Today’s Stock Exchanges, March 8th. Weak price lists after the Fed. Visco against the “hawks”: “I don’t appreciate those who talk about prolonged increases”
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The markets restart weak after the words of the president of the Federal Reserve, Jerome Powell, who clarified yesterday in the US Senate that the Central Bank is ready again to accelerate the pace of rate hikes to counteract inflation which is falling too slowly, while the economy holds up more than expected. The hawkish rhetoric generated the expected reaction: Treasury yields up, equity futures down, dollar strengthening.
As for the ECB, analysts at Abn Amro have just updated their expectations on Eurozone rates. The slow slowdown in core inflation, the stability of the economy better than expected despite the slowdown in progress and the comments filtered by the toughest part of the board have led to an upward revision of the estimate on the deposit rate, which should reach a peak of 3 .75% at mid-year with increases of 50 points in March and May, then 25 in June. The previous peak was seen at 3% in March. The reversal with the rate cut is not now expected before December, while previously the focus was on October. On this point we note the words of the Italian governor Visco, who says he does not appreciate “the statements of my colleagues about future and prolonged rate increases”
Milan up slightly. Fincantieri suffers
After a declining start, the Milan Stock Exchange turns slightly higher. In Piazza Affari, the Ftse Mib index rose by 0.17% to 27,808 points. Fincantieri in sharp decline in the aftermath of the 2022 accounts. The shares lose 5.7%, settling at 0.55 euros. Equita analysts defined the 2022 numbers as lower than expected. The forecast for 2023 was also considered disappointing. “The guidance at an operating level anticipates an adjusted EBITDA of approximately 370 million and is approximately 20% lower than our current estimates”, they explained, also pointing the index also to indications on the financial leverage of debt-adjusted EBITDA exceeding six times . The experts have issued a ‘hold’ with a price target of 0.49 euros. Intermonte has also issued an ‘underperform’ rating with a price target of 0.45 euro.
Visco against the hawks: “I don’t appreciate prolonged rate hike statements”
“Uncertainty is so high that as the Governing Council of the ECB we have agreed to decide ‘meeting by meeting’, without ‘forward guidance’. I therefore do not appreciate statements by my colleagues about future and prolonged rate hikes. I don’t know, we don’t know enough ; for this I can only say, recalling Eugenio Montale, ‘what we are not, what we do not want, in this case high and prolonged inflation”. This was underlined by the governor of the Bank of Italy, Ignazio Visco, in his greeting address to the XIV Maeci – Bank of Italy Conference.
Visco to the ECB: continue to move with caution
“Even if monetary policy has so far been successful in stabilizing expectations, the serious geopolitical situation makes it very difficult to predict future macroeconomic trends. Monetary policy will therefore have to continue to move cautiously, being guided by the data that gradually becomes available, in order to bring inflation back to the 2 per cent objective over the medium term, without jeopardizing financial stability and minimizing the negative effects on the still fragile recovery”. This was underlined by the governor of the Bank of Italy, Ignazio Visco, during the greeting address at the XIV Maeci – Bank of Italy Conference with the delegates and financial operators accredited abroad. “However, it will be necessary to prevent the supply shock, which the dramatic conflict in Ukraine has made much more persistent than initially expected, from giving rise to inconsistent increases in labor costs and profit margins in the euro area as a whole with a sufficiently rapid return to the objective of price stability”, added Visco.
The European Stock Exchanges fall waiting for Lagarde and Powell
The European stock exchanges open down pending Jerome Powell’s hearing today in the Chamber and Christine Lagarde’s speech in Geneva, at the WTO, in view of the meeting on 16 March. Central banks are becoming increasingly aggressive with the intention of fighting inflation. In Frankfurt the Dax dropped by 0.19% to 15,529.55 points, in London the FTSE 100 dropped by 0.23% to 7,901.66 points, in Paris the Cac 40 lost 0.37% to 7,312.16 points and in Madrid the Ibex-35 0.26% at 9,386.18 points. Milan was also negative where the Ftse Mib recorded -0.30%.
Germany, leap in industrial production
Leap in industrial production in Germany: in January on a monthly basis it rose by 3.5%, from the previous -2.4%. The figure is also clearly better than the expectations which pointed to +1.4%. Instead, retail sales recorded a decline of 0.3% quarter on month in January and 6.9% on year.
Stock exchanges uncertain in Asia
Asian and Pacific stock markets trended lower after Federal Reserve Chairman Jerome Powell warned interest rates could rise more than expected, with a second speech due today. Especially Hong Kong is bad, which is closing down by more than two percentage points also on the growing tensions between China and the United States. The closure of Seoul fell by 1.2% and that of Sydney by 0.7%. The Chinese stock markets were flat, the Tokyo conclusion slightly up (Nikkei 225 index +0.4%). The futures on the launch of the European lists are uncertain.
Tokyo manages to close higher
The Tokyo Stock Exchange closed the session on a six-month high, despite the contraction of the US stock market, supported by the weakness of the yen against the dollar and expectations of a recovery in tourism in Japan. The Nikkei marks a rise of 0.48% to 28,444.19, with an increase of 135 points. On the foreign exchange market, the yen trades at its lowest in two and a half months against the dollar at 137.60, and against the euro at a level just above 145.
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