The phase is still expansive, but European industry slows down, while the gas war and the drop in supplies from Russia lead Germany to activate the alarm in the emergency plan: in this context the continental stock exchanges remain volatile and they struggle to find reasons for optimism, even after the sound start of Wall Street.
The US Stock Exchange is also beginning to digest Jerome Powell's words on his second day of congressional testimony. The number one of the Fed reiterates: the US economy is very strong.
The bear, on the other hand, bites in Europe e the closure is in red for Piazza Affari, -0,89%, but even more for Frankfurt -1,72%, Amsterdam -0,93%, London -1%. Paris -0,56% and Madrid -0,51% limit the damage. With declines of more than 20% from their most recent highs, the German Dax, the French Cac 40 and the Italian Ftse Mib have effectively already entered a “bear phase”.
The euro suffers the slowdowns in manufacturing and services in June and trading down against the dollar, but still in the 1,052 area. Oil treads cautiously after recent losses. Brent trades around 111,32 dollars a barrel. In Amsterdam the future on gas is up 5% at 133,64 euros per megawatt hour.
In the meantime, the EU summit has taken off in which Italy will work on the introduction of a cap on the price of gas, while the Union and Norway announce that they will intensify cooperation to increase gas supplies in the short and long term with the aim of lowering prices.
At the same time, President Vladimir Putin seeks global prominence in an online meeting with the other leaders of the BRICS countries, in which he affirms that Russia is ready to further develop multilateral cooperation with Brazil, India, China and South Africa.
Piazza Affari, collapse of Saipem, banks down
It doesn't stop in Piazza Affari the race to the bottom of Saipem, which after a loss of more than 21% yesterday, today leaves another 8,07% on the ground. The expected capital increase of 2,5 billion euro weighs the stock down. It seems unlikely that a saver could keep his share without shelling out a gigantic sum, so many prefer to sell.
Il oil sector is penalised also from the weakness of crude oil. Tenaris, -3,02% and Eni, -1,97% are again in the red. The automotive industry falls with Cnh -6,44%, Pirelli -5,62%, Iveco -3,95%.
Halfway through the session they put the fast reverse banks too, which record substantial losses. In particular, Bper -4,81%, Unicredit -3,95%, Banco Bpm -2,93%, Mediobanca -2,25%, Intesa -2,16%. Mps slips, -2,99%, which will have to raise 2,5 billion euros with a capital increase within the year to finance the new strategic plan. The goal is to improve Monte's profitability by 2026, also reducing staff with 4 redundancies. According to Intesa SP analysts), "the amount of the increase is in line with what was foreseen in the previous version of the plan and is in the lower part of market expectations".
At the top of the list there are utilities, which rebound after the recent losses, starting from dto Terna +3,45% and Italgas +2,72%.
To tower over the main index are however health titles such as Amplifon +7,93%, Diasorin +5,87 and Recordati +3,68%. Finecobank confirms itself in cash +278% and recovers luxury with Moncler +2,13%.
The Btp Italia closes at 9,4 billion
The finish is also rosé for the Italian secondary, although yields are falling. The spread between 10-year BTPs and Bunds with the same duration, it rises to 193 basis points (+0,77%) with rates decreasing respectively to +3,36% (from 3,53% yesterday) and +1,43% (from + 1,62%).
In the meantime, the primary ended placement of the new Btp Italia, duration eight years, indexed to inflation. The defined rate is 1,6% and the amount issued is equal to 9,44 billion euro.
Wall Street seeks redemption
The situation on the European markets remains stressful and the desire to buy appears rarefied, for fear that the tightening of the central banks, committed to slowing down the price race, will lead to a recession in the USA, which would have effects on a global level.
Jerome Powell, in the second day of hearing on the Fed's report on monetary policy, reiterates that the United States has a "very strong" economy and that it has "fully recovered". Inflation in the US "is the consequence of very strong demand" and the Fed "is using the tools available" to stop it. "It is possible to have a strong labor market while reducing inflation."
The New York Stock Exchange thus moving into positive territory after a previous session in slight decline. Tonight, the Fed is also releasing the results of its 2022 stress test, which will assess how much capital banks would need to weather a severe recession. T-Bond prices rise, while yields fall. The 3-year Treasury shows rates down around XNUMX%.
The Norwegian central bank raises rates
The focus remains on central banks also in Europe. Today, the Norwegian institute raised the reference interest rate by 50 basis points and did not rule out further interventions to bring inflation under control. It's about the largest single increase since 2002.
On the other hand, the recent trend is confirmed in the ECB bulletin. The indication on rates already given by the Governing Council is reiterated: a rise from 25 basis points in June, and if the inflation outlook "remains unchanged or deteriorates, at the time of the September a higher increase will be appropriate” Furthermore, the European central institute acknowledges that the war “is having a heavy impact on the economy of the euro area and the prospects remain characterized by a high degree of uncertainty”. However, there are "the conditions for the economy to continue to grow and show a further recovery in the medium term".
Business activity in the euro area is slowing down
The slowdown in business activity growth in the eurozone appears to fully reflect the ECB's concerns. The CComposite Purchasing Managers' Index (PMI) by S&P Global, considered a valid indicator of economic health, fell to 51,9 from 54,8 in May, well below the 54,0 forecast by a Reuters poll and at its lowest since February 2021. (50 is the limit between contraction and expansion).
"Growth is showing signs of slowing down, as the stimulus to pent-up demand due to the pandemic wears off, offset by the cost-of-living shock and plummeting business and consumer confidence,” said Chris Williamson, chief business economist at S&P Global.
Il PMI related to services, dominant in Europe, fell to 52,8 from 56,1, missing expectations by 55,5 and posting the weakest reading since April 2021. Growth in demand for services has all but petered out and businesses are facing a surge of input costs at a near-record pace, shifting the burden onto customers. The production factor price index rises to 78,3 from 77,4. In the poll's 24-year history, it has only reached its highest level twice, in March and April.
