The European stock markets are preparing to start the last session of the week in negative territory, in the wake of the collapse that yesterday saw all the stock markets of the Old Continent as protagonists. So i Euro Stoxx futures they lost 1%, Milan 0,9%, Paris 0,7% and Frankfurt 0,8%. A negative sign also for Wall Street where the Dow Jones left 1,21% on the ground, and the Nasdaq 2,30% which is weighed down by fears of a recession in the American economy.
Stock market August 2: rates falling, banks are shaking
With a very narrow majority of 5 votes to 4, the Bank of England decided to lower the key interest rate by 25 basis points, bringing it to 5%. The main factor leading to this decision was probably provided by the new medium-term inflation projections. On the other hand, with a unanimous decision (12-0), the US central bank kept interest rates unchanged at 5,25%-5,50%. In the statement from the FOMC, the monetary policy arm of the Fed, we read that “there will be no cuts until there is greater confidence that inflation will fall towards the 2% target”.
The central banks' doveish vision is thus confirmed but without an explicit commitment. Leaving his hands free on his next moves, the president Jerome Powell the necessary flexibility is guaranteed to possibly postpone, if necessary, the expected reduction in the cost of borrowing to November, when the meeting falls immediately after the elections.
Stock market August 2: quarterly reports weigh
But in the meantime the rotation among the most followed themes on the market continues after the peaks reached by tech. In reality, the Bloomberg index of the "Magnificent 7" achieved a spectacular +3,6% in the last session. However, the overall balance is in the red by 0,6% despite the final performance of Meta +7%. THE quarter numbers they exceeded Wall Street's expectations, both in terms of revenues (+22%) and profits (+73%). Advertising increased by 10%. “We had a strong quarter and Meta AI is on track to become the most used AI assistant in the world by the end of the year,” said the CEO Mark Zuckerberg in the press release.
But July saw the start of the rotation. The data already underlined are not surprising so much for their dimensions, but for the comparison with the Dow Jones +4,8% and above all compared to that of the index Russell 2000, +10%, its best budget of 2024. The wait for a rate cut should favor a further widening of the gap, at least until the Fed acts. What to do in the meantime? It will be good – he writes Alessandro Fugnoli – “reduce the risk profile. It's not about taking refuge in cash. It makes no sense to do so when the basic scenario is still that of good growth and almost normalized inflation."
Le quarterly have shown that the moderate slowdown of the economy, the holding of rates and the low percentage of bad loans for now constitute a winning mix.
Stock market August 2nd: Tokyo crash, Intel down
But the coming freeze on the US economy pushed down Wall Street yesterday. This morning in Asia Pacific there is only decline. Nikkei of Tokyo -5%: to find a negative variation of this magnitude you have to go back to the times of the pandemic. The yen is little moved at 149,5, the highest since March.
China. Hong Kong's Hang Seng loses 2%.
Apple +0,5%, closes the third fiscal quarter with revenues of 85,78 billion, +5% and above expectations. Revenue from iPhone amounted to 39,30 billion, above forecasts. Net profit rose to 21,44 billion, above expectations.
Amazon -7%. Revenue for the quarter rose 10% to 148 billion and profit more than doubled to 13,5 billion. The company expects revenues of 154-168,5 billion for the current quarter and an operating profit of between 11,5 and 15 billion, below expectations.
Intel -20% has announced a 10 billion cost cutting plan, 15% of employees will be cut, the dividend will not be paid.
The heavy decline in the index Ism Manufacturing, together with the strong increase in new requests for unemployment benefits, has frozen the rise at the beginning of the session. In the final, Dow Jones -1,2%, S&P500 (5.446) -1,4%, Nasdaq (17.194) -2,3%, Magnificent Seven (21.685) -2%, Russell 2000 index of mid&small caps (2.186) - 3%.
The index Eurostoxx 50 (4.765) closed down 2.4%, the lowest since February. First support to monitor towards 4.500 points. The frost also affected Italy. The FtseMib (32.857 points) lost 2,80%, its worst session in a month and a half, under the weight of the fall of the banks. The alarm of SocGen on the evolution of the interest margin (one of the most important items in the banks' income statement) has caused some concern.
THEgold regains ground thanks above all to strong geostrategic tensions. Over in the Middle East, there is unrest in Venezuela.
