Enthusiasm for a seemingly dovish-than-expected Fed petered out in Europe later in the day and the close is moderately negative, especially after booting into deep red of Wall Street. The super dollar is also making a comeback, government bond yields and raw material costs are rising, leaving little hope for a drop in inflation.
This is the picture, while the American price lists, starting from NASDAQ (-4,6%), seem poised to close on a black Thursday, after yesterday's gains, largely due to the words of central bank number one Jerome Powell. As is now known, Powell raised rates by 50 basis points, the maximum increase in 22 years, but in line with market expectations, and appeared more cautious than expected on the future: "A 75 basis point increase is something that we are not actively considering,” he clarified, sparking investor euphoria. After about 24 hours, however, with the bowls still, risk aversion returns decisively.
I am paying the highest price right now the tech giants, such as Amazon (-7,45%), Apple (-4,13%), Alphabet (-4,8%), Meta (-6,17%), Microsoft (-4,5). Tesla drops about 7%, while Twitter is up (+3,44%) after Elon Musk secured 7,14 billion dollars in financing for the acquisition of the social network (44 billion dollars) from a group of 19 investors, including Larry Ellison (the co-founder of Oracle), Sequoia Capital and the Binance platform (cryptocurrency trading).
On the other hand, mood swings, in this phase, are sudden and commonplace, in a geopolitical context that gets worse instead of better and with China grappling with Covid and the economic repercussions of the restrictions decided on in Shanghai and Beijing. In particular, the IHS Markit-Caixin PMI index on services in China plunged to 36,2 points in April from 42 points in March. The pandemic does not cease to worry globally, given the speed with which the coronavirus mutates and due to the large number of victims it causes, despite vaccines limiting its danger. WHO today tripled its estimates of the number of Covid-related deaths worldwide between January 15 and December 2020 to around 2021 million.
European price lists: from euphoria to depression
The European lists, after a euphoric start, thus arrive at the finish line in negative territory. Piazza Affari loses 0,6% and closes at 23.759 basis points. Frankfurt -0,5%, Paris -0,43%, Amsterdam -0,36%, Madrid -0,71% also went below the waterline.
Instead, London is saved +0,2%, on the day in which lthe BoE has decided to raise rates by 25 basis points, the fourth since December, to a 13-year high, while inflation is at a staggering 10%. Britain's central bank has warned that the country could end up in a recession, but that it "can do nothing about global supply problems or energy prices that are currently driving prices up."
At this point, the ECB too will have to move towards a normalization of monetary policy within the year. “I think it is clear that at some point we are going to move rates, not just once, but over time, in a sequence,” Eurotower chief economist Philip Lane told a Bruegel think tank conference. And the important question is not understanding when the ECB will start to move, but how quickly and at what pace it will raise interest rates, Lane specified. Speaking of normalisation, the banker admitted that a range of rates between -0,5% (the current deposit rate) and zero (the repo rate) "is not good" and is not consistent with an inflation target of 2%.
Euro and Pound in deep red
The choices of central banks are reflected in the various currencies. After a leap in the euro, following a dovish Fed, today the single currency reverses course and returns to the 1,053 area with a drop of 0,85. It even goes down the pound which loses about 2% against the greenback, with the cross around 1,237.
Government bond yields rise; BTPs over 3%
The respite does not last long even for the bond. The prices of T-Bonds North Americans are down, while yields are on the rise. The ten-year Treasury moved beyond the psychological threshold of 3% (+3,09%), with an increase of approximately 6% compared to yesterday's closing.
Yields are also rising in Europe. The spread between the ten-year Italian and German it rises to 199 basis points (+0,72) and rates are still running: the Btp closes at +3,03% and the Bund at +1,04%.
Among raw material oil is moving forward: Brent +1,15%, 111,41 dollars a barrel. OPEC+ has decided to confirm the line of gradual increase in production established last year and consequently will increase the level of extractions by 432 barrels per day starting from June.
Further increases for natural gas: futures traded in Amsterdam: +2,8%, 106,73 euros per megawatt hour.
Piazza Affari, Unicredit is not enough to save the list
The main Milanese list sees red, after having cast an eye on global issues and one on the quarterly reports of large companies.
Blue chip queen of the day is Unicredit, +2,08%. with the market that rewarded i counts beyond expectations, the confirmation of the targets and the breakthrough on Russia, ie a containment of the exposure to Moscow reduced by 2 billion "at a minimal cost".
Banca Mediolanum +1,16% and Campari +1,07% are also on the podium. Wooden medal for Prysmian +0,62%. Mediobanca did well +0,4%, in the capital of which Caltagirone rose to 5,499%.
In the automotive sector stellantis, after a tonic phase following better-than-expected counts e confirmation of the 2022 guidance, instead ends in red -0,72%. Cnh +0,55% is positive, Iveco -3,07% and Pirelli -2,8% are down.
The list of major discounts opens with Moncler, -5,63%, despite the good quarterly performance, while in the luxury sector Ferragamo rebounds +2,99%.
Evil Enel, -2,24%, after accounts judged in chiaroscuro by analysts.
The sitting was a lot volatile for Telecom, -1,62%. In a video call with journalists after i first quarter results, CEO Pietro Labriola expressed confidence in the possibility of reaching a preliminary agreement on the integration of network assets with Open Fiber shortly, even within a few days.
