Le European stock exchanges they continue the morning rise (+0,9% the Ftse Mib, +0,9% the Dax, +0,5% the Cac 40) despite the fears for the escalation of the war in the Middle East which, if anything, can be glimpsed in the strong volatility, at the highest 5 months. The exception is London which slipped by 0,5%. Against expectations, there are no drops in oil, while gold, in its role as a safe haven asset, does not rise. Meanwhile, futures on US indices are rising and we continue to look at the Fed and the budgets.
“Fears of a much broader regional conflict in the Middle East have only partially influenced market sentiment,” he explains Philip Diodovich, senior market strategist at Ig Italia. European stock markets are supported “in the wake of the fact that the Iranian response, following the Israeli attack on Tehran's embassy in Damascus, was contained. We believe that Israel's possible response could only involve Iranian proxies (Hezbollah), but not an escalation of the conflict with a direct attack on Tehran." Meanwhile, Iran has invoked its right to self-defense at the UN.
“Although the United States has declared that it will not take part in a counteroffensive against Iran,” says Diodovich, “thevolatility index remains close to five-month highs, reflecting a certain nervousness in the market. Any further increases in oil prices could increase inflationary pressures, complicating central banks' efforts to control rising consumer prices."
Gold stable, oil drops
No appreciation for their in its role as a safe haven asset, which remains a $2.369 per ounce (-0,2%). While I oil prices slipped by more than 1%, with Brent at 89 dollars a barrel and WTI at 84 dollars, after the highs recorded over the weekend, as the risk of Iranian retaliation it had already been discounted last week, especially Friday. Fears that Iran's attack on Israel could inflame oil prices towards $100 a barrel are currently proving unfounded.
Certainly, the geopolitical factor weighs heavily on the trend of crude oil, as tensions in the Middle East risk having impacts on the cartel's oil supply. Even if Iran were to have production problems, these would add to the repercussions of Houthi attacks to oil tankers in Red Sea and damage to Russian oil infrastructure, with a disastrous effect on the oil market. And all this while OPEC Plus continues the plan of supply cuts decided a year ago. On the other hand, the Usa they have large strategic reserves to be able to use in the event of a shock on the supply side, while the OPEC cartel itself has at least 5 million of residual unused capacity, largely in the hands of Riyadh. Iran is the third largest producer of OPEC: out of a total production of 26,6 million barrels per day in March 2024, Iran made a contribution of almost 3,2 million barrels, behind Iraq which produces 4,2 million and l 'Saudi Arabia which contributes just over 9 million barrels per day.
Since last year, OPEC, with the addition of some external members such as Russia, to form the so-called OPEC Plus cartel, has adopted rigid supply planning and set production quotas in order to limit excessive fluctuations in the price of raw. This agreement, called the Declaration of Cooperation, establishes the production levels of the countries that have joined, internal and external to OPEC, periodically reviewing the production quota of each member. Demand growth is estimated at 2,2 million barrels this year, in response to the economic recovery, indicated at 2,8-2,9%. In reality, growth in the United States could now be conditioned by the Fed and its policy of "higher rates for longer", while growth in Europe could be revived in the second half of the year by a more accommodating ECB and a cut of rates expected for the month of June. As for China, the large Asian economy now seems to be on the road to economic recovery.
“If prices were to rise significantly in the wake of supply losses, one could imagine the producer group looking to utilize some of the spare capacity in the market. OPEC will not want to see prices rise too much given the risk of demand shocks,” underlines Ing, who confirms a Brent price forecast of $87. For Saxo, Iran's involvement is likely to "push crude prices higher", but the recent rally could deflate "if further escalation is avoided". According to Citi analysts, the current prices between 85 and 90 dollars are the result of prolonged tensions in the Middle East, which a de-escalation could bring back to 70 dollars, while in the event of an increase in tensions, prices could easily reach 100 dollars per barrel.
USA: Attention remains on the Fed and the US earnings season
Apart from the war situation, the publication of the US economic data, including the retail sales and the comments of the officials of the Federal Reserve.
I stock index futures Use I'm in rise, after Wall Street saw a heavy sell-off in the wake of disappointing earnings from some big US banks last week and escalating tensions in the Middle East. By late morning, Dow futures were trading up 0,21%, S&P futures were up 0,41%, and Nasdaq 100 futures were up 0,48%. All three major indexes fell more than 1% in the previous session, posting weekly losses after results from major US banks were less than positive.
With first-quarter earnings season in full swing, investors await the numbers Charles Schwab and the investment bank Goldman Sachs before the opening bell. Comments are also awaited president of the Dallas Fed Lorie Logan and San Francisco Fed President Mary Daly. Federal Reserve Chairman Jerome Powell is expected to speak tomorrow.
Furthermore, March retail sales data, due at 14,30pm, could be crucial in assessing the situation of US consumers in the current high interest rate environment.
U.S. stocks have been trading lower lately as investors reassessed expectations for how much the Federal Reserve will cut rates later this year. Traders expect just 42 basis points of cuts this year, compared to 150 basis points at the start of the year, according to LSEG data. Money market traders now see a better than 50% chance that the central bank will kick off its easing cycle in July, according to CME's FedWatch tool.
In premarket trades, Apple it fell 0,85% after data from research firm IDC showed the company's smartphone shipments fell about 10% in the first quarter of 2024.
Salesforce lost 2,49% after a source told Reuters that the software company is in advanced negotiations for the acquisition of Informatica. Telecom Italia was weak on Piazza Affari, while the countdown to the shareholders' meeting which will be held on April 23rd. The securities fell by 0,8%, settling at 0,226 euros.
Prysmian, Leonardo and Stellantis shine in Piazza Affari
For the whole morning it is Prysmian which supported the entire Italian stock market with a non-stop rally that led it to gain 7% by mid-day. The movement is linked to the announcement of fusion of the cable group with the American company Encore Wire for a value of approximately 3,9 billion euros.
Leonardo rises by 1,81% after the news of having signed an agreement with RFI to create a shared project within the framework of Military Mobility, an EU initiative aimed at increasing existing infrastructural and digital capabilities, to ensure the movement of military resources , inside and outside Europe, even at short notice and on a large scale, ensuring safe, sustainable and resilient transport capabilities. It also goes up Stellantis, of 2,79%, pending the shareholders' meeting tomorrow. Telecom Italy instead it is weak in Piazza Affari, while the countdown has begun for the shareholders' meeting which will be held on April 23rd. The securities fell by 0,8%, settling at 0,226 euros.
A Business Square the FTSE MIB rises by 0,91%, FTSE Italia All-Share Index +0,81%, FTSE Italia Mid Cap +0,40%, FTSE Italia STAR +0,34%. spread at 137 basis points down 1,46%.
Italian debt still rising
Il debt it increased again in February, reaching a level of 2.872,4 billion euros, with growth of another 22,9 billion compared to the previous month. This is what emerges from the latest statistics of Bankitalia on “Public finance: needs and debt”.
