Market analysis: Normalization in process
Market phase: Normalization in process

Our Market Pressure Index stands at 41/100, into the "risk-on" zone, coupled with a positive spread momentum for the Stoxx600 (+6), and for the S&P500 (+30) while the VIX stands at 22. The participation to the rise is positive but still short of a "risk on" pattern that implies a spread momentum above +40.

After a strong start last week, stocks ended mixed after signs of Covid-19 resurgence in Europe and Asia and fears for the world economy. However, Chinese stock market surged again on Monday as the Chinese central bank injected additional medium term loans to the financial system. The US 10Y rates surged to 0.7% (from 0.5% in early august), that may be seen as a positive but also added some pressure on the USD. The EURO/USD is back to a 2 years high at 1.185, a positive momentum sustained by a greater Eurozone fiscal solidarity, and the gap in the balance sheet trends between the Eurozone and the U.S. This may weight negatively on European equity indices if the trend continues, especially for Techs, Pharmas and oils stocks.

Another move to monitor is the WTI prices that rose by 2% last week, amid hopes for Chinese demand and after data showed a drop in inventories.