Markets, EU stock exchanges fear recession. The spread rises to 237 points
There clear victory of the center-right in the Italian elections it instills optimism in the markets because, as the economist Lorenzo Codogno explains, a large majority represents a sign of stability. The Ftse Mib index after initial prices down by 0.5%, it immediately reversed the trend, going positive and registering a + 0.5%. Business Square it does better than the other European stock exchanges, which are still cautiously rising.
THE the spotlight is on the outcome of the political elections at the start of the week in Italy and on the reactions of the markets and the spread. All the shares in the basket gained, apart from oil, which lost positions due to the drop in the price of crude oil, with Eni -0.8%, Saipem -0.2% and Tenaris -0.8%. Tim jumped by 3.9%, Moncler + 1.7%. Banks did well with Intesa + 1.3%, Bpm + 1.7%, Bper + 1.8%. Tension rises on the bond market, with the spread widening, after a declining start, to 237 points.
The yield of the Italian 10-year rises to 4.48%, at their highest since October 2013. On the currency front, the greenback is still advancing, the euro and pound collapse. All-time low of the British currency against the dollar, while the euro fell to a 22-year low as growing concerns about worsening economic conditions in Europe boosted the dollar-safe asset rally.
The euro stabilizes below par with the dollar at 0.9696. Euro / yen down to 138.44, dollar / yen up to 143.73. The pound fell as much as 5% to an all-time low of $ 1.0384, with doubts about the UK’s fiscal stability rising after the country announced large tax cuts in the face of a looming recession. And some analysts warn that the GBP it could even go down to par with the greenback. Investors began selling pounds on Friday after Britain’s new finance minister, Kwasi Kwarteng, unveiled a controversial tax cut plan to revive the struggling economy.
The special guard remains the same spread, intended as a thermometer of degree of reliability of a country in repaying its debt: the differential between Italian and German bonds opened slightly down from Friday’s close, at 229 points, but the rate of return on the BTP travels steadily and advances up to 4.464%, marking a new high since 2013. All Eurozone government bonds are under pressure, due to the prospect of new interest rate hikes by the ECB.
In particular, the manufacturing PMI index weighs on Tokyo, which fell to its lowest level in 20 years in September. The futures of Wall Street they proceed negative, while the European stock exchanges open mixed: in London the Ftse100 marks an increase of 0.32%, Amsterdam also does well with a + 0.40% while the Cac40 drops 0.12%. The Ibex in Madrid is also down. In particular Business Square opens with a decrease of 0.50%, and then immediately turns positive. “The electoral outcome was substantially in line with expectations“, explain the analysts. On the list, energy stocks such as Eni (-1.3%), Enel (-1.4%), also weak Tenaris (-1.4%). In contrast Tim (+ 1.44%) and Finecobank (+ 2.6%) Outside the main price list, Mps is priceless and marks a theoretical decline of 33%.
To pay for last week’s decisions of the central banks to raise interest rates in a consistent way, eyes also today on any indications of monetary policy.
A hearing of the number one of the ECB is expected today in the European Parliament Christine Lagarde. On the agenda in the morning also public speeches by other representatives of Frankfurt, the vice-president Luis De Guindos in Madrid and the member of the Executive Committee Fabio Panetta at a symposium of the Deutsche Bundesbank.
Spread Btp-Bund up a 237 basis points, compared to the close of 233 on Friday afternoon. On the day after the vote for the political elections, the MTS platform notes, Italian government bonds guarantee an opening yield of 4.49%, against 2.12% for German Bunds. From French bonds 2.69%, while Belgian bonds ensure 2.73%
The Asian stock exchanges they are under pressure in the first trading session of the week: in Tokyo the Nikkei closed with a loss of 2.65%, while in Taiwan the markets closed on Monday down by 2.41%. When it starts to close, the Korean Kospi is also in the red, down 2.73%. The liabilities in Shanghai were less heavy, where the decline, with markets still open, was just over half a point, as was the decline in Hong Kong at -0.35%. In contrast to Shenzhen: + 0.4%.
On the currency, the GBP it dropped to new all-time lows against the dollar below 1.04 (to 1.0342), before recovering some ground to 1.0617 (from 1.1262 on Friday). Pound even at the lows of almost two years at 0.9096 for one euro (from 0.8725): movements that have fueled speculation about a possible emergency intervention by the Bank of England.
The euro, for its part, it has updated the 20-year lows against the dollar to 0.9551 and is now indicated at 0.9643 from 0.9724 on Friday closing. Euro / yen to 138.79 (from 139.18), dollar / yen to 143.93 (from 142.14).
On the energy front, the oil price: the November Brent futures drop 1.4% to 84.94 dollars a barrel, the November WTI slips 1.3% to 77.72 dollars. The price of the natural gas on the Ttf platform in Amsterdam.
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