Financial markets begin a transitional week with a focus on the minutes from the Federal Reserve, the ECB, and the evolution of oil following the OPEC+ production increase.
Financial markets are starting a week that, while transitional, is not without catalysts. The Ibex 35, DAX 40, and Wall Street will seek clues in the minutes from the last Federal Reserve meeting, in the monetary policy accounts of the European Central Bank, and in the reaction of oil following the new production increase agreed by OPEC+. Brent, which has already dropped to around $72, has become a key factor for inflation and interest rate expectations.
Fed and ECB Minutes: The Pulse of Monetary Policy
This week, the Federal Reserve will publish the minutes from its June meeting, a document that will reveal the degree of internal division regarding upcoming interest rate movements. The market arrives at this meeting after the US employment data reduced expectations for further aggressive hikes, which boosted equities and gold. If the minutes reflect a growing concern about inflation, bonds could tighten again. Conversely, if they show caution about growth, Wall Street might interpret it as support for risk assets.
In Europe, the ECB will also be in the spotlight with the publication of its monetary policy accounts. For the DAX 40, this reference is particularly relevant, as Germany is one of the economies most sensitive to financing costs and the global industrial cycle. A restrictive tone from the ECB could hinder the advance of European stock markets, while a more cautious message would relieve pressure on cyclical, industrial, and financial sectors.
Falling Oil Prices: A Double Reading for the Markets
Oil has become the second major focus of the week. Brent has fallen towards $72 after OPEC+ agreed to raise its production targets starting in August. This decision comes at a time when transit through the Strait of Hormuz has partially normalised, reducing the accumulated geopolitical risk premium. For the markets, lower oil prices have a clear reading: they reduce inflationary pressure, improve margins for energy-consuming companies, and may soften interest rate expectations. However, they could also dampen momentum for oil companies and those linked to the energy sector.
In macroeconomics, the US will publish the ISM services index, the trade balance, and housing market data. The ISM services index will be particularly relevant as the tertiary sector remains the main driver of the US economy. A strong reading could sustain expectations for corporate profits, but it would also complicate the message of disinflation. A weak reading would have the opposite effect: it would increase doubts about growth but reduce pressure on the Fed.
First Corporate Results: PepsiCo and Delta Set the Tone
The earnings season has not yet entered its most intense phase, but this week already offers useful signals. PepsiCo will publish its accounts on Thursday and Delta Air Lines will do so on Friday. PepsiCo will serve to gauge the resilience of defensive consumption and the ability to protect margins in a more sensitive demand environment. Delta will be a direct reference for tourism, air transport, and consumer spending on services. There will also be results from Levi Strauss, WD-40, Progressive, Fast Retailing, and Tata Consultancy Services, with a more sector-specific impact.
For the Ibex 35, the week will largely depend on the performance of banks, energy companies, and values linked to the European cycle. If bonds relax and oil continues to fall, the Spanish index could find support in sectors sensitive to interest rates and energy costs. For the DAX 40, the market will watch industry, automotive, chemicals, and exporters, especially if the euro and ECB expectations generate significant movements. In Wall Street, the Nasdaq will remain influenced by semiconductors, artificial intelligence, and profit expectations, while the Dow Jones and S&P 500 will measure whether the recent rise can extend to more sectors.
The baseline scenario is a week of lower intensity than major events involving CPI, central banks, or major tech companies, but with enough references to move the market. The combination of Fed minutes, ECB accounts, lower oil prices, and first corporate results could set the tone before the strong part of the earnings season begins. Investors would do well to pay attention to the nuances of central banks and the evolution of crude oil, as these will provide the next clues for equities.
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