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Stock Markets Try to Rebound. Treasury Yields Stabilize. Keep an Eye on the French Spread

Markets remain nervous as they await clues to the Fed's next moves. But mostly positive Asian stocks inspire a rebound in Europe too. Keep an eye on the TikTok story. Crucial day for the French government

Stock Markets Try to Rebound. Treasury Yields Stabilize. Keep an Eye on the French Spread

Selling in stocks and bonds eased overnight, although markets remain nervous ahead of tomorrow's data on US inflation which could mark the perimeter of the action of the Fed in the coming months. But today a new front of tension opens for investors, the French one, with the new French government called to face a great test. Europe is seen opening with a rebound.

Inflation Fears Measured by Trump's Tariff Policies

Tensions are high in the markets after an unequivocally positive US labor market data on Friday reduced the chances of a interest rate cut by the Federal Reserve. Investors are also worried that inflation could rise as a result of the tariff, immigration and tax policies of the new administration of US President-elect Donald Trump. The stakes are high tomorrow on US consumer prices: any increase in the core figure above the expected 0,2% could close the door to monetary easing.

But in the night the sell-offs in stocks and bonds have subsided also due to the latest rumors about the White House's next trade policy moves. Bloomberg wrote that President-elect Donald Trump's economic advisers are working on a plan to gradual increases in tariffs, month after month. The soft approach would serve the negotiations to be started with the affected counterparts, in order to avoid inflationary spikes. The duties should increase between 2% and 5% per month. The Trump administration still intends to declare a sort of state of economic emergency, in order to have a free hand in imposing restrictive measures on goods arriving at customs.

Signs of stabilization in US stocks and bonds

Il 10-year benchmark yield settled at 4,77% after hitting 4,805% in New York trading, its highest level since early November 2023. US stock futures also settled, with the S&P 500 futures up 0,25% and the Nasdaq 100 futures up 0,5% on Tuesday morning in Asia. The Nasdaq fell 0,4% yesterday and hit a two-month low, while the benchmark S&P 500 index rebounded from a two-month low to close with a slight gain. The US dollar index hit its highest level in two years yesterday, before retreating late. The financial reporting season fourth-quarter results in the United States, with results expected from some of the largest U.S. banks, including Citi and JPMorgan Chase.

Asian stocks firm, except Tokyo. Eyes on TikTok

Le asian bags are mostly positive, except Tokyo, which is back from the holiday and is trading down 2,02% on the Nikkei 225, continuing its downward trend of four consecutive declines, which has been going on since last Wednesday. Today's data from Japan shows a growth in the current account surplus in November. According to the Japanese Ministry of Finance (MOF), a current account surplus of 3.353 billion yen was generated, up from the surplus of 2.457 billion in the previous month. The figure is also higher than analysts' expectations, who expected a growth of up to 2.691 billion.

Instead, the Hang Seng Index Hong Kong gains 1,4%. CSI 300 of the stock exchanges Shanghai Shenzhen +1,7%, TAIEX of Taipei +1%. The China Securities Regulatory Commission reiterated overnight that stability is at the top of its agenda for 2025, it said at the end of its working meeting on priorities for the current year. The regulator said it will work with the People's Bank of China to improve the effectiveness of monetary policy tools while strengthening the construction of a market stabilization mechanism. While it did not provide details on how the mechanism will work, the regulator pledged to strengthen its guidance and added that it will respond promptly to market concerns. One of the two structural monetary policy tools the CSRC has referred to in the past is a liquidity support facility that allows institutional investors to tap the PBOC to obtain financing to buy stocks. The second is a swap facility that allows securities firms, funds and insurance companies to obtain liquidity from the central bank to buy stocks. The initial amount of the instruments is 800 billion yuan ($109 billion) and could be doubled or even tripled depending on demand, Governor Pan Gongsheng said.

