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EU stock exchanges cautious with eyes on the ECB, Milan and Madrid positive with banks

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EU stock exchanges cautious with eyes on the ECB, Milan and Madrid positive with banks
Written by aquitodovale

(Il Sole 24 Ore Radiocor) – Mixed session for the European stock exchanges after two sessions of good recovery and with Apple’s moves weighing on technology, while the acceleration of the banks pushes the IBEX 35 in Madrid and the FTSE MIB in Milan, which in any case awaits the moment of truth for the continuation or not of the Italian government led by Mario Draghi. The other indices move instead in alternating current (CAC 40 in Paris, DAX 40 in Frankfurt, AEX in Amsterdam and FT-SE 100 in London), while Wall Street futures are up.
Meanwhile, the spotlight is on the ECB which on Thursday will in all likelihood raise rates by 25 basis points, for the first time in over ten years, and will give useful indications on the possibility of a new mini-tightening in September and on the anti-spread shield. However, it must be said that, according to rumors reported by Reuters, the ECB it might even consider raising the cost of borrowing by 50 basis points and a proposal to that effect will be officially put forward by chief economist Philip Lane.

The Draghi Government hangs by a thread

The evolution of the government crisis is at the center of attention in Italy with the conferences of the group leaders of the Senate and the Chamber who decide on the modalities of the intervention of the Prime Minister in Parliament on Wednesday. Supporting the markets on Monday and Friday was the feeling that, however complex the situation, Draghi is more likely to stay in the saddle than to fall. Partly because no party, except Fratelli d’Italia which is in the opposition, has an interest in going to the vote (as Algebris claims), partly because the split of the 5 Stars could be enough to convince Draghi to stay with one side of the party that continues to support him (as many on the market claim, including The sun 24 hours ). This expectation calmed the markets on Monday, but they remain exposed to every single statement until Wednesday.

The unknown about the ECB’s moves

The other big question is about central banks: the ECB meets on Thursday 21 and the Fed on Wednesday 27. The European Central Bank will raise rates by 25 basis points on Thursday, but in September the market is discounting a further hike less and less. If until recently another squeeze of 25 basis points was given for sure, now many are questioning it. The possible gas crisis and the possible turbulence on sovereign debts could in fact suggest greater caution to the ECB. Also because again on Thursday 21st (or the day after) it will be known whether Gazprom will reopen the taps of Nord Stream 1: if it did not, the thesis of an ECB slower to raise rates would be supported.

Tech under pressure with Apple, banks well

On equities, Apple’s moves weigh on technology: the Cupertino group, according to rumors, would have revised the hiring and spending programs of some divisions in anticipation of a slowdown in the economy in 2023. Apple. Awakening for Saipem and Leonardo – Finmeccanica rooms: a maxi contract by Lockheed Martin with the US Department of Defense for the F-35s, of which the Italian group is a supplier, is near, but further announcements of orders from the international fair are expected Air Force in Farnborough, near London, which opened on Monday. Among the banking groups, Unicredit and Intesa Sanpaolo rose by more than one percentage point: the Cariplo Foundation increased its stake in Intesa to 4.812%.

Spread slightly moved in the area 216 points, yield at 3.33%

Little movement for the spread between BTp and Bund in a day of purchases on Eurozone bonds and therefore with falling yields. On the eve of the decisive day for the fate of the Draghi government, the yield differential between the ten-year benchmark BTp (Isin IT0005436693) and the same German maturity is indicated at 216 basis points, slightly down from the 217 points marked at the previous closing. The yield of the benchmark ten-year BTp fell sharply, indicated at 3.33% from 3.39% on the eve of the previous year.

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