“US Inflation Data and Central Bank Moves Drive European Market Volatility”

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(Il Sole 24 Ore Radiocor) – European stock exchanges volatile. After an initial rally, the major indices slowed, even though the last-minute deal between Democrats and Republicans to suspend the US public debt ceiling for two years (has yet to pass a congressional vote) creates optimism. The day, however, lacks the reference of Wall Street, closed for Memorial Day. The London Stock Exchange is also closed, again for holidays. More the financial results of some Chinese industrial groups have given cause for concern, which weighed on the performance of the Chinese markets, confirming the slowdown of the economy of the People’s Republic. In addition, the latest data on US inflation have convinced economists that the Federal Reserve could proceed with further rate hikes, already in the month of June, in spite of the declarations of the number one, Jerome Powell, who had traced the possibility of a pause for reflection, after ten consecutive adjustments to the increase in the cost of money. Last week, however, it emerged that consumer price inflation (PCE), the index most followed by the Fed itself, rose 4.4% year-on-year in April, accelerating from 4.2% in March (unchanged), against expectations for a figure of 4.1%. The “core” component of the data grew by 4.7% compared to a year earlier, against expectations for a confirmation of 4.6% the previous month.

II FTSE MIB, which started up by about half a percentage point, after about an hour of trading canceled the gains, moving together with the other main continental lists. The spread is down by 184 points, while the yield on ten-year bonds stands at 4.36%. Madrid it is the best, after the vote in the administrative elections which saw the affirmation of the right, which conquered the cities of Seville and Valencia and confirmed the taking of Madrid. Meanwhile, the indices of the Istanbul Stock Exchange are rising, after the confirmation in power of the president, Recep Tayyip Erdogan, who won the elections, albeit narrowly. Glide instead the Turkish lira towards historic lows, given that the president could continue the policy of low rates.

Banca Mps runs in Piazza Affari, Prysmian swerves

Among the main Milanese stocks, the shares of Monte dei Paschi di Siena, after the Economy Minister, Giancarlo Giorgetti, at the Trento Festival of Economics, defined the bank as a potential “coveted prey” and no longer as an institution to be avoided. Furthermore, he indicated, the government’s objective would be to create a third banking pole to increase competition in Italy and allow the MEF to exit capital. Among the stocks with the largest capitalization, the Telecom Italia on the day in which the company’s board of directors meets, following which news about the group could emerge. They skid the Prysmian, after the company’s board designated Massimo Battaini, current director and chief operating officer, as the next candidate for the role of managing director, in place of Valerio Battista, who has headed the company for about twenty years. The changeover, however, will take place in 2024.

Turkish lira towards historic lows, euro recovering

On the currency side, the euro recovered some ground against the dollar and is indicated at 1.0737 from 1.0703 on Friday, when it was at its lowest level since mid-March. The single currency is also worth 150.67 yen (from 150.53), while the dollar retraces its highs since November against the yen to 140.36 (from 140.60). As mentioned, the Turkish lira was weak after Erdogan’s confirmation: the currency fell to 20.05 per dollar, one step away from the all-time low of 20.06 reached on Friday. Morgan Stanley has warned that the Turkish lira could hit $26 sooner than expected and slide towards $28 by the end of the year if Erdogan sticks to his policy of keeping interest rates low. Wells Fargo & Co expects the currency to hit 23 by the end of the quarter.

On the energy front, the upward march of oil continues: the WTI in July stands at 73.16 (+0.67%) and the contract of the same maturity on Brent marks +0.49% at 77.33 dollars. After the slowdown of 20% recorded last week, raises the head of gas: the June contract is equal to 26 euros per megawatt hour, an increase of 6 percent.

Nikkei updates 33-year highs

In the meantime, the Tokyo Stock Exchange closed higher, where trading benefited from the optimism for a possible agreement on the debt ceiling in the USA. Stocks in the banking and high-tech sector above all drove the prices, with the shares of Softbank in evidence (+8.2% at the close). At the end of the session, the Nikkei index rose by 1% to 31,233.54, reaching a new high in the last 33 years. The broader Topix index also performed well, closing with a gain of 0.69% at 2,160.65 points.

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