Last night, behind-the-scenes information about the relationship between China and the United States was circulating. Senior Chinese officials are said to be considering the possibility that Elon Musk buy them TikTok's US operations: the hypothesis could materialize if the social company is unable to legally challenge the bans imposed by the White House. Beijing officials would prefer to leave things as they are, with the property in the hands of the holding company ByteDance, but in view of a confirmation of the limitations by the Supreme Court of the United States, it is necessary to prepare. One of the possibilities that is already being discussed includes Elon Musk's involvement: X – the former Twitter – would take control of TikTok USA and jointly manage the business, sources said.

France in the spotlight: fears for the state budget are reflected in the spread

Il Prime Minister Francois Bayrou today he is expected to outline in a speech the contours of an agreement to water down the pension reforms, in exchange for the left's support for approving the budget. Bayrou's government, formed last month after the collapse of his predecessor's administration, has sought assurances from some opposition parties, particularly the Socialists, that they will not vote against the 2025 budget. Analysts mostly expect him to win. But markets are still nervous, fearing that Bayrou could undo parts of the pension reform that would raise the minimum age for full retirement, which could save the struggling government billions of euros. risk premium on French debt, measured by the yield gap between French and German 10-year yields, is trading near highest levels in the last 12 years, as investors are concerned about the'political instability and for the growing public deficit.

Oil Tensions Remain. Euro Struggles to Recover

Not helping matters is oil prices soaring to a four-month high, amid signs of lower shipments from Russia as Washington tightens sanctions against the country.
Benchmark Brent crude futures broke above their 200-day moving average and held above $80, at $80,73 a barrel on Tuesday. Unusually, the malaise in traditional financial markets has spread to cryptocurrencies, with bitcoin down nearly 95.000% in a week, just below $7.

In the currency market, the euro was steady at $1,02475, hovering near a more than two-year low of $1,0177 hit yesterday. The yen was at 157,54 per dollar, backing away from a nearly six-month low hit last week. The dollar index, which measures the dollar against a basket of currencies, hit a two-year high of 110,17 overnight and was last at 109,62.

European stocks seen recovering

The major indices of the Italian Stock Exchange and the main European financial markets should start the day with fractional gains (+0,68% the future on the Eurostoxx50)

Brunello Cucinelli. The cashmere group has announced its preliminary results for 2024, a financial year that closed with revenues of 1,28 billion euros, up 12,2% compared to the 1,14 billion achieved in the previous financial year; at constant exchange rates, growth would have been 12,4%. Management estimated that 2024 would see revenues increase between 11% and 12%. Brunello Cucinelli confirmed its expectation of revenue growth of around 10% for the two-year period 2025/2026.

Intesa Sanpaolo has made a surprise entrance into the world of cryptocurrencies. On the evening of Monday, January 13, a screenshot of an internal bank email went viral on various social media in which Niccolò Bardoscia, Head of Digital Assets Trading & Investments at Intesa Sanpaolo, announced that in the morning the bank led by Carlo Messina had successfully concluded the first trade on Bitcoin, worth one million dollars for 11 Bitcoin. “With the hope that this is just the beginning,” Bardoscia wrote in the email.

Autostrade per l'Italia announced that, "following a broad competitive process", it has reached an agreement with the Group through its subsidiary Free to X Renault – through the mobility brand Mobilize – for the sale of a share of the capital of Free to X. The aim is to further develop the e-mobility business outside the motorway network.

BuildingAcrobatics closed 2024 with a +16,6% increase in the number of contracts signed, going from 26.550 contracts in 2023 to the current 30.958. The number of customers grew by 73,8%.

Mediobanca. Its subsidiary active in consumer credit, Compass, has acquired the majority of HeidiPay, the holding company specialized in buy now pay later, strengthening its development of platforms active in the payment deferral segment in line with its strategic plan to 2026.

Team. The Milan court is expected to rule this week on a request by Vivendi, the telecoms company's main investor, to overturn the former telephone monopolist's decision to sell its fixed-line network to a consortium led by Kkr.

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