The stock exchanges today, 20 June. Lagarde to the markets: “Anyone who doubts our determination is very wrong”. The lists closed higher

MILANO – European markets take a cautious start but close with a good rise, for the moment putting the concern for the monetary tightening of the central banks and the cooling of the economies that is affecting the mood of investors in the freezer. Milano – affected by an effect of -0.29% due to the detachment of the coupons – the session ended with a gain of 0.99%, driven in particular by the banking sector. Net of the dividend effect, Piazza Affari is therefore in line if not ahead of the others: Paris salt by 0.64%, Frankfurt 1.08% e London by 1.58 per cent. As for Piazza Affari the price fork is recorded for the IPO of Industry De Norathe green hydrogen company: this is a range of 13.5-16.5 euros, for a value ranging from 2.7 to 3.28 billion approximately.

Lagarde: nip fragmentation in the bud

The yield differential between Italian BTPs and German ten-year Bunds ends the session hardly moved in the 200 points area, after having dropped to 190 points, with the yield of the Italian title slightly increasing to 3.77%. She talked about badgers again Christine Lagarde, the president of the ECB, who speaking to the European Parliament looked at the September meeting: “The extent of the rate hike will depend on the updated medium-term inflation outlook. If medium-term inflation outlook persists or worsens, a larger increase will be appropriate at our September meeting, “he recalled. In July, rates will start to rise by 0.25%.

Lagarde recalled the Central Bank’s commitment against market fragmentation, or rather the uneven reactions of sovereign yields to the squeeze, clearly stated that it is a risk to be “nipped in the bud” and attention to the heart of the ECB mandate, precisely because it is fundamental to achieve the price stability objectives. “Anyone who doubts our determination” against any risk of monetary policy fragmentation “is making a big mistake,” Lagarde said. “We have demonstrated several times in the past that we can act with flexibility and creativity and we will do it again,” she added. In a second report later in the afternoon, he also answered a question from German MEP Guennar Beck about the opinion of Prime Minister Draghi’s adviser. Francesco Giavazzi, according to which raising interest rates would be the wrong tool against inflation. “Everyone has their own opinion on what the right tool is and what the right times are, but there is only one institution responsible for monetary policy and that is the ECB”, highlighted Lagarde. “We have identified a path of normalization, completely legitimate and necessary, citing my colleague from the Bank of Italy, Ignazio Visco,” he said.

Before that, he explained: “We have decided to apply flexibility in the reinvestment of maturing redemptions in the Pepp portfolio, in order to preserve the functioning of the monetary policy transmission mechanism, a prerequisite for the ECB to be able to fulfill its stability mandate. of prices “. Furthermore, “we have decided to instruct the relevant Eurosystem committees together with the ECB services to accelerate the completion of the design of a new anti-fragmentation tool under consideration by the Governing Council”. These are decisions that “underpin our previous commitments to adjust all of our instruments within our mandate, incorporating flexibility as needed, to ensure inflation stabilizes at our 2% medium-term target” .

Words of reassurance came from the president of the Eurogroup in an interview with the Financial Times Pascal Donohe, according to which the Eurozone can calmly overcome recent market volatility and its economy will grow this year and next. Current circumstances are “completely different from the crisis environment we were in” in the early 2010s, he explained, as the area has “deeper foundations for our common currency.” For this reason, she explained, “we are all confident in our ability to navigate the changes that are taking place,” she said. “The starting positions for member states in terms of debt and deficit levels – he explained – are now very, very different from where we were before Covid hit us.” “We will continue to need plans to carefully reduce lending” continued the Irish minister, adding: “The plans to do so will have to be credible. They will have to reflect the fact that we are in an inflationary environment”. And he concluded: “We accept that there are changes in market conditions, which is understandable as changes in monetary policy reflecting a changing economy” but still there is “unity of purpose in ensuring that we have the plans and measures in place to maintain the resilience of the euro and the euro area “.

Some more skepticism emerged from the monthly bulletin of the Federal Bank, for which “the fact that the general exception regime to the debt rules is extended until the end of 2023 is not convincing”. The extension opens up space for new debts financed by budget programs “which from today’s perspective are not indicated”. The fiscal situation in some countries is fragile and having credible financial rules is more important than ever for the German central bank.

The euro recorded positive comments from Lagarde, closing in the 1.0530 zone against the dollar and at around 142.10 against the yen. The exchange rate between the greenback and the Japanese currency remained stable at the level of 135.

Market trends

How do you remark Bloombergthe MSCI Asia index which summarizes the performance of the eastern markets has put together the longest streak of negative sessions since February 2020, when Covid 19 exploded. At the end of the day, the eastern lists recorded contrasting trends: Tokyo it lost 0.74%, Taiwan 1.75%, Seoul 2.04% and Sidney 0.64%. Bucking Hong Kong (+0,2%) e Shanghai which finished flat while Shenzhen gained 1.3 percent. The price lists remain today without the reference of Wall Street, closed for the ‘Juneteenth holiday’, which commemorates the liberation of African American slaves. Investors await indications on the Fed’s next moves from President Jerome Powell, who will be heard next Wednesday in the Senate and Thursday in the House. Fears remain that the US central bank’s monetary tightening could send the global economy into recession.

The Chinese yuan rose to one-week highs against the dollar, supported by Beijing’s decision to keep benchmark lending rates unchanged to avoid further divergences in monetary policy vis-à-vis other economies. The reference rate for one-year loans (Lpr) was kept at 3.70% and the five-year rate remained unchanged at 4.45%.

Try the bounce on Bitcoin, at the center of a very difficult phase with other cryptocurrencies increasingly tied to the trend of riskier assets and therefore exposed to monetary tightening by the Fed. The main digital asset. after hitting a low of 18,880
dollars, returns to rise and stands at $ 20,725, up 9.59% in the last 24 hours. Good performance of Ethereum which gains 13.7% at $ 1,126. The concern of some observers is that a decisive break of the threshold of 20 thousand dollars would trigger other forced sales by those who had positioned themselves “in the open”, putting further fuel in the engine of the declines that this year has already led to a loss close to 60. % for Bitcoin. It is no coincidence, notes the financial agency, that the three-month expected volatility index is at its highest in 2022.

Among the commodities, the prices of the Petroleum they travel slightly down on Asian markets. Worries about slowing global economic growth and fuel demand offset fears about rising inventories that had pushed prices higher. US West Texas Intermediate crude fell 0.17% to $ 109.37 a barrel while North Sea Brent crude fell 0.02% to $ 113.10 a barrel.

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