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(Il Sole 24 Ore Radiocor) – Week to forget for the European stock markets which mark a decisive setback, after the result of the European elections, which led France towards the early elections. The defeat of Macron and the advance of Marine Le Pen’s Rassemblement National, which is opposed by the left-wing forces of the National Popular Front, has generated new shocks on the market, already grappling with doubts about cutting interest rates. The Fed, as expected, left the cost of money unchanged, but expected a single reduction of 25 basis points by the end of the year. In this scenario, the eighth ended with theEuro Stoxx 600 down 4.2%. The black shirt goes to the Paris Stock Exchange (-6.2%) which marks the largest weekly drop since 2022, canceling all the gains achieved since the beginning of the year. It follows closely Ftse Mib (-5.8%) with the worst eighth since March last year. Madrid closes at -3.6%, Frankfurt -2.9% and London -1.2%.
Sales do not spare any sector but the most affected are the banks (-5.5%). Then also cars (-4.6%) and construction (-4.3%). On the Milanese list, the worst stock is Leonardo (-12.4%), followed by the banks (-11.7% Mps, -11.3% Bper, -11% Unicredit and -9.6% Bpm). The week is positive only for Amplifon (+1.9%). On the currency side, the euro is suffering, having lost 1% against the dollar. Government bonds were under special surveillance with the surge in yields which led the BTP-Bund spread to rise by 22 points (today it closed above 156).
Stocks down in the session on Friday 14 June
The political situation in France, after Macron’s decision to call early elections, with the risk of a surge in populist forces, generates new shocks in the financial markets. After an attempted recovery at the start of the session, the price lists all closed in negative, with the Paris Cac canceling out the year’s gains (-0.5% from the beginning of 2024). Even the Ftse Mib is unable to get back on track and remains well below the 34,000 points, regained at the beginning of May, ending trading with a decline of 2.8% (32,665 points).
The clouds at the beginning of the week have turned into a storm in the face of the polarization of French politics, which sees on the one hand the advance of the Marine Le Pen which is contrasted, on the other, by the ‘pact of the left’. The New Popular Front has presented a program aimed at reversing most of Macron’s economic reforms and rejecting the European Stability Pact. In both cases, investors fear for the stability and for the country’s deficit, and as a consequence for the very stability of the euro. «We believe that the elections in France in the next few weeks have become a very significant event for the financial markets», comment the analysts of Ig Italia, highlighting the surge in European spreads, «especially the French one Oat-Bund, which reached 75 on 2017 levels, when fears of a Frexit were very real.” The Italian spread has risen well above 150 basis points, but “we are still below the annual highs”.
Wall Street down, Adobe soars
Wall Street is down, after the record closings for the S&P 500 and Nasdaq Composite the day before (on Friday evening the New York Stock Exchange closed mixed: -0.15% for the Dow Jones, +0.12 for the Nasdaq and -0, 04% for the S&P 500). After the latest inflation data, investors are betting more on an interest rate cut in September: according to the CME Group’s FedWatch Tool, the odds have increased from 46.6% a week ago to 61.4%. Wednesday, the Federal Reserve, as expected, it kept interest rates unchanged at 5.25%-5.50%; from the ‘dot plot’ graph on bankers’ forecasts, however, it emerges that only one interest rate cut of 25 basis points is now estimated during 2024, compared to the three that had been forecast in March. Fed President Jerome Powell, however, kept open the possibility of further cuts. Moving on to shares, Tesla did well, thanks to the news that shareholders approved, with a clear majority, its controversial remuneration of 56 billion dollars, rejected by a judge, and the decision to move the company’s registered office from Delaware in Texas. The legal battle, however, is far from over. Adobe was also positive, after higher-than-expected quarterly revenues and profits and the increase in 2024 guidance.
