(El Sol 24 Raw Radiocor) – Anticipation is increasing in operating rooms for US labor market data, from which observers hope to extract indicators about the health of the US economy, and thus about the next moves of the Federal Reserve. This comes at a time when the reform of the Stability Pact is at the forefront at the political level in Europe, affecting the financial policies of member states. Ecofin registered a stalemate overnight, but work is underway to find a compromise to end the picture.
Meanwhile, also in the wake of the positive session on Wall Street, ie European price lists They move wisely upward, with FTSE MIB indicator Milano is just a hair above par. Slight increase for FT-C100 london, CAC 40 Paris andIbex 35 Madrid, while DAX 40 Frankfurt recorded confirmation of German inflation in November at -0.4% (+3.2% y/y). On the other hand, the Tokyo Stock Exchange (-1.7%) is suffering at its lowest levels in a month, with the yen’s jump linked to market expectations for the end of the “zero interest rate” season by the Bank of Japan.
Nothing has been accomplished on the stability agreement, but Gentiloni is optimistic
Finance ministers failed overnight to reach an agreement on reforming budget rules, so negotiations will resume this morning. They still hoped to reach a compromise, but around 4 a.m., when discussions broke down, the road was still uphill. According to Economic Affairs Commissioner Paolo Gentiloni, the finance ministers “made significant progress” in the discussions that took place overnight, but the mission is not yet accomplished. However, he expressed optimism that an agreement would be reached in the next few days, noting that an extraordinary meeting of Ecofin would likely be held to reach an agreement on reforming budget rules. “Many points remain open, including clarification of the legal aspects” of a potential agreement. France, Germany, Italy and Spain have proposed a compromise solution that takes countries’ interest spending into account when determining fiscal maneuvers to reduce the deficit/GDP. It is a matter of “deducting” it from the deficit account only for the purposes of judging the correction of the public accounts year after year. According to the Fund for Economy and Finance, in 2023, spending on Italy’s debt burden will be equivalent to 3.8% of GDP, equivalent to more than 78 billion euros. In 2024, it will be equivalent to 4.2% of GDP, or about $89 billion. In 2025, by 4.3%, equivalent to more than 95 billion; In 2026 to 4.6% of GDP to 104 billion.
Euro weak under $1.08, gas and oil rise
On the currency front, the euro remains weak at $1.077 (from 1.0785 at yesterday’s close), the price of gas rises to €41.3 per MWh (+3.5%) while the recovery in crude oil continues after OPEC+ efforts to support production cuts: a contract is being traded North Sea crude for February delivery at $75.6 per barrel (+2.1 percent).
Tokyo closes lower, yen strengthens
The Tokyo Stock Exchange ends the last session of the week with a decline, in the face of the gradual rise of the yen against major currencies, which undermines the sustainability of made-in-Japan exports. The Nikkei index lost 1.68% to 32,307.86 points, leaving 550 points on the ground. Expectations of a gradual shift away from the Bank of Japan’s excessively expansionary monetary policy support the Japanese currency, which reaches its highest level in 4 months against the dollar at 143.80, and against the euro at 155.10.
Slowing exports and falling consumption are weighing on Japan’s economy, which was revised down in the July-September period, after recording its first negative contraction in four quarters. According to government data released on Friday, GDP fell by 0.7% compared to initial estimates of 0.5% in the previous three months; While the economy contracted on an annual basis by 2.9%, more than the initial figure of 2.1%. Private consumption, which accounts for more than half of GDP, fell by 0.2%, worse than the first reading of 0.04%, while corporate capital investments were revised upward, down by 0.4% compared to the previous decline of 0.6%. Exports grew by 0.4%, slower than the 0.5% reported in preliminary data, due to the slowdown in China, the main reference partner for goods made in Japan. Separate data from the Labor Department showed that inflation-adjusted real wages fell 2.3% year over year in October, the 19th straight month of decline, although slower than September’s 2.9% decline.
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