by Stefania Blasioli and Chiara Di Cristofaro
Tokyo interrupts the positive series
3′ reading
(Il Sole 24 Ore Radiocor) – European stock markets are moving into negative territory following a lackluster session which saw trading on Wall Street halted for the Martin Luther King Day holiday. The Davos International Forum continues, which will end on January 19, where ECB President Christine Lagarde is scheduled to speak on Wednesday. Furthermore, the season of quarterly reports continues: the US banking giants, Goldman Sachs and Morgan Stanley, will be put to the test.
Villeroy (ECB): «The next move will be a cut»
Meanwhile, the governor of the French central bank Francois Villeroy de Galhau said that “it is too early to declare victory, the work is not finished even if our tightening maneuver has been more successful than we had predicted a year ago here in Davos” .Villeroy stressed that rates “should not be” higher than the current level and added that “the next move will be a cut, probably this year.”
Yesterday, my Austrian colleague Robert Holzmann, on the sidelines of the Forum, hinted that the ECB could defy market expectations and postpone the start of interest rate cuts for the whole of 2024: «I can’t imagine that we will talk about cuts again – he said – everything we have seen in the last few weeks points in the opposite direction, so I might not even foresee any cuts this year». Mario Centeno, governor of the Bank of Portugal and therefore member of the governing council of the European Central Bank (ECB), in an interview with CNBC at the World Economic Forum in Davos, underlines: «We are aiming for medium-term inflation, not February inflation, and the trajectory is very positive right now.” In short, a real challenge is taking place in Davos between the hawks and doves of the ECB: after the Austrian Robert Holzmann, according to whom there may be no rate cut in 2024, Centeno reassures on the trajectory of inflation.
Germany: +0.1% monthly inflation December, +3.7% annual
In Germany, consumer prices rose by 0.1% monthly in December and by 3.7% annually. This is the final reading released by the federal statistics office. The data is in line with analysts’ forecasts. In November, consumer prices fell by 0.4% per month, instead recording +3.2% per year.
Tokyo slows down after the rally at the beginning of the year
The Tokyo Stock Exchange is slowing down, having reached its highest level since 1990 in recent sessions. The Nikkei index, the protagonist of a rise of more than 6% in the first part of 2024, ended trading with a decline of 0.79% at 35,619 points while the Topix fell by 0.82% to 2,503.98 points. The decline was however limited by a still weak Japanese currency with the exchange rate between the dollar and the yen at the highest level since the beginning of December at 146.
Yesterday the Chinese Central Bank left interest rates unchanged and disappointed investors who were expecting help to breathe new life into the economy, which is still struggling to regain a strong pace of expansion.
In addition, the victory of a pro-independence President in the Taiwanese elections raises fears of an increase in tensions between the country, the main semiconductor producer in the world, and the Chinese motherland.
Red Sea and raw materials
Conversely, the raw materials market remained subdued and gas fell below 30 euros, despite further difficulties in transporting fuel in the Red Sea due to clashes between Houthi rebels and the United States.
The appointments
The macroeconomic agenda foresees December inflation in some Eurozone states. In Italy the preliminary estimate signaled a price increase of 0.2% on a monthly basis (compared to -0.5% in November) and 0.6% on an annual basis (compared to the previous 0.7%). In Germany the first reading gave an increase of 0.1% monthly (against the previous -0.4%) and 3.7% annual increase (against 3.2% in November).
In Germany, the German Zew Institute for Economic Research publishes the Zew Index, a survey of institutional investors on economic and financial prospects.
Wall Street returns to trading after Martin Luther King Day.
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Chiara Di Cristofaro
Expert Radiocor editor
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2024-01-16 08:03:45
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