“Higher rates, for longer”: this is what the US central bank promised yesterday, disappointing the markets and triggering a wave of sales which today also hit the European stock markets, which closed in the red, while Wall Street started to decline again.
They are also back under pressure government bonds on both sides of the Atlantic (4,54% for the ten-year BTP), while oil fears repercussions on demand due to the effects that the monetary tightening may have on the economy.
The aggressive attitude of the bankers of Fed (which also left the cost of money unchanged) is overshadowing the other central banks at work this week. The last one, tomorrow, will be the Bank of Japan.
Europe down; Piazza Affari in black shirt
After shining yesterday, Business Square Nemesis does not escape the fact that it closed today in the black with a loss of 1,78%, a measure that almost mirrors the gain of the day before and which brings the Ftse Mib back to 28.708 basis points. Only a few banks, which do not disdain high rates, were saved from the rain of sales. It stands out above all even today Unicredit +2,45%, rewarded by the market after the announcement of a new tranche of the buyback plan scheduled for this year.
The picture is not very different in the rest of the eurozone: Paris gives 1,6%, even if the attention of the French in recent days is put to the test by the mini tour of the English monarchs, King Charles III and Queen Camilla, which started from the palace of Versailles. On such a glamorous occasion, it is precisely luxury that suffers on the stock market with Hermes at a peak of 5,85%. Frankfurt loses 1,32%, Madrid 0,97%, Amsterdam -0,89%.
Off the block London -0,68% and Zurich -0,63%, both on the day of the choices of their central institutions. The BoE, as expected after the latest macroeconomic data, left the cost of money unchanged, the first stop after almost two consecutive years of tightening. The Swiss central bank also did not change rates, although it kept the option of further increases open.
On the contrary the Swedish Riksbank , norwegian central bank both raised rates by 25 basis points, in line with expectations.
Out of line there Turkish central bank which decided on a 5-point increase and brought interest rates to 30%, the highest level in twenty years. On the other hand, the country is experiencing 60% inflation which the central bank is finally trying to combat.
Wall Street down; T-Bonds fly
Wall Street is moving lower today too, with stocks under pressure from high government bond yields. The titles of the Murdoch galaxy go against the trend, Fox (+2,23) and News Corp (+0,9%) after the announcement of the farewell to the presidency by the 92-year-old tycoon who will pass the baton to his son Lachlan Murdoch.
Rate-sensitive stocks, such as mega tech, are down due to yields Treasury two- and 10-year bonds which are moving at the highest levels since 2006 and 2007 respectively. The 4,47-year bond currently shows a yield of 5,135% and the two-year bond XNUMX%.
On the other hand the weekly benefit requests Unemployment reached its lowest level since January last week, confirming an economy that is holding up, offering the Fed an edge to stick to the tightening.
Toned Dollar; oil starts again
On the foreign exchange market the dollar if it maintains tonic in light of the estimates of the Fed bankers, who foresee another rate increase of 25 basis points in 2023, as in June, but now only imagine a cut of 50 basis points in 2024, against 100 points in June.
Il WSJ he even wonders whether rates are now destined to remain higher forever. Whether the so-called "neutral level", which allows for the stability of inflation and employment, will from now on be positioned at a higher level than previously.
THEeuro it holds up quite well in the comparison and trades at the levels of the day before around 1,066. On the other hand, the pound retreats, while the yen remains under pressure awaiting the government's decisions BoJ.
Among raw materials, oil is starting to rise again in recent minutes, after having lost ground following the choices of the Fed hawks.
Il Brent it moves around 94 dollars a barrel and Texan crude trades above 90,5 euros, with an increase of approximately 1%.
The price also continues to rise gas in Amsterdam, close to 39 euros per MWh with an increase of approximately 4%.
Heavy Business Square Recordati, oil and utilities
In Piazza Affari you are spoiled for choice among the negative stocks on the main price list. Starting from the bottom, the worst is Recordati -5,27%, but utilities also suffer with Ivy -4,8% and A2a -3,88%, industrial stocks, such as Cnh -4,12% Ferrari -4,67% Interpump -4,26%. Oil stocks are bad, starting from Saipem -4%.
At the top of the list there are only four blue chips and three are banks. In addition to Unicredit, the interest in Bpm bank +1,73% and Mount Paschi + 0,48%.
The only title that is not from the credit sector is Amplifon +0,3%, which consolidates the gains of the day before after the promotion of HSBC.
Outside the big cap list, it appreciates sapphire +4,6%, following the announcement that Amazon will launch new smart glasses under the Carrera brand and with Alexa voice service in the US market.
He can't get it Ovs, -1,52%, which instead started well following excellent quarterly results.
Spreads and rates on the rise
The red is also bright on the secondary market for government bonds, in particular for Italian paper. The spread between the 180-year BTP and its German counterpart it rises to 2,76 basis points (+4,54%) and rates soar: the Italian bond goes to 4,45% (from 2,74% yesterday) and the 2,7-year Bund to XNUMX % (from XNUMX%).
From the ECB front, various bankers shared the scene in the media today. The European Central Bank may need to tighten its monetary policy further given the abundance of inflationary pressures, according to Belgian central bank governor Pierre Wunsch, while Klaas Knot of the Governing Council said rates would most likely remain stable. at the next meeting. The President of the Bundesbank Joachim Nagel noted that inflation in the eurozone is not falling “at the desired pace” and it is therefore too early to determine whether or not the European Central Bank will need to raise interest rates further.
On the other hand, the president of the ECB Christine Lagarde at a conference in Marseille he reiterated that “high inflation represents a challenge for the entire region. It must be reduced, not least because low and stable inflation is essential to incentivize long-term investment.”
“For our part – he added – we are committed to maintaining price stability for the euro zone. That's why we've raised interest rates ten times since July last year, and why we acted again last week to strengthen progress towards our inflation target."
In short, the blanket risks becoming increasingly shorter due to the financial maneuver that the government is preparing to present next week.
