The biggest fund indices of Europe and the US have ended the last week in the red zone. However, one should not count on active sales in the long term just yet. With the European session opening on Monday, we do not observe much enthusiasm from the sellers. Moreover, the first two hours saw DAX to the green zone.

At the same time one should remember that the current week is the last one before Christmas. It is already the vacation season and the Friday is a short business day in many of the countries. Thus one should not count on strong unidirectional movements today. Most probably, the sales volatility would reduce; moreover there are no important macroeconomic pieces of news to be expected. This suggests a probability of side movements being formed within a couple of weeks.

Last week leaders and outsiders:

DAX:

Top: Porsche AG Vz +2.71%, Airbus SE +1.33%, Porsche Automobil Holding SE +1,27%

Flop: Volkswagen AG Vz -9.76%, Deutsche Post AG -2.61%, Deutsche Börse AG -1.03%

EURO STOXX 50:

Top: Total S.A. +2.11%, Intesa Sanpaolo S.p.A. +2.38%, Banco Bilbao Vizcaya Argent +1.54%

Flop: Volkswagen AG Vz -10.26%, Deutsche Post AG -3.09%, PADDY POWER PLC -1.85%

Volkswagen’s internal problems have reflected on the company’s shares price. Nevertheless, we do not observe a repeated wave of price reduction today. Active sales become irrational in that case.

Bond market:

Getting to the Europe’s bond market we see that the 10-year yields profitability in France in Germany continues to grow, yet at a very moderate pace. Considering that the speed of the value growth is a bearish factor for the stock market, one should not count on rapid fund market recovery. Moreover, there’s a probability of considerable reduction of the trading activity on the Christmas Eve.

The oil market

Various multidirectional fundamental factors have generated volatility in the oil market. Let’s start with a bearish factor – strengthened monetary policy. The ECB, Fed and the bank of England continue rising up the key rate and announced to also do that in 2023. This is an obvious bear factor for the oil market, as the further growth in the rates will decrease the business activity. Consequently, the real demand for the oil will decline.

At the same time, the market receives bullish signals too. First of all, it is the China’s promise to renew the consumption after restraining from the Covid Zero policy. The quarantine restriction becoming softer in China, the largest oil importer, is a strong bullish factor. Secondly, the US has already started buying the oil to replenish the strategical reserves. This is yet another bullish factor, since it points not only at an increase in demand, but also at a decrease in supply.