(Il Sole 24 Ore Radiocor Plus) – The Federal Reserve’s imminent squeeze on the cost of money in the United States to curb inflation and the fear of a further escalation of the Ukrainian crisis after the call of Russian President Putin to partial mobilization for the citizens of military age determine a start in the red for the European stock exchanges. Frankfurt (DAX 40) and Paris (CAC 40) yield about half a point while Piazza Affari (FTSE MIB) even marks a timid rise thanks to the leap of Leonardo – Finmeccanica and energy stocks; weak London (FT-SE 100). The main Asian lists are down. The Moscow Stock Exchange loses nearly 10%.
A squeeze of at least 75bps
Everyone expects a third consecutive 75 basis point hike from the US central bank as the bank’s bets of a less aggressive approach faded after US inflation figures in August; indeed, among analysts, there are those who even go so far as to hypothesize a possible rise of 100 basis points. “Our expectations are set for an interest rate hike of 75 basis points, bringing the new interest rate range from 2.25% -2.50% to the new 3% -3.25%. We believe the Federal Reserve will maintain however, very hawkish tones in the press release, in the Jerome Powell press conference and in the published material (economic projections and dotplot graph) “is the comment of Ig Italia.
The surprise in Sweden, other central banks ready to move
The high sensitivity of the markets to the interest rate theme in this phase emerged yesterday morning with the surprise decision of the Swedish Central Bank to increase the cost of money by 100 basis points and this resulted in a negative session of the financial markets with sales on equities (Wall Street lost about 1%, Milan lost 1.7% and this morning all the main Asian lists are down sharply) and also on government bonds on both sides of the Atlantic: the ten-year US yield exceeds 3.5%, with the two-year close to 4%, and in Europe the bund approaches the 2% threshold and the Italian BTp is close to 4.2%.
The meeting of the Bank of England, also determined to fight inflation, which in the UK reached 9.4%: last month the Bank of England raised rates by half a percentage point – as it had not done for 27 years – and brought them 1.75%. Also there Bank of Japan it will hold its monetary committee; however, Japanese inflation, which rose to 2.8%, is still under control and the Bank of Japan’s monetary policy is still accommodating.
In Milan Leonardo and petrofileri do well, Niel turns on the telcos
Leonardo stands out in Piazza Affari, in line with the attention of investors for the defense sector given the very high tension situation in Ukraine and Russia, and the oil companies (Saipem, Eni and Tenaris) are holding on due to the surge in crude oil which it rises by over 2% both in November Brent (92.4 dollars per barrel) and in November WTI (85.7 dollars per barrel). Utilities are doing well, starting with Italgas, Terna and Snam. Volatile Telecom Italia in a lively telecommunications sector after the announcement of the investment vehicle of Xavier Niel (Atlas) of having acquired 2.5% of Vodafone. Sales on managed savings continue, while Buzzi, Stellantis and Pirelli are falling behind among the industrialists.