European stock markets are expected to rise at the start of the session following the second consecutive record session on Wall Street (Nasdaq +0.9% thanks to the push of Apple, +7.2%, which has returned above the 3,000 billion dollar capitalization mark , and S&P500 +0.3%, yet another record since the beginning of the year). The Eurostoxx50 future rises by 0.36%. However, US futures moved little (+0.07% on the Dow Jones and +0.07% on the S&P500) on a day full of events for US investors, with the publication of the results of the consumer price index for the month of May (2.30pm) and, to follow, the Federal Reserve’s monetary policy decision (8pm rate announcement: Fed Funds expected unchanged at 5.25-5.5%; conference at 8.30pm print by Jerome Powell).
Fed, firm rates expected. First cut in September?
«The latest inflation data for April, after four consecutive months of growth, showed a gradual and continuous easing of price pressures, in line with economists’ expectations», underlines Richard Flax, Chief Investment Officer of Moneyfarm. Operators expect a slight decline in core inflation, i.e. the measure that excludes the most volatile components such as food and energy from the basket, from 3.6% to 3.5%, while overall inflation is expected to remain stable at 3.4%. «This would be a new small step in the right direction, even if it may not be enough: it seems, in fact, that the sustained pace of price cooling, which we witnessed last year, has practically stopped, thanks to the solidity of the American labor, which is continuing to fuel consumption despite the sharp increase in prices and financial costs”, specifies Flax.
A scenario, according to the expert, which could push the Fed to maintain its wait-and-see approach unchanged: policymakers have, in fact, repeatedly reiterated that the data will trace the path of monetary policy and that, in the absence of a significant movement as prices fall, it will not be possible to reduce the country’s high financing costs. «With inflation well above the 2% target, therefore, the possibility that the Fed meeting will end with a rate cut is practically non-existent. Analysts are inclined to predict that the first cut will take place only in September, followed by a second in December”, indicates Flax. “If, however, the May inflation report shows a new surge in prices, traders may be forced to scale back their expectations, risking a collapse in stocks and bonds.”
The word to numerous members of the ECB
On the ECB side, on 11 June the chief economist, Philip Lane, was clear: the European Central Bank may have to wait before cutting interest rates again, given the great uncertainty regarding the inflation outlook. «In a world of uncertainty, one way to deal with uncertainty is to wait a little. Wait and make sure you don’t take a step you’ll regret,” Lane said at an event in Dublin. Numerous speeches by members of the ECB are scheduled for the day: Tuominen’s speech is expected at 11.15am, Schnabel’s at 11.30am, Buch’s at 1.30pm, de Guindos’ speech at 3pm, and de Guindos’ speech at 3.45pm of McCaul and at 4 pm that of Tuominen.
Oil prices rising
The yield on the 10-year US Treasury is stable, after the run of the last few days, at 4.39% and that of the BTP at 4.07% awaiting the outcome of the Fed meeting. The euro is confirmed at the lows of the last five weeks at 1,074 dollars (-0.22%). There were numerous other macro data of the day, not just American inflation. At 8am, Britain’s April trade balance (previous: -£14 billion) and April industrial production (previous: +0.2% month-on-month) are on the agenda. Germany’s final May inflation is forecast at the same time (preliminary: +0.1% month-on-month, +2.4% year-on-year; consensus: +2.4% year-on-year). To then move on at 1pm in the United States with the weekly mortgage request index (previous: -5.2%) and close at 4.30pm with the weekly oil inventories (previous: +2.1 million barrels) which at the moment sees the WTI at 78.47 dollars a barrel (+0.73%) and Brent at 82.38 dollars a barrel (+0.56%). Hamas’s response to the proposed ceasefire in Gaza is “responsible, serious and positive”, said Izzat al-Rishq, a member of the Hamas political bureau, according to whom “a wide path” opens up to reach a agreement. The head of the Mossad, Dedi Barna, has a completely different opinion, according to which the changes requested by Hamas and Islamic Jihad to the draft agreement constitute a substantial rejection of the proposal.
In Milan, watch out for Eni, Saipem, Saras, Leonardo, Fincantieri, Stellantis and Nexi
On the Milanese list, pay attention to Eni which successfully completed the placement with institutional investors of a 10% stake in Saipem’s share capital at 1,970 euros per share, for a total value of 393 million euros.
Good news also for Saras: the Court of Appeal also confirmed the acquittal sentence against the managers involved due to the non-existence of the fact in the judicial proceedings concerning alleged irregularities in the purchase of crude oil from Iraq.
Instead, Leonardo announced that negotiations with the Franco-German KNDS consortium to define a common configuration for the Italian Army’s Main Battle Tank program and to develop a broader industrial collaboration have been interrupted.
While the extraordinary meeting of Fincantieri gave the board of directors the power to increase the share capital for an amount up to a maximum of 500 million euros. The strengthening will be used to finance the purchase of the Wass underwater division from Leonardo.
As for Stellantis, following Acc’s announcement of the rescheduling of the timing of the Gigafactory project, it reiterated the importance of the Termoli plant for the production of internal combustion engines for vehicles, carrying forward the CO2 reduction strategy and guaranteeing the transition . Stellantis recalled that it wants to enhance the production of Ice components in the Termoli plant for a new hybrid Fiat 500 and to extend the commercial life of the hybrid Fiat Panda until 2029.
In the financial sector, watch out for Nexi which, as reported by Mf-Milano Finanza, is expanding its range of action among the large Italian banks. The payments group led by Paolo Bertoluzzo will expand its collaboration with the Mediobanca group and in particular with Compass, the historic Piazzetta Cuccia subsidiary active in consumer credit.
Finally, we remember the debut of Soges Group, a company in the hotel and conference hospitality sector in prestigious facilities, at Euronext Growth Milan. (All rights reserved)
Posting time: 12/06/2024 07:23
Last update: 12/06/2024 08:09
