The market continues to follow the compass of central banks and awaits the Jackson Hole symposium, which starts today, but which will see the central event tomorrow when the president of the American Central Bank will speak Jerome Powell, to understand the possible implications regarding monetary policy. However, the cards are now revealed and the markets themselves have elements available that point the way.
Yesterday evening the Fed FOMC minutes ended on July 31, which showed that a large majority of bankers believe it is "probably appropriate" to cut interest rates at the next Federal Reserve meeting, scheduled for September, if the data allows it. On that occasion, the FOMC decided to keep interest rates at 5,25%-5,50%, the level to which they were raised in July last year, the highest since 2001. Interest rates were were lowered to 0-0,25% in March 2020, to combat the negative effects of the coronavirus pandemic on the US economy, and then progressively raised from 2022.
Not only that. Also yesterday, the data on theUS occupation in the 12 months ending in March, revised by approximately 30% less than previously published (818.000 fewer jobs): another factor that points in the direction of the need for a rate cut, to avoid a potential recession.
At this point, according to the experts who are part of the Reuters panel, the US central bank will not only cut the reference rate by 25 basis points at its meeting on 17-18 September, but will then repeat the operation in November and December, bringing the range to 4,5%-4,75% by the end of 2024.
Things to watch on Friday will be whether Powell explicitly says he's comfortable cutting rates, whether he mentions being open to a 50 basis point cut, and whether there's any talk of the terminal rate, which is the level at which the Fed believes it should be the natural long-term cost of borrowing in a normal economy, unhindered by inflation or recession
The Fed's decisions will also influence the behavior of the ECB. Yesterday the governor of the Bank of Italy Fabio Panetta he said that it is "reasonable to expect that we are moving towards a phase of easing of monetary conditions, because inflation is falling and the world economy is slowing down". And are you hoping for a rate cut in September? “obviously I hope so,” replied the governor as he left a meeting at the Rimini Meeting. The publication is scheduled for 13pm minutes of the June meeting of the ECB which cut rates by a quarter of a point in June, bringing the reference on deposits to 3,75%.
Wall Street up yesterday
Last night theS & P500 it closed up 0,4%, coming within one percentage point of the all-time record. Nasdaq Composite +0,6%. The VIX volatility index remains on the rise for the second consecutive day at 16,30, in any case far from the 65 peak seen in early August. Purchases of medium/long-term government bonds continued. Ten-year Treasury Note yield at 3,79% from 3,81%.
Bubbly day for Target (+11,2% to 159,25 dollars), after the release of the financial results for the 2nd quarter of 2024/2025, a period closed with revenues and earnings per share better than the analysts' consensus. Furthermore, the company's management has revised upwards its earnings per share estimates for the full year. In sharp decline, however, American Express (-2,68%).
Asia: positive signs from the Japanese economy
The Nikkei 225 stock market index Tokyo it is at +0,40%. The Purchasing Managers' Index showed sustained growth in the services sector for the second consecutive month as domestic demand was boosted by improving wages. While Japan's manufacturing PMI still fell more than expected, overall business activity remained expanding. The strength ofJapanese economy favors the possibility of further interest rate hikes by the Bank of Japan this year, which could pose a headwind for local markets. However, experts predict that stocks with exposure to domestic demand will benefit from this trend at the expense of exporters. Japanese consumer price inflation data, due out on Friday, is expected to offer further insights into the economy.
Chinese bags contrast. China's CSI 300 and Shanghai Composite indices are trading just below parity, at six-month lows. The rebound in technology and e-commerce stocks helps the Hang Seng index Hong Kong to rise by 0,4%. The KOSPI of South Korea it is unchanged. The Central Bank kept interest rates unchanged as expected, citing the need to keep inflation under control. There Indian stock exchange is slightly negative.
The other variables
The yield of Waist ten-year is at 2,19% from 2,21% yesterday, while that of construction sector ten-year term is at 3,55% from 3,60%, at the lowest levels since the beginning of 2024 with the spread which shares at 137 bps. THE'Euro dollar it is at 1,114, the highest since the beginning of 2024. Petroleum: Brent and WTI -0,2%. Gold -0,4% to 2.502 dollars after reaching a new all-time high of 2.531 dollars on Tuesday. Bitcoin at 60.700 dollars, -0,8%.
European stock markets seen starting slightly down. What to follow today
After yesterday's positive session, European stock markets are expected to decline at the start of the session based on the indications provided by futures prices: the one on the Eurostox50 is down by 0,08%. US futures are just below parity (-0,01% on the Dow Jones and -0,03% on the S&P500) with the yield on the 10-year US Treasury rising to 3,805%. Yesterday the Ftse Mib of Milan was the pink jersey of the Old Continent with an increase of 0,7%. Also positive were the Cac of Paris, the Dax of Frankfurt, the Aex of Amsterdam (all up by 0,5%) and the Ibex of Madrid (+0,1%).
Webuild announced that the American subsidiary Lane has been awarded a contract for the construction of the Palisades Tunnel in New Jersey (United States).
Juventus FC has announced that it has reached an agreement with AC Milan for the acquisition, on a temporary basis until 30 June 2025, of the rights to the sporting performances of the footballer Pierre Kazeye Rommel Kalulu Kyatengwa for a consideration of 3,3 million euros, payable in two financial years.
The total value of the order is 466 million dollars (427 million euros), of which 35% is Lane's share.
The works will be carried out in joint venture with the companies Schiavone and Dragados and completed in 2027.
Saipem. Yesterday it jumped by 3,35%), on rumors of new contracts with Saudi Aramco.
A2A. Yesterday it achieved the eleventh consecutive rise, with the price at the highest level since 2008.
Eni. In the period between 12 and 16 August, it purchased 3.189.700 own shares, equal to 0,10% of the share capital, at the weighted average price of 14,4175 euros per share, for a value of approximately 46 million.
The titles of the company should also be monitoredthe oil sector, after the price of crude oil in New York (contract expiring in October 2024) fell below $72 a barrel.
The data on the agenda today
At 10 the pmi Eurozone preliminary August composite (previous: 50,2 points), preliminary August manufacturing PMI (previous: 45,8 points) and preliminary August services PMI (previous: 51,9 points). Weekly U.S. jobless claims (previous: 14), July CFNAI (previous: 30 points) and preliminary August manufacturing PMI (previous: 227.000 points) are expected at 0,05:15 p.m. 45 points) and the preliminary services PMI in August (previous: 49,6 points). At 55pm with the Eurozone's preliminary August consumer confidence index (previous: -16 points) and with sales of existing homes in July in the USA (previous: 13 million).
