Equity Market Shrugs Off ECB Hawkishness Amid Oil Price Surge

Global equities took a hit yesterday, falling around 0.5%, despite a hawkish message from the European Central Bank and a sharp rise in oil prices.

The ECB's communication was itself influenced by the oil shock, which saw prices surge to their highest level since mid-May.

Danske Research Team attributes the relatively mild reaction of equities to exceptional underlying economic strength and a market view that does not yet price a full stagflation shock.

Investors are not pricing this scenario, as evidenced by only marginal defensive outperformance and Asian equities softer, while European and US futures trade slightly higher.