MILAN – Chinese markets are hanging on the words of an official who is opening up to possible support for the economy, but only after four sessions of sharp declines do they manage to reverse course to a certain point: in the end, Shanghai and Shenzhen give in to the selling . Europe starts weakly: the words of Fed President Jerome Powell are being digested in the West, who has promised a rate cut but rejected the hypothesis that it could happen as early as March. Kevin Thozet of Carmignac noted that “the Goldilocks scenario is in full swing,” that is, that of a balance of moderate growth and falling inflation. “The narrative of complete disinflation, which is progressing faster than expected, appears to be confirmed,” he wrote, recalling that “there is every reason to start adopting more accommodative policies if necessary, given the current key interest rates,” well above the neutral level .” But Powell “will probably want to avoid becoming one.” Market movers. The Fed is downplaying the likelihood of a rate cut in March. Instead, they will stick to a plan based on dependence on economic indicators. In fact, two more inflation data and two labor market releases are expected before the next meeting in March.
The Bank of England leaves interest rates unchanged
The BoE left UK key interest rates unchanged at 5.25%. The decision was passed by a majority. There were six board members who voted to keep monetary policy unchanged, two voted to increase the cost of money, and one voted to decrease it.
EU stock markets weak after inflation and PMI
European stock markets remain weak the day after the Fed, awaiting the Bank of England’s monetary policy decision as earnings season continues. London lost 0.03%, Frankfurt lost 0.19% and Paris lost 0.76%. In Milan the Ftse Mib index is at -0.35%. Data this morning showed that annual inflation in the euro area slowed to 2.8% in January, in line with market expectations, from 2.9% in December. Then, in the first month of the year, the crisis in the euro zone’s manufacturing sector eases, and output and new orders contract by the most since April last year. Shopping activity, purchasing inventories and employment rates also fell, while business optimism rose to its highest level in nine months. The Eurozone Manufacturing Hcob PMI, compiled by S&P Global, rose to its highest level in 10 months at 46.6 in January, up sharply from 44.4 in December. While still below the neutral immutability threshold of 50, as has been the case since July 2022, the index indicates further deterioration in operating conditions in the industry, but also signals a slowing of the decline for the third consecutive month.
China is still in the red
Chinese stock markets continue to fall, updating the lows of the last five years, due to fears related to the stability of the national economy, uncertainties related to the housing crisis and stagnant growth, as well as the possible negative impact of the liquidation of Evergrande: The Index Shanghai Composite recorded a decline of 0.64% to 2,770.74 points, while that of Shenzhen lost 0.46% to settle at 1,537.75.
Weak EU stock markets
European stock markets begin a decline the day after the Fed as investors prepare for January euro zone inflation data and the Bank of England’s monetary policy decision. The BoE is expected to keep interest rates steady at 5.25% as recent UK inflation data surprised markets on the upside. Meanwhile, in the usual press conference following the Fed’s two-day meeting yesterday, President Jerome Powell said it would be appropriate to start cutting interest rates at some point in the year, even if he doesn’t think a March cut is likely. Meanwhile, the quarterly reporting season continues and in the morning the manufacturing SMEs from the Eurozone and the main economies of the Old Continent arrive. In early trading in London, the Ftse 100 index lost 0.67% to 7,609.57 points, in Frankfurt the Dax fell 0.43% to 16,831.29 points and in Paris the Cac40 fell 0.93% to 7,585, 37 points. At Piazza Affari, the Ftse Mib index is trading at -0.57% at 30,567.87 points.
Milan negative
Negative start for Piazza Affari: The Ftse Mib Index opened with a decline of 0.33%, the Ftse All Share with the same decline of 0.33%.
Spread little exercise
The spread between 10-year BTPs and Bunds widened slightly at the start of the session: on electronic markets, the spread opened at 156 basis points, compared to 155 at yesterday’s close. The Treasury product yield is 3.76%.
Deutsche Bank, pre-tax profit of 5.7 billion
Deutsche Bank today announced full-year 2023 pre-tax profit of €5.7 billion, up 2% compared to 2022. Revenue rose 6% to €28.9 billion. Proposed capital distribution of 1.6 billion euros to shareholders.
Mixed future prospects for Europe await the BoE
Mixed futures for major European exchanges following the Fed’s decision to leave interest rates unchanged and in anticipation of today’s Bank of England meeting, which is likely to opt for a similar decision. The DAX future in Frankfurt rises by 0.148%, that of the Cac 40 in Paris falls by 0.22%, the Euro Stoxx 50 future falls by 0.11%.
Oil in motion
Oil prices continue to fluctuate between continuous highs and lows, with prices starting to rise again in Asian markets after closing sharply lower on Nymex following news that crude oil inventories in the United States rose by 1,234 million barrels compared to are a decrease of 9.2 million in the previous week (analysts had expected a decrease of 217,000 barrels). An OPEC summit is scheduled for today. The price of WTI rose by 0.16% to $75.97 per barrel, the price of Brent increased by 0.10% to $80.62.
Weak euro
The euro fell slightly, just below the $1.08 threshold, after the Federal Reserve decided to keep interest rates unchanged between 5.25% and 5.5% for the fourth consecutive day, signaling that rate cuts are possible, but not imminent. More specifically, the single currency falls to 1.078 dollars (-0.14%) and is also losing ground against the Japanese currency at 158.64 yen (-0.18%). Dollar/Yen exchange rate unchanged at 146.87.
Tokyo closes down 0.7%
The Tokyo stock market closed lower, with the Nikkei 225 losing 0.76% to 36,011.46 points. Stocks in Asian markets were mixed after Wall Street posted its worst loss since September yesterday as the Federal Reserve left its key interest rate unchanged and made clear it “does not believe it is appropriate” to cut interest rates, “until she has gained more trust”. that inflation moves sustainably towards its target of 2%. “We are not declaring victory at all,” said Fed Chairman Jerome Powell.
Asian stock exchanges in no particular order
The major Asian bourses move forward in their fourth weekly session in no particular order. After the negative close in Tokyo, Hong Kong continues to rise (+0.33%) following the Caixin jump in January and despite continued signs of Chinese economic weakness. In contrast, Shanghai fell 0.56% while the Seoul Stock Exchange’s Kospi index rose 1.82% after South Korea’s exports rose for a fourth straight month thanks to a rebound in shipments to China and a rise in chip sales.
