Curb inflation, accelerate the Stock Exchanges. The May CPI index of the Eurozone grew by +6,10%, from +7% in the previous month. Estimates pointed to +6,3%. It is the slowest pace since February 2022. The peak was reached in October 2022 (+10,70%). The index net of food and energy – which the ECB watches with particular attention – grew by +5,30%, from +5,6% in the previous month. It was estimated at +5,50%. It is the third consecutive decline.
Stock exchanges latest news: Piazza Affari runs with banks and Recordati
Le European stock exchanges gain ground, with attention focused on inflation data from the Eurozone, which slowed more than expected last month. Confidence that the US is on course to avoid a debt default also helps buoy the mood. Leading the upward race is Milan, +1.90% above 26.500 points, recovering what was lost on the eve. The banks lead the race, starting from Mediobanca after the promotion to "buy" of Jefferies, while the rally of Mount Paschi +1,8% supported today also by the improvement of the outlook by Moody's. Shop on Recordati +3,1% for which JP Morgan raised the target price to 54 from 50 euros.
Lagarde: "Inflation still too high"
But be careful: the successes on the price front are still too modest to let our guard down. Christine Lagarde reiterated this this morning, reiterating that a further tightening of monetary policies of the European Central Bank. “Today, inflation is too high and will stay that way for a long time,” she said ECB President Christine Lagarde – We are determined to promptly bring it back to the medium-term target of 2%. For this reason we have increased rates at the fastest pace ever and have made it clear that we still have a way to go to bring interest rates to sufficiently restrictive levels”.
Dax up, but there's little to celebrate in Frankfurt
These words do not slow down the progress of the markets, even when the macro data could suggest a more cautious attitude. This is the case of Germany which today celebrates a new absolute record for the index Dax +1,2%, one of the most effervescent despite a new negative signal: in May the German manufacturing sector it contracted fastest in three years and output fell for the first time in four months.
The final HCOB Purchasing Managers' Index (PMI) for the manufacturing sector, which accounts for about a fifth of the German economy, fell to 43,2 from 44,5 in April, the fourth consecutive monthly drop and the lowest reading from 2020. Meanwhile consumption slows down -4% compared to a year ago despite salary increases in various sectors and the intervention of the federal government on commuter transport costs with immediate repercussions on the inflation rate.
Despite this. “the manufacturing sector is heading towards difficult timesCyrus de la Rubia, chief economist at the Hamburg Commercial Bank, told Reuters. Companies have noticed a decline in demand, especially in exports to China, Europe and the United States. “Business expectations about future output have turned pessimistic but – he adds – companies continue to increase employment and are still able to push slightly higher selling prices in an environment of significantly declining input prices, which is positive for profit margins. A judgment that does not conflict with the "technical recession" of the first economy of the Old Continent.
Germany slows down, the Btp-Bund spread is at its lowest
Thus the latest forecasts of the International Monetary Fund remain confirmed, according to which Germany risks being the only country to score a decline in growth in 2023, equal to -0,1%. Beyond the economic corrections that Berlin faces from the top of a still enviable public accounts situation, there is a widespread feeling that the German development model has reached the end of the line. It is now behind the era of Frau Merkel, based on the mix of military security outsourced to the United States, low-cost energy from Russia and close ties with Chinese manufacturing which, on the contrary, threatens to invade Europe with low-cost electric cars.
Same zero debt policy inherited from the intransigence of Wolfgang Schauble has caused a delay in investments which holds back the colossus from across the Rhine: Berlin has the problem of uncompetitive energy costs, an excessive dependence on the old-school engineering tradition, a lack of political and commercial responsiveness to in new sectors.
A novelty as surprising as the snow on August 83 depends on this too: despite the rising rates and the greater burden on the state coffers to meet the debt service (2022 billion euros more in XNUMX due to the higher cost of money) narrows the spread: the risk premium between Italy and Germany on the ten-year stretch tightens to the minimum since 10 March below 180 points.
