ECB Raises Interest Rates: Oil Above USD 100 – Is a Stock Market Shock Now Imminent?
The European Central Bank raised interest rates again last Thursday. The deposit rate is rising from 2.25% to 2.50%, while the main refinancing rate is being raised from 2.40% to 2.65%. The new interest rates take effect on September 16. Although the move was expected, the accompanying statements sparked renewed nervousness in financial markets.
The ECB now expects average inflation in the eurozone to reach 3% by 2026. This means inflation will remain well above the 2% target. At the same time, the growth forecast was raised slightly to 0.9%. ECB President Christine Lagarde warned of heightened inflation risks and did not rule out the possibility that this was the last interest rate hike. The bond market is already pricing in further rate hikes totaling around 60 basis points through April 2027. Yields on 10-year German government bonds, as well as those from France and the United Kingdom, reached their highest levels since 2008 and 2009, respectively—levels last seen during the financial crisis.
The reaction on European stock markets was correspondingly negative. The STOXX Europe 600 lost about 0.6%, and the DAX fell by about 0.7%. The iShares STOXX Europe 600 UCITS ETF (DE) (WKN: 263530 | ISIN: DE0002635307 | Ticker: EXSA) also declined. Banks can generally benefit from higher interest margins. Nevertheless, Deutsche Bank (WKN: 514000 | ISIN: DE0005140008 | Ticker: DBK) lost 0.56% on the day of the decision. A potential interest rate advantage therefore does not guarantee an immediate rise in the share price.
The pressure was particularly evident in the real estate sector. Vonovia shares (WKN: A1ML7J | ISIN: DE000A1ML7J1 | Ticker: VNA) fell by about 3%, while LEG Immobilien shares (WKN: LEG111 | ISIN: DE000LEG1110 | Ticker: LEG) lost 2.21%. For TAG Immobilien (WKN: 830350 | ISIN: DE0008303504 | Ticker: TEG), the sell-off continued on Friday but stabilized again toward the end of trading. Rising financing costs and higher bond yields are thus weighing on the entire industry.
At the same time, oil prices intensified inflation concerns. US WTI crude oil surged 6.7% on Thursday to USD 102.48 per barrel. On Friday, the WTI Crude Oil Future corrected to around USD 100.25, but still ended the week well in positive territory. Triggers include tensions in the Middle East and concerns about prolonged disruptions to transportation routes and oil supplies. Technically, WTI also remains firmly in an uptrend. The price is well above the 20-day moving average (MA) of USD 88.37, the 50-day MA of USD 83.12, the 100-day MA of USD 86.79, and the 200-day MA of USD 79.45.
In the US, consumer prices rose by 0.4% in August, while the yield on 10-year Treasury bonds briefly approached 5%. Although stock markets rebounded on Friday, the probability of a Federal Reserve rate hike next week rose to nearly 90%. A major stock market crash has not materialized so far. However, oil prices above USD 100, persistent inflation, and further potential interest rate hikes continue to form a dangerous combination. Real estate stocks, highly indebted companies, and expensively valued growth stocks, in particular, remain vulnerable to sell-offs.
Desert Gold: Will the Re-Rating Begin with Gold Production?
A gold price above USD 4,300 per ounce has noticeably improved the starting position for developers and prospective producers over the past 12 months. It is in this favourable market environment that Desert Gold is attempting to transition from explorer to operational gold producer. The focus is on the SMSZ project in western Mali, on the border with Senegal. Thanks to a geologically interesting rock structure, the exploration area already contains significant gold deposits suitable for open-pit mining. For investors, therefore, the decisive factor is less the prospect of new discoveries than whether the geological potential can now gradually generate reliable cash flow.
Recent operational signals indicate that management intends to accelerate this transition. Desert Gold reported progress on the construction of the gravity plant in the Barani section of the property. This gravity plant is strategically important because a small, relatively low-capital-intensive production start-up can insulate the project from the typical dilution many junior miners suffer in early development phases. At the same time, Mali remains a challenging environment: logistics, the rainy season, permits, and political premiums on country risk can derail operational schedules at any time. Most recently, the rainy season and muddy roads delayed transport of the plant components by over five weeks.
