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(Il Sole 24 Ore Radiocor) – The month of September – in the wake of the one that has just ended – begins for the European markets in the name of sales due to the further monetary tightening that ECBfollowing the hard line of Fedwill start to launch next week after the record of theinflation. The first session of the month, in fact, ends with generalized reds for all the main lists, weighed down by fears of recession and yet another drop in oil due to estimates on global demand. But if the German locomotive slows down, as does the Chinese one, on the contrary, the stability of the US economy is recorded, certified by the latest macro data (manufacturing stable, unemployment benefits lower than expected). These numbers testify, according to operators, that the Fed still has ample room for maneuver on rates. While the dollar remains at record levels, and pushes the euro back below the parity threshold of 0.99, the decline of the gas which, on the second day of the stop of the flow to Europe through Nord Stream 1, regained its share at 244 euros per MWh (+ 1.7%), with the European Union thinking about a possible ceiling on the price of methane. In this climate, the FTSE MIB in Milan loses altitude at the end of the day, with substantial losses on industry, asset management and luxury, which are weighed down by the new anti-Covid lockdowns in China. The other European squares are also down, from the CAC 40 in Paris to the FT-SE 100 in London, up to the IBEX 35 in Madrid and the AEX in Amsterdam. Frankfurt’s DAX 40 was down after German retail sales fell 2.6% yoy in July (+ 1.9% yoy, better than estimated).
Wall Street mixed, still fears about rate hikes
Wall Street closes mixed. The Dow Jones gained 0.45% to 31,652.14. points, the Nasdaq lost 0.18% to 11,794.37 points, while the S&P 500 advanced 0.36% to 0.78% to 3,969.13 points. Growth fears are not abating, reinforced by the words of Fed chairman Jerome Powell on the need to continue raising interest rates to combat inflation. 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 the 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 Eb in red, the energetic ones in the queue
As for the shares, in an Ftse Mib substantially at the end of the session all down (in the early stages Cnh Industrial was saved and the only noteworthy rise is that of Telecom Italia), the energetics still end up in the queue, returning from a session of strong 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
Spread closes up at 238 points, yield at 3.95%
Closing higher for the spread between BTp and Bund in a negative context for European government bonds, hit again by fears for the inflation race in Europe. The yield differential between the benchmark ten-year BTp (Isin IT0005494239) and the same German maturity marked a last position at 238 basis points, from 235 at yesterday’s close. Even more marked was the rise in the yield of the ten-year benchmark BTp which ended the session at 3.95%, from 3.88% at the end of last night, after having touched the threshold of 4% during the day.
Gas in the swing after the + 25% in August
Expensive energy is always in the foreground: after + 25% in August, prices in Amsterdam are currently + 4.7% at 251 euros per megawatt hour. 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).