November 28, 2022

Hardwood Paroxysm

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EU stock exchanges are trying to recover, and all eyes are on growth and central banks

(Il Sole 24 Ore Radiocor) – They’re trying to bounce European stock exchanges After weakening on the eve of the Old Continent and the mixed shutdown of Wall Street, trying to absorb the path set by central banks to raise interest rates. The FTSE MIB So Milan is on the rise, the same goes for CAC 40 Paris, dated DAX 40 in FrankfurtIBEX 35 Madrid FT-SE 100 London andAEX Amsterdam. Asian markets are moving in positive territory, with the exception of Tokyo which lost 0.26%.
Global stock exchanges continue to suffer from signs of an associated economic slowdown restrictive monetary policiesTaken to win the fight against inflation. Without a change in pace, the eighth consecutive week is looming in red for the S&P 500 index that fell again on May 24 to the intraday level below 3,900 points, approaching the -20% threshold which, if breached, technically opens the doors to “the market.” descending ». A level that the market feels strongly about, given the potential implications for other listings in the event of a breakout. sessions Also sensitive to the NASDAQ technology index Which on Tuesday suffered a drop of 3% (bringing the deficit to -30% from its highs last November).

Banking securities on the shields on the hypothesis of an interest rate hike from the European Central Bank

In this context, bank stocks are rising and are starting to benefit from the intentions of the European Central Bank to put an end to the era of negative rates. Even in Milan they are well tuned Pop eh bankAnd Intesa San PauloAnd Unicredit And Banco Bpm. Governor Christine Lagarde has been more “hawkish” than usual in recent sessions, paving the way for a rate hike in July. There is also the hypothesis of a 50 basis point squeeze, which Bank of Latvia Governor Martins Zazak reinforced. However, the majority of conservatives appear to be intent on gradual increases, and Bank of France Governor Francois Villeroy de Gallo said a 50 basis point increase was not in the board’s consensus. However, other rulers, including Dutchman Klaas Knott, are pressing for more decisive action to tackle inflation. Facilities are also doing well in Piazza Afari starting from In thealso with oil Tenaris And where are youat the end of the list with pharmaceuticals Diasurin And my recordings.

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Spread less than 200 pips, falling rates

The spread between BTp and Bund drops below 200 pips in the MTS European government bond market. The yield difference between the ten-year BTp standard (Isin IT0005436693) and the same German maturity is indicated at 199 points. The 10-year benchmark BTp yield, which comes back on startup, has fallen below 3% and is indicated at 2.95% from around 3% values ​​at the end of the previous day.
Meanwhile, the latest aggregate data indicates that major economies are growing, but at the same time slowing and bond prices are factored in. Net inflationary pressures (which have driven yields higher in recent months), rates have been dropping for a few sessions. 10-year Treasury yields rose from a peak of 3.2% in early May to 2.7%. Even the German ten years, after being extended to 1.2%, returned to less than 1%, just as Italian yields returned to absorb below the 3% level.

Commodities in the spotlight

Some signs of slowdown in raw materials especially those related to industrial minerals. Overall, the commodity index remains strong and close to the highs. Fans of internal analysis are having their eyes set on this sector at the moment. Because usually, after bonds and stocks slow down, the commodities sector is the last to go down in the event of a full-blown economic slowdown, but for that to happen, inflation has to start falling. It is a commodity that protects better than other classes.

Oil is rising, the dollar is getting stronger

On the foreign exchange front, the dollar strengthened with the euro back below the 1.07 threshold to 1.0692 (from 1.0726 last night). Euro / yen up to 136 (from 135.75). USD/JPY at 127.19 (from 126.57). The price of gas rose slightly to 85.5 euros per megawatt-hour. Finally, oil rose with WTI in July at $110.9 (+1%) and Brent crude in the same month at $114.64 (+0.95%).

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