After an opening above par, the European stock exchanges they worsen as the hours pass and by mid-day they are in the red with investors still worried about the effects of the European elections after the reversals that occurred in France and Germany, but also curious to know the next moves of the Fed, which could give new indications on rates tomorrow . Not only that, again on Wednesday, new data on inflation will arrive from the USA, which will be crucial for understanding what the monetary future of the Stars and Stripes will be.
But prices remain a central theme also in Europe despite last week's rate cut, with the ECB advisor Francois Villeroy de Galhau which ensures that the European Central Bank will bring inflation back to the 2% target by next year, despite the expected “noise” in this year's monthly data. “This 'noise' is not very significant and therefore we are even more 'outlook-driven' and will follow inflation forecasts even more closely,” Villeroy said. The ECB banker from Finland Olli Rehn confirms: “It's important to see the big picture. Significant progress has been made in bringing inflation back towards target, especially from September 2023,” Rehn said in a statement. Inflation has fallen by more than 2,5 percentage points since the ECB's last rate hike in September 2023, she added. Inflation is expected to return to the ECB's medium-term target of 2% in the year ahead, although its downward path "has slowed a bit in recent months", Rehn said.
Staying on the macro front, also keep an eye on the monthly report on job market published in Great Britain, which showed continued weakening in employment, which fell by 139 in the three months ending in April compared to the three months ending in January. The English unemployment rate thus rose to 4,4% in the three months to April compared to 4,3% in the three months to March. Vacancies fell for the 23rd consecutive month. The vacancy-to-unemployed ratio fell to 0,60, which is now broadly in line with the pre-pandemic level at the end of 2019.
European stock markets worsen with electoral uncertainty
The effects of the European elections continue to be felt on the stock markets, with the Stoxx 600 loses 0,6%. Among the main price lists, Madrid is in the red by -0,94%, while Frankfurt e Paris they lost more than 0,6%. Amsterdam marks -0,26%, while outside the EU London is down by 0,6%.
On the stock market it is necessary to point out the collapse of Atos (-12,5%). The French tech group has accepted a debt restructuring offer led by anchor investor David Layani, which will massively dilute the stake of current shareholders. Ucb instead, it gains 2,58% after JPMorgan updated its recommendation on the Belgian biopharmaceutical group's shares to 'neutral' from 'underweight'. Naturgy slipped 12% after the holding company Criteria abandoned the plan to acquire the Spanish gas company with Abu Dhabi's Taqa.
Milan in the red ballasted by the banks
After opening higher, mid-day Business Square achieved the worst performance in Europe, losing 1,17% to 34.137 points. The banks are above all weighing on the Ftse Mib, still in deep red after Monday's sales: Bpm bank loses 3,2%, weighed down by Morgan Stanley's cut in rating, from 'Overweight' to 'Equal'. However, the investment bank raised the target price to 7,7 euros (from 7,10). Same rating for other Italian banks, such as Unicredit (from 40 to 43 euros), which loses 1,94%) and Intesa Sanpaolo (from 4,2 euros to 4,7), in the red by 1%. Bad too Ps 1,95% and B for Bank 1,85%.
Travel 2% lower Moncler, energy prices below parity: Saipem -1,86% A2a (-1,48%), Snam (-1,25%).
The best stock in the Ftse Mib is instead Amplifon (+1,78%). Fractional increases also for Prysmian (+ 0,35%), Diasorin (+ 0,29%), Mediobanca (+ 0,14%).
Out of the main basket Solid World Group collapsed by -9,39% after the launch of the capital increase. Also worth mentioning Bank Profile (+1,4%) after rumors of a binding offer from Barents Re. Second the messenger, the European reinsurance group would be ready to make a binding offer on the majority "shortly" and to launch a takeover bid on the remaining shares. Barents Re would act in partnership with two Italian investors, including the Lmdv family office, headed by Leonardo Maria Del Vecchio.
The spread continues to rise, tension on yields
But the effects of the European elections mainly affect government bonds with the spread between BTPs and Bunds growing further, reaching 145 basis points from 141 the day before. The yield on the Italian ten-year benchmark stood at 4,12% from the previous 4,08%. The Bund yield instead fell from 2,67 to 2,65%. French bonds are still in the spotlight after President Emmanuel Macron called early elections for the end of the month, following the election result. After yesterday's strong movements, today the 10-year OAT rate is at 3,27%. Unicredit analysts point out that the market's reactivity in the last 24 hours “has given everyone an idea of what could be expected in the run-up to the French elections, with the uncertainty that could last until the second round of voting in July 7th". According to experts, the performance of the Bund, however, will most likely soon begin to focus (but not exclusively) on "regular" market drivers such as ECB indications, inflation trends and data on business sentiment,
The other markets
The quotations of the Petroleum are lower as investors await inflation data from the United States and China and the outcome of the Federal Reserve's policy meeting to get a clearer picture of the direction of prices and how this will affect fuel demand. At 12.30, Brent futures lost 0,4% to 81,3 dollars a barrel and US West Texas Intermediate crude futures lost almost half a percentage point to 0,08%, at 77,36 dollars. It is up almost one point gas at 34,8 euros per megawatt hour.
On the currency l'EUR it moves to 1,074 dollars, the same level as yesterday's closing.
