s maximum. France has also gained, the values are back to the maximum for the last 5 weeks. Further growth of these instruments would mean new stock market sales. But this scenario is going to be valid until there’s data on the ECB terminating the key rate evaluation.

The oil market

The oil has also reacted on the change in the enthusiasm towards the risk related assets following the key fund indices. On Friday, during the European session, the Brent oil dropped below $80 per barrel, the American counterpart WTI also shows negative dynamics being back at below $75.

The bearish scenario is a priority until global changes in the monetary policy of the Fed and ECB or until OPEC+ announces to reduce the extraction values. OPEC is about to summon an urgent meeting to confirm the new extraction rates, keep it in mind.