The markets and the Fed pressing for new stimuli
A Paris the Cac rises by 0.62% to 4,802.26 points, a Frankfurt the Dax gains 0.33% at 12,636.35 points, A London the FTSE 100 advanced 1.21% to 5,899.91 points in the wake of the announcement that lockdowns will be targeted and not national. Milano closed up by 0.18%: banks were weak, Atlantia accelerated (+ 3.02%), awaiting tomorrow’s board of directors who will have to decide whether to proceed with the spin-off of Aspi or direct sale. Also in evidence FCA after stop the social safety nets for the Turin production center.
The spread between BTP and Bund consolidates the decline of the eve, marked with the positive opinions of analysts on the outcome of the polls: it protects the majority from pressure for early elections and – in their reasoning – should strengthen a pro-European and moderate agenda. On the government bond market, it should be noted that the 30-year BTP yield falls to an all-time low of 1.75%. The 10-year BTP rate fell close to an all-time low of 0.83%, only to rise slightly with the spread between BTP and Bund at 135 basis points.
After a cautious start, the day after the rebound, Wall Street reverses the course and becomes negative: fears are growing for the increase in infections, even if investors like the agreement in the Chamber to avoid the shutdown of government activities in the United States. The Dow Jones falls by 0.10%, the S&P 500 leaves 0.44% on the ground. The Nasdaq loses 0.66%. On the other hand, the price of oil rose in the wake of the decline in American inventories. Asian stock exchanges are struggling to keep up: Tokyo it moves back by 0.39%, Hong Kong by 0.12% and Seoul by 0.25%. Shanghai gains 0.02%.
Yesterday’s recovery of US stocks came after the president of the Fed, Jerome Powell, in the hearing he remarked how the American economy will need a long path to recover and also support, a message shared by Treasury Secretary Steven Mnuchin who assured that the White House is for a bipartisan agreement on a new plan. Today Powell has returned to smear politics by asking for more “fiscal support”: in his opinion, if this support were adequate, the recovery would proceed “more quickly”. Chicago Fed Chairman Charles Evans has put on the table the possibility of a rate hike before the average inflation target of 2% is reached (pushing the dollar up), but he too has pushed Congress to approve. new stimuli to accompany the restart. In the Old Continent, however, the words of Fabio Panetta of the ECB who pointed out that the risk of not doing enough to react to the crisis is higher than of doing too much, and thus raised the prices of a possible strengthening of the Eurotower stimulus plan.
L’euro closes sharply below 1.17 dollars. The European currency changes hands at $ 1.1678 after falling to a two-month low. The decline of the euro is linked to the appreciation of the greenback, which is affected by a series of comments from members of the Fed. Euro / yen advances to 122.91 and the dollar / yen rises to 105.24.
SME indices, concern for a return to the recession
That the macroeconomic situation remains uncertain is evidenced by the new SME indices published in the morning. The indicators built with the opinions of the purchasing managers of the companies mark “a stalemate” for the Eurozone. The IHS Markit index places the composite PMI (manufacturing and services) of the area with the single currency at 50.1 points in September, down from the previous 51.9 points and just above the sufficiency threshold set at 50. Positive the German manufacturing jumped to 56.6 points, a record for 26 months and above expectations, while the SME services index fell from 52.5 points in August to 49.1 points in September. The composite flash PMI thus fell from 54.4 to 53.7 in September, the lowest in 3 months. In general, the dynamics (manufacturing well, services declining) is repeated in the main economies: “The main concern is whether the weakening of the September data will increase in the fourth quarter, causing a return to recession after the too short recovery of the third quarter, “experts say. The day also featured German consumer confidence recovering to -1.6 in October. Berlin has decided to derogate from the constitutional rule regarding a balanced budget in 2021 due to the impact of Covid on its finances. This was stated by the Minister of Finance, Olaf Scholz. The largest European economy will borrow € 96.2 billion. “After 2020, even in 2021 we are obliged to ask Parliament for authorization to run a deficit”, explained the minister. In 2020, Germany was indebted for 218 billion euros. In Asia, Japan’s manufacturing PMI rose in September to 47.3 from 47.2 in August, while the services index rose to 45.6 from 45, according to preliminary data from IHS Markit. Below the threshold of 50 points, therefore, it remains in the area of contraction.
Prices of Petroleum up after US weekly inventories decreased less than expected. The WTI rose by 1.9% to 40.36 dollars a barrel, the Brent rose by 1.3% to 42.2 dollars. The price oforo it falls as the dollar strengthens. Precious metal with immediate delivery is trading at $ 1,882.5, down 0.9% from yesterday’s close, an already bad day. The level is the lowest in the past six weeks.
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