Expensive energy and inflation weigh down the stock markets. Gas on the swing

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(Il Sole 24 Ore Radiocor) – After archiving a difficult August, with losses even over 5% for the main lists (Milan -3.78% in the month) and gas prices up by more than 25%, the European stock exchanges, after half of the first session in September, do not find the opportunity to straighten the fate of trading and continue to decline, while reducing the falls compared to the previous hours. While expensive energy continues to hold its own across Europe (prices are currently on the swing, while it is the second day of the Russian gas flow to Europe via the Nord Stream 1, officially under maintenance), the inflation observed special and the increasingly concrete risk of recession. Especially since also in China, the manufacturing SME index collapsed to 49.5 points (the largest decline since May and a value that indicates a contraction in activity), which put the brakes on Asian markets (Tokyo closed at -1.5%). European indices are in decline as shown by the FTSE MIB in Milan, the CAC 40 in Paris, the FT-SE 100 in London, the IBEX 35 in Madrid and the AEX in Amsterdam. Also down was the DAX 40 in Frankfurt after German retail sales fell 2.6% yoy in July (+ 1.9% yoy, better than estimated).

Wall Street down, fears of interest rate hikes do not abate

Wall Street is also down, following the last four sessions. Growth fears, reinforced by the words of Fed chairman Jerome Powell, on the need to continue raising interest rates to combat inflation are not easing. Yesterday, in this regard, Loretta Mester, president of the Federal Reserve of Cleveland spoke, according to which “it is too early to say that inflation has peaked”; for this, you have said you are “in favor” of an increase in interest rates of more than 4% at the beginning of 2023; at the moment they are at 2.25-2.50%. Mester then added that he does not foresee “a rate cut over the next year”. According to Mester, “the risk of a recession in the next year or two has increased.” Powell spoke of “bad debts” for companies and families from the rise in rates, “but if we fail to restore price stability, the bad debts would be even greater”. Meanwhile, the US rating agency Moody’s cut its forecast for the growth of the G-20 countries to 2.5% in 2022 and 2.1% in 2023, down from 3.1% and respectively. from 2.9% previously predicted. Tightening financial conditions and the sharp rise in energy and commodity prices following the Russian invasion of Ukraine have caused the reduction. For the advanced economies of the G-20, expected + 2.1% in 2022 and + 1.1% in 2023; for emerging economies, + 3.3% this year and + 3.8% next year.

Almost all of the Ftse Mib in “red”, in the queue the energetic ones

As for the shares, in an Ftse Mib substantially all downward (in the early stages Cnh Industrial was saved and the only noteworthy rise is that of Telecom Italia), the energetic ones still end up in the queue, returning from a strong session declines in Italy and Europe (Tenaris, Interpump Group, Eni), with the drop in oil prices. Luxury stocks (Moncler) are under pressure, in the wake of the news that the Chinese city of Chengdu will be subjected to a new lockdown. On the swing for several sessions, utility sector stocks continue to be viewed as special, while measures to contain the effects of the price spike are discussed. In the queue Interpump Group, Leonardo – Finmeccanica and Exor.

BTP / Bund spread trend

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Spread up, 10-year yield is close to 4%

The spread between BTp and Bund is widening again with the yield of the Italian 10-year term reaching almost 4 per cent. The yield differential between the benchmark ten-year BTp (Isin IT0005494239) and the same German maturity is indicated at 237 basis points, up from 235 at the close on Wednesday. Even more marked is the jump in the yield of the ten-year BTp which is at 3.97%, from 3.88% at the previous end.

Gas in the swing after the + 25% in August

Expensive energy is always in the foreground: after the + 25% in August, prices in Amsterdam currently mark -2% at 235 euros per megawatt hour, after having fluctuated between -5% at 223 euros and + 1% at 243. EUR. Numbers that, although below the records of recent weeks, well above 300 euros, remain at high levels (to make a comparison they were below 200 euros at the beginning of August and around 30 euros a year ago).

The article is in Italian

Tags: Expensive energy inflation weigh stock markets Gas swing

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