EU stock exchanges try to rebound, eyes on growth and central banks

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(Il Sole 24 Ore Radiocor) – They attempt a rebound European stock exchanges after the weakness of the eve of the Old Continent and the mixed closure on Wall Street, trying to digest the path outlined by the central banks for rate hikes. The FTSE MIB of Milan is thus on the rise, and the same goes for the CAC 40 of Paris, on DAX 40 in Frankfurt, theIBEX 35 of Madrid, the FT-SE 100 of London andAEX of Amsterdam. The Asian markets are moving in positive territory, with the exception of Tokyo which lost 0.26%.
Global exchanges continue to suffer from the signs of an economic slowdown coupled with restrictive monetary policies, taken to win the battle against inflation. Without a change of pace, the eighth week in a row is looming in the red for the S&P 500 index which on 24 May fell again to the intraday level below 3,900 points, approaching the -20% threshold which, if violated, technically it would open the doors to the “bear market”. A level strongly felt by the market, considering the potential implications that it would also have on other lists in the event of a breakout. Sittings also delicate for the technological Nasdaq which on Tuesday suffered a 3% drop (bringing the deficit to -30% from last November’s highs).

Bank securities on shields on ECB rate hike hypothesis

In this context, bank stocks are rising and are starting to benefit from the intentions of the ECB to put an end to the era of negative rates. Even in Milan they are well tuned Banca Pop Er, Intesa Sanpaolo, Unicredit e bpm bank. Governor Christine Lagarde has been more hawkish than usual in recent sessions, paving the way for a rate hike in July. There is also the hypothesis of a 50 basis point squeeze, reinforced by Latvian bank governor Martins Zazacs. However, the majority of governors appear determined to gradual increases, and Bank of France Governor Francois Villeroy de Galhau said a 50 basis point increase is not in the council’s consensus. However, other governors, including Dutchman Klaas Knot, are pushing for more decisive action to tackle inflation. Utilities are also doing well in Piazza Affari starting from Enelalso the oil with Tenaris ed Eniat the end of the list the pharmaceuticals with Diasorin e Remember.

Spreads below 200 points, falling rates

The spread between BTp and Bund falls below 200 points on the MTS market for European government bonds. The yield differential between the benchmark ten-year BTp (Isin IT0005436693) and the same German maturity is indicated at 199 points. The yield of the benchmark ten-year BTp is down, which at start-up returns to below 3% and is indicated at 2.95% from values ​​around 3% at the close of the day before.
Meanwhile, the latest macro data indicate that major economies are growing, but at the same time slowing down and bond rates are taking note. Net of inflationary pressures (which have pushed yields higher in recent months), rates have been falling for a few sessions. 10-year Treasury yields went from a peak of 3.2% in early May to 2.7%. Even the German ten-year, after an extension to 1.2%, has returned to below 1%, just as Italian yields have re-accommodated below the 3% level.

Commodities in the spotlight

Some signs of a slowdown for raw materials, especially those related to industrial metals. Overall, the commodity index remains strong and close to the highest levels. Lovers of intermarket analysis have their eyes on this sector right now. Because usually, after the bond and equity slowdown, the commodities sector is the last to go down in the event of a full-blown economic downturn, but for that to happen, inflation will have to start to decline. From which commodities protect better than other classes.