On a purely valuation basis, however, Desert Gold remains attractive. An updated PEA for the SMSZ project shows a post-tax net present value of USD 61 million and an internal rate of return of 57% based on a base gold price of USD 2,850 per ounce. This recently contrasted with a market capitalization of only about CAD 41.5 million (USD 30 million). This valuation gap is not yet proof of undervaluation, but it does show that the market is currently still demanding a significant discount. However, if production ramps up as planned, this risk discount could shrink significantly, especially since the PEA assumes a post-tax net present value of USD 124 million and an internal rate of return above 100% at a gold price above USD 4,070.
USD 820 Price Target: Is Meta Set to Kick Off the Next AI Rally with Muse?
Meta Platforms stock (WKN: A1JWVX | ISIN: US30303M1027 | Ticker: META) closed at USD 648 on Friday. Its market capitalization stands at approximately USD 1.65 trillion. Over the past 5 trading days, the stock gained nearly 7%. Year-to-date, however, it is down just under 1%, and for the year, it is down about 14%. Headquartered in Menlo Park, California, Meta controls some of the world’s largest social networks, including Facebook, Instagram, WhatsApp, Messenger, and Threads. Its core business remains digital advertising. About 3.6 billion people use the company’s platforms daily. This enormous reach is now expected to give Meta an advantage in the competition for personal AI assistants.
The AI agent Muse is fueling new excitement. JPMorgan analyst Doug Anmuth upgraded Meta’s stock from “Neutral” to “Overweight” and significantly raised the price target from USD 640 to USD 820. Compared to the current price, this represents a potential upside of around 27%. The analyst believes Meta is only at the beginning of a multi-year phase of new AI products and revenue streams. Muse not only answers questions but can also perform tasks independently. For example, the assistant can send emails, manage calendars, book travel, and make online purchases. It is initially available for free in the US via its own app and WhatsApp. By its second day, Muse had already reached third place in the US App Store. According to JPMorgan, early adoption was even 10 times higher than among internal test groups.
In the long term, Meta could generate revenue from Muse through subscriptions, sales commissions, and additional services. The integration with WhatsApp, Instagram, and the company’s AI glasses also opens up new possibilities. Evercore ISI therefore reaffirmed its “Outperform” rating and a price target of USD 860. The analyst also points to about 15 million small businesses already active on Meta’s platforms. The existing business provides a strong financial foundation. In the second quarter, revenue rose 28% to USD 60.80 billion. Daily active users increased by 3%. At the same time, ad impressions rose by 14% and the average ad price by 12%. This shows that Meta continues to grow strongly even without direct revenue from Muse.
However, the AI push is extremely costly. Meta plans to invest up to USD 145 billion by 2026. Additionally, Muse requires access to sensitive areas such as emails, calendars, and payment services. Privacy, security, and user trust will therefore be crucial. Oppenheimer remains cautious and merely confirms the neutral “Perform” rating, as future monetization has not yet been proven.
From a technical analysis perspective, the picture has brightened significantly. The price is above the 20-day moving average (MA) at USD 583.81, the 50-day MA at USD 600.20, the 100-day MA at USD 604.15, and the 200-day MA at USD 622.96. This means all key moving averages have been regained.
The next resistance levels are between USD 660 and USD 680. Above these prices, the record high of around USD 796 could come back into focus. Below the 200-day moving average, the chart picture would cloud over again.
The Deutsche Bank example shows that even an interest-rate environment that is fundamentally positive for banks does not guarantee a short-term price rise if market uncertainty and economic concerns weigh on the overall market. Desert Gold, a speculative addition to a gold sector portfolio, is poised for a revaluation with the planned start of production in Mali; however, as a still-small market participant, the stock is less liquid, so position size should be adjusted accordingly. Meta Platforms continues to impress with its strong advertising business and AI potential around the AI assistant Muse, but it has yet to justify its high investment requirements or address outstanding monetization questions.
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