Stock markets moved higher as bond yields fell

The history of conflicts and their impact on stock markets shows statistically that either the stock markets rose immediately when the conflict broke out, or they rose after the first negative reaction, as in the case of the outbreak of the war in Ukraine. It is no different now, where yesterday we observed strong increases on the stock markets, and the stock exchange in Poland was the strongest. Asia also performed very well this morning, and the opening in Warsaw was positive.

Bond yields fell rapidly

Stock markets may also be influenced by the situation in the bond market. In the face of the conflict, investors began to buy, among others: gold and government bonds, which in turn led to a rapid decline in their yields. In Germany, the yield of 10-year bonds dropped the fastest since August, and in the United States, where the reaction is only visible today after Columbus Day, we have the largest decline since March.

No Fed rate increases a foregone conclusion?

Lower market interest rates along with another element of geopolitical and economic uncertainty (the impact of the conflict on the market oil i gas) may also inhibit the ambition for further increases in interest rates in the US. This may be good news for the stock market, where the local economy is doing very well, which may bring better-than-expected company results.

This combination of factors may mean that this quarter and at least the first quarter of 2024 may be good for the stock market, unless there is a broad escalation to other regions and there are no shocks on the commodity market.

Identical price and time adjustment for FW20

Yesterday's turnover was impressive on the Polish stock exchange. Interestingly, the current correction to FW20 had the same range in price and time as the correction from the first quarter. This gives technicians reason to believe that the correction may have ended and the market will start a new upward wave.