Bankinter's analysis team establishes three ranges to measure the impact of crude oil on the markets. The $100 per barrel level becomes the threshold beyond which the market suffers significantly.
The evolution of oil once again dictates the pace of the stock markets this week, in a context of meetings of three major central banks and a new wave of corporate earnings. The analysis team at Bankinter maintains a cautious tone, although it considers that the recent moderation of crude partially improves the outlook.
Last week ended almost flat thanks to Friday's stabilization. Strong corporate earnings prevented significant downturns, despite Brent briefly surpassing $100 per barrel and the European Central Bank maintaining an ambiguous stance on future interest rate movements.
Bankinter establishes three ranges to measure the impact of crude oil on the markets. Between $90 and $100, the pain would still be tolerable: stock markets may stall, but not necessarily correct sharply. Between $80 and $90, the market begins to feel more comfortable. Below $80, oil would cease to be a central concern for investors.
This Monday, the drop in Brent after Iran indicated it would suspend its attacks if the United States acted similarly has brought the price back to a more manageable zone. However, the entity warns that the war with Iran is likely to be long, intermittent, and capable of frequently reigniting.
The rise in bond yields remains one of the main obstacles for the stock markets. The US T-Note hovers around 4.67% and the German Bund around 3.18%. Bankinter reminds that higher yields imply lower stock valuations, especially in sectors with demanding multiples. Therefore, a sideways movement of the stock markets during the summer would not necessarily be negative, as it would allow for the correction of some accumulated excesses following the continuous rises since 2023.
The European inflation figure for July will be one of the main references of the week. On Thursday, the German data will be released, with an acceleration expected to 2.7%, up from the previous 2.3%. Such a deterioration would reinforce fears that rising oil prices will again pressure prices during the second half of the year and force central banks to tighten their monetary policy.
This week, decisions from the Federal Reserve, the Bank of England, and the Bank of Japan will be announced. Bankinter expects brief, cryptic, and ambiguous messages, especially from the Fed under the presidency of Kevin Warsh.
The earnings season will gain intensity with reports from Microsoft, Meta, Amazon, and Apple. Bankinter expects good or very good figures, although it warns that the market is beginning to distrust the enormous investments aimed at artificial intelligence. Alphabet, for example, raised its AI investment forecasts for 2026 to $200 billion, up from the previous $185 billion. These figures raise doubts about future profitability and may reduce the positive impact of good results.
For investors, the key is to monitor the $100 level of Brent: if it consolidates below, the outlook improves; if it surpasses it again, pressure on the stock markets will intensify. Bankinter anticipates a cautious and possibly sideways tone over the coming weeks, with an orderly consolidation that would not be negative as long as crude does not spike and bonds do not continue to climb.
You may also like
