Newsletter Mercados

Friday's session showed a consolidation pattern in European markets, with regional divergence between a bullish FTSE 100 and the main Eurozone equity markets in negative territory. The global context was dominated by the geopolitical escalation in the Middle East, which drove clear risk aversion in U.S. markets and a flight to safety in the dollar and gold. European sovereign bonds showed notable stability, with contained peripheral spreads, suggesting that uncertainty was primarily channeled towards risk assets and commodities, without generating immediate stress in Eurozone sovereign financing.

European 10-year sovereign bond yields showed absolute stability at Friday's close. The German Bund remained at 2.69%, as did the French OAT at 3.25%, the Italian BTP at 3.31%, and the Spanish Bono at 3.10%. Sovereign spreads (BTP-Bund +61.3bps, OAT-Bund +55.8bps, Bonos-Bund +40.9bps) showed no significant widening compared to recent levels.

This immobility in rates suggests that the European fixed income market is digesting ECB outlooks without aggressive repricing, despite the adverse geopolitical context. The lack of curve movement indicates limited conviction to bet on immediate monetary tightening or easing, remaining within a consolidation range.

The main driver was geopolitical risk aversion, which traditionally pressures the yields of safe-haven bonds like the Bund. However, the absence of a material decline suggests that flight-to-quality flows were moderate and were counteracted by caution regarding potential inflationary pressures stemming from the oil price shock.

The European sovereign debt market operated with a notable lack of volatility at close. Yields across all key maturities for major issuers (Germany, France, Italy, Spain) remained unchanged in basis points. Yield curves maintained their slope, without signs of flattening or inversion driven by the geopolitical event.

Stability in peripheral spreads, particularly the BTP-Bund spread holding at +61.3bps, indicates that the market is not pricing in a deterioration of sovereign credit risk in the periphery despite the external shock. This suggests a perception of robustness in the EU framework and a containment of speculative flows.

The primary driver was the absence of domestic monetary or fiscal policy catalysts, leaving the market in a wait-and-see mode. Global risk aversion generated some demand for quality, but was insufficient to significantly move core bond prices, possibly due to the offsetting effect of inflationary expectations stemming from rising oil prices.

Sentiment in European corporate credit showed resilience, albeit with a cautious tone. Credit spreads, represented by the iTraxx Europe Main 5Y at 53.61 bps and the iTraxx Crossover 5Y at 252.86 bps (data as of 26/02/2026), did not show aggressive widening during the session. Credit ETFs such as HYG (-0.16%) and LQD (-0.04%) experienced marginal downward movements.

This relative stability in spreads suggests that the geopolitical impact is filtering more through equity market beta and commodities than through a direct repricing of credit risk. Corporate funding conditions appear to remain stable in the short term.

The drivers were general risk aversion, which typically pressures spreads, counteracted by the search for yield in a stable interest rate environment and the absence of specific negative news from the European corporate sector. Movements appear to be driven more by technical and beta flow factors than by an active fundamental reassessment of risk.

The FX market demonstrated clear strength of the dollar as a safe haven. The DXY Index rose by 0.62% to 98.218. EUR/USD fell by 0.57% to 1.17357, GBP/USD retreated by 0.83% to 1.33801, while USD/JPY advanced by 0.67% to 156.905. EUR/GBP rose by 0.24% to 0.87684.

These movements reflect a classic risk-aversion dynamic, with flows into the dollar and the yen, and pressure on European currencies. The relative strength of the euro against the pound suggests that the geopolitical impact is perceived as more negative for the UK economy, possibly due to its greater exposure to the energy channel.

The main driver was the escalation in the Middle East, which fueled demand for dollar liquidity and safe-haven assets. Central bank statements and economic data played a secondary role, with the market reacting almost exclusively to the geopolitical factor and its implications for global growth and inflation.

Commodities experienced sharp increases driven by geopolitical risk. Brent Crude rose by 8.54% to 78.67 USD/barrel. Natural gas (TTF) advanced by 3.60% to 2.96 EUR/MWh. Gold (XAU/USD) gained 3.20% to 5398.10 USD/oz. Copper rose by 1.26% and aluminum by 3.63%.

These movements indicate aggressive repricing of supply risk in the energy market and demand for inflation hedging and safe-haven assets in precious metals. The magnitude of the increases suggests the market is pricing in a potentially prolonged disruption in supply.

The exclusive driver was the military escalation in the Middle East, specifically the attacks in Iran and the risk of closure of the Strait of Hormuz. This generated panic buying and hedging in oil, while gold benefited from its traditional role as a safe-haven asset in times of extreme geopolitical uncertainty.

European indices closed with mixed performance. The Euro Stoxx 50 retreated 0.38% to 6,138.41 points, the DAX fell a marginal 0.02% to 25,284.26, the CAC 40 lost 0.47% (8,580.75), and the IBEX 35 declined 0.73% (18,360.80). In contrast, the FTSE 100 rose 0.59% to a new all-time high of 10,910.60.

This divergence reflects a cautious reallocation of capital within Europe, with the British market benefiting from its exposure to defensive and commodities sectors, while Eurozone indices consolidated after February's movements. Price action lacks clear directional momentum, operating within defined technical ranges.

The drivers were risk aversion due to the escalation in the Middle East, which weighed on cyclical sectors, and the strength of oil, which supported the FTSE. Weakness in the U.S. (S&P 500 -0.43%, Nasdaq -0.92%), driven by inflation data and sectoral concerns, also limited appetite for global equities, although European markets showed relative resilience in the session's context.

The cryptocurrency market showed relative resilience at Friday's close, but with an underlying tone of caution. Bitcoin (BTC/USD) rose 0.75% to $66,233.93, and Ethereum (ETH/USD) advanced 0.32% to $1,945.24.

This performance, positive but moderate, contrasts with the risk aversion observed in other assets, suggesting that cryptocurrencies did not act as a clear haven, but neither did they experience a massive sell-off. Upside conviction remains limited, operating within consolidated ranges.

The driver was a mix of technical flows within a trading range and potential marginal demand as an inflationary hedge, counteracted by their nature as risk assets in an adverse geopolitical environment. The lack of a sharp decline indicates that there was no significant forced deleveraging in the session.

The session was dominated by the reaction to the geopolitical escalation in the Middle East, generating a classic risk-off pattern: dollar strength, rise in energy commodities and gold, and pressure on equities, particularly in the US. European markets showed internal divergence, with the FTSE resilient and the Eurozone consolidating. The notable stability in European sovereign yields and spreads suggests that the shock is being absorbed without immediate systemic financing stress.

What we are not seeing yet: There is no significant widening in European peripheral spreads despite the external shock. Nor is aggressive repricing observed at the long end of the yield curve, indicating that ECB policy expectations remain anchored. The absence of a massive cryptocurrency liquidation suggests that deleveraging was contained.

Conditional Trading Idea: If Brent Crude remains above 80 USD/barrel in the coming days, consider a long in TTF natural gas futures (currently 2.96 EUR/MWh) vs a short in copper futures (currently 6.08 USD/pound). Persistently high oil could translate into higher energy costs in Europe, benefiting gas, while weighing on industrial demand and base metals such as copper.