MILAN – Little inspiration for European stock markets after the Swiss National Bank cut rates for the second time in a row and the Bank of England – which as expected did not move – paved the way for easing in August. Mixed closing for Wall Street last night, while Asia experienced a second consecutive weak day after the hangover of tech rises.
Yesterday the S&P500 briefly exceeded 5,500 points, before changing direction and losing ground with the collapse of technological support: the Nasdaq fell for the first time in seven days, thanks to profit taking on Nvidia and Apple.
For today the Bloomberg volatility is expected given the anniversary of a “three witches” day, i.e. the simultaneous expiration of options linked to indices, shares and ETFs for a cumulative value of 5,500 billion: the reallocation of these positions could generate some aftershocks on the markets.
Brent Kochuba, founder of SpotGamma, explains to the financial agency that this time the expiry value linked to the calls is approximately eleven times higher than the notional value of the puts: a force that signals a growing upward bet.
Among the macro data of the day, bad Manufacturing SMEs in the Euro Area which fell to 45.60 points in June from 47.30 points in May and against an estimate of 47.9. The Eurozone manufacturing PMI averaged 50.89 points from 2007 to 2024, reaching an all-time high of 63.40 points in June 2021 and an all-time low of 33.40 points in April 2020.
Attention, on the currency front, allo yen which saw two-month lows against the dollar, just below a level of 159. Carlo Alberto De Casa, external analyst for Swissquote Bank, recalls that these are “the levels that at the beginning of May led to direct intervention – albeit not very effective – by the Bank of Japan”. The Bank of Japan’s low rates, just above zero, weigh on this decline. They are no longer negative, they are now at 0.10%, but the gap with the other large Western banks is enormous”. For the Central Institute of Tokyo, says De Casa, the “situation is complex. In particular, the main way he has to support the exchange rate is to sell American government bonds – obviously denominated in US dollars – and buy yen. There is an implicit risk: in fact, selling US securities also tends to raise the yields of US government bonds, effectively making them more attractive. The risk is therefore that of entering a vicious circle without being able to obtain the desired effect of supporting one’s currency”. All this also has repercussions with “a significant cost for those who invest in the yen, due to this difference in interest rates. In fact, the financing cost of keeping the position open overnight, i.e. for several days, against the yen is on credit. Instead, since Japanese rates are lower, those who buy yen pay a daily swap to keep the position open.”
- 09:55
Slow start for Milan. Europe is also weak
- 08:33
Tokyo closes just below parity, inflation rises
12.32pm
Aon, revenues in Italy over 300 million
Aon Italia has released the data for 2023. The market leading broker in Italy, we read in a note, closes 2023 with net revenues in 2023 of over €300 million, including acquisitions and excluding the Reinsurance perimeter, with a rate of double-digit growth compared to 2022 (€243 million). The premiums brokered are over 3.2 billion euros, the retention rate on consolidated customers is 96% and 44 million euros were generated by new business. Between 2021 and 2023, 150 new people joined the workforce, with a growth of 10% and an engagement rate of 79%. The company announces the new role of Andrea Parisi as CEO of the “Italy and Eastern Mediterranean” sub-region, consisting of Italy, Cyprus, Greece, Israel, Malta and Turkey.
12.31pm
Milan gets worse in the middle of the day
Piazza Affari further extends losses after the publication of flash readings of PMIs in the manufacturing and services sector. The Ftse Mib drops by 1.15% to 33,287 points. According to preliminary estimates, the Eurozone manufacturing PMI fell to 45.6 in June, hitting a six-month low after falling from 47.3 in May. This is the 15th consecutive month of decline in manufacturing production, driven by declines in new orders, export orders and employment. German manufacturing also fell to 43.4 in June from 45.4 in May and well below forecasts of 46.4. The reading pointed to a sharper contraction in industrial activity, as output suffered its biggest decline in three months after coming close to stabilizing in May.
09:55
Slow start for Milan. Europe is also weak
Declining start for Milan, together with the European stock markets which await a series of SMEs. The Ftse Mib lost 0.45% to 33,525 points. Among Amplifon sales (-1.5%). Tim (-1.39%) awaiting the closing on Netco and the new offer from the Mef on Sparkle. Then StM (-1.3%) and the banks fell with Unicredit (-1.1%) which concluded the second tranche of the 2023 buyback, and Popolare di Sondrio (-0.95%). Energy-related stocks, however, held steady with Saipem in the lead (+0.75%). Followed by Erg (+0.66%). The spread between BTPs and Bunds is confirmed at 150 points with the yield decreasing. The 10-year bond drops by 6 basis points to 3.88%.
The other European stock markets also open with weakness. Paris marks a -0.24% with the Cac 40 at 7,653 points. Frankfurt is unchanged with the Dax at 18,254 points. London records a -0.11% with the FTSE 100 at 8,263 points.
09:54
German manufacturing is bad, PMI drops
The manufacturing PMI in Germany fell to 43.40 points in June from 45.40 points in May and compared to a consensus of 46.40. The manufacturing PMI in Germany recorded an average of 51.29 points from 2008 to 2024, reaching an all-time high of 66.60 points in March 2021 and an all-time low of 32 points in January 2009. This was reported by S&P Global.
09:53
Asia ends the week lower
Stock markets in Asia and the Pacific closed the week weak with sales on technology on Wall Street slowing down Hong Kong (-1.4%) and concerns about the Chinese economy. Tokyo leaves a marginal 0.09% while inflation rose to 2.5% in May. Shanghai (-0.24%) and Shenzhen (-0.04%) were also weak. Seoul loses 0.83% while Sydney moves against the trend (+0.34%). European markets and futures on Wall Street are expected to be cautious. From a macro point of view, above all, it is the day of the PMI indices of many countries: the French one begins, followed by Germany and the Eurozone. The US manufacturing and services PMIs for June will also be published in the afternoon.
08:33
Tokyo closes just below parity, inflation rises
The Tokyo Stock Exchange closed just below parity in the last weekly session, which coincided with the release of the latest inflation reading in Japan in May. The Nikkei index shaved 0.09% to 38,596 points while the Topix recorded a -0.03% to 2,724 points. The headline consumer price index, excluding volatile fresh food prices, rose at an annual rate of 2.5% last month due to the phasing out of subsidies for gas and electricity, compared with a rise of 2 .2% in April. Instead, the so-called “core-core” index, which excludes both food and energy prices, slowed to 2.1% from 2.4% in April, marking the ninth consecutive month of deceleration as domestic consumption remains stagnant.
08:02
Asia, the yen weakens
The yen weakened even further against the dollar to 159, pushing the Japanese authorities into the intervention zone. And the euro and the pound also lost some hits on the greenback. Shares in Asia are also slowing down, with technology stocks affected by Nvidia’s ups and downs. In Tokyo, the Nikkei was flat, just below parity, after inflation in Japan, driven by weak demand, slowed in May, complicating the prospects for interest rate increases. The Hong Kong price list fell by more than 1.5% and Shanghai also fell, while Seoul lost almost 1%.
08:02
Futures just above parity for Europe
Futures just above parity for the main European stock exchanges which continue to look to the moves of the central banks after the Swiss National Bank cut rates for the second time in a row and the Bank of England opened the way to easing in August. The Dax future of Frankfurt is unchanged, that of the Cac 40 of Paris marks a +0.03%, for the Ftse 100 of London we are at +0.07%, while the future of the Euro Stoxx 50 we are at +0, 06%.
