Investors, too, are bracing for a high-risk week. Developments on the geopolitical front suggest tensions could spill over into the economic and investment arena.
At least 12 people, including a US citizen, were killed and 309 injured in the attack on Riyadh airport. Trump has left open the possibility of US-Saudi military action against the Houthis.
Taking into account a New York Times editorial on Friday about a strike being considered by Washington, as well as Monday’s public holiday in the US (Columbus Day), traders are on heightened alert.
Meanwhile, just hours after the Trump-Putin agreement on Russian diesel, the US president said it was time for Ukraine to get a new president. As these developments unfold almost simultaneously across the main unresolved fronts, with the consequences for Europe already clear, European Commission officials are voicing their disagreement with the Trump-Putin agreement.
All of this is essential context for traders and investors seeking a broader picture of the environment taking shape and its inevitable impact on markets.
Frankfurt and Paris ended last week lower, despite Friday’s rebound. Gains of 1.19% for the DAX, to 25,103.07 points, and 0.95% for the CAC 40, to 7,803.33 points, looked more like an upward correction than the start of a new uptrend.
With the “energy” and “interest-rate” outlooks still in flux, attention is also focused on the release of US consumer and producer inflation data.
At its latest meeting, in late September, the US Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75%–4.00%, delivering its first rate increase in three years.
Fed chair Kevin Warsh noted that inflation remained far too high, while markets are pricing in at least one more rate increase by the end of the year.
Against this backdrop, Manos Hatzidakis believes the inflation data take on particular significance, as they are expected to offer clues about the Fed’s next moves.
Fed meetings are scheduled for 27–28 October and 8–9 December, and ECB meetings for 28–29 October and 16–17 December. In between, the US midterm elections take place on Tuesday, 3 November. The third-quarter results season also begins on Wall Street next week, with banks in focus.
Results are due on Tuesday, 13 October, from JPMorgan Chase, Citigroup, Goldman Sachs and Wells Fargo, as well as healthcare companies Johnson & Johnson and UnitedHealth Group. On Wednesday, Bank of America, Morgan Stanley and BlackRock report, while Thursday’s standout is Taiwan Semiconductor Manufacturing (TSMC).
The particular interest is understandable given the company’s importance to the global semiconductor market and investment in artificial intelligence.
That is the global backdrop. At home, sellers were the clear winners last week. The market fell 2.93% to 2,559.18 points, with average daily trading value of 395.6 million. A 5.55% drop in the banking index to 2,961.13 points was decisive, dragging down most blue chips.
The FTSE 25 fell 3.11% to 6,547.03, while the FTSE Industry index lost 4.62% to 12,013.77. Trading activity and turnover during market corrections were significantly higher than during the corresponding rallies, suggesting that some “major foreign investors” are reducing their positions, mainly in the banking sector but also across a broad range of large caps.
That is evident in the fact that only five FTSE 25 stocks ended the week in positive territory: Allwyn at 12.10 (up 9.21%), Coca-Cola HBC at 50.50 (up 0.40%), Motor Oil at 67.75 (up 0.37%), HelleniQ Energy at 18.49 (up 1.71%) and AKTOR at 9.70 (up 1.88%). Sellers are clearly in the lead and, unless there is a dramatic positive change on Wall Street, are likely to retain the upper hand from Tuesday, when the ... financial capital reopens.
Politics is also in play, with Mitsotakis’s remarks on the 25% target prompting various interpretations. On this, the article by Filippos Pantazis on the messages within the party is highly informative.
Meanwhile, the prime minister is warning of possible (?) price rises in supermarkets, which he even described as inevitable, while September inflation stood at 5% — a Tentoglou-style leap from 3.8% in August.
Energy costs are surging, with annualised price rises of 15% for electricity, 55.2% for natural gas, 53.2% for heating oil, 7% for solid fuels, 38.8% for diesel and 22.5% for petrol.
Giorgos Findikakis outlined seven reasons fuel prices will remain above €2 for months. Spyros Theodoropoulos is pleased with the prime minister’s announcements on managing energy costs, while the EU continues to press for a windfall tax on energy companies’ excess profits.
It is widely acknowledged that the main pillars of Euronext Athens are, first and foremost, the banks, followed by the energy sector in the broadest sense. Given the significant shareholdings of “major foreign investors” in both systemic groups and energy companies, what happens next will depend to a very large extent on their stance.
How will traders and investors act in the coming period? Traders have reason to continue “taking” some of their profits, while investors are looking for better entry points — that is, lower prices.
Against this backdrop, the subscription process is beginning for Capital Maritime Finance, with Dr Panos Dantis providing a detailed analysis of what investors “buy” in the public offering. As he notes, it is “...the first shipping company to list all of its shares exclusively on the Greek stock exchange, and that alone is enough to attract the market’s attention”.
On Wednesday, Evangelos Mytilineos and Antonis Karatzis will inaugurate one of the largest stand-alone energy storage projects in south-eastern Europe.
A day later, Papoutsanis will present its financial results and growth strategy.