A week opposed to the main European bags, in which the central banks with their monetary policy decisions were once again the master.
The decision of the Fed and the change of language
In particular, the Fed which, as expected, cut the interest rates of 25 basis points, bringing the Fed Funds to the corridor 4.00-4.25%. It was the first training intervention of the year. A largely awaited step, with a single vote against: Stephen Miran, a newcomer in the board, who would have preferred a 50 BPS cut. It is not so much the measure that makes news, explains Gabriel Debach, Etoro’s Market Analyst, as the frame that accompanies it: new macro projections and dot plots that signal a change of tone, more cautious but not accommodating.
The difference with July is evident. Then Powell spoke of a “solid” economy and a “balance” job. In September, however, the narrative overturned: the labor market “can no longer be defined very solid”, the growth of the places stopped and the risks have moved down to the reduction of employment and upward on inflation.
The statement summarizes him in an unprecedented phrase: “Downside Risks TE Employment Have Rise”. It is the key to the meeting: not a cut to stimulate, but a defensive step to protect the most fragile side of the Dual Mandate.
Bank of England: despite the break, potential cuts coming in the future
Among the other banks that met in the week, the Bank of England has decided to keep the reference rate unchanged to 4%. The monetary policy committee (MPC) of the British Central Bank voted by a majority of 7 to 2 to keep the discount rate at 4%. Two members voted to reduce the discount rate of 0.25 percentage points, at 3.75%.
Since the possibility that the Boe announced a cut of the rates, was highly unlikely, the expectations were all focused on any changes in the communication on the future prospects of the rates and, more in the immediate one, on the decision of a reduction in the APF in the next 12 months. The reduction target set at 70 billion pounds, explains Jamie Niven, Senior Fixed Income Fund Manager of Cantiam, is fully in line with the expectations of the market and should not have a significant impact on the yield curve in the short term. As for the bank reference rate, the maintenance of Wording used in the past indicates that any future cuts still remain a possibility for the Committee. In our opinion, adds the expert, there is a certain asymmetry in the cuts currently prized for next year, especially in relative terms, and we continue to see value in the front of the curve in the United Kingdom.
Tax cutting, however, in Norway. Norges Bank has decided to reduce the reference rate from 4.25% to 4%. The Committee said that a slightly higher reference rate will probably be necessary than the June forecasts. The economic perspectives are uncertain, but if the economy evolves in principle as currently planned, the reference rate will be further reduced over the next year “. The central bank has confirmed the restrictive orientation of monetary policy considering it still necessary by highlighting how it has contributed to cooling the Norwegian economy and curbing inflation in recent years.
The Canadian central bank also reduced rates, bringing them to 2.5%, the minimum of the last three years and the first cut in six months. As for the next moves, he undertakes to proceed with caution following the risks placed by global protectionism and duties.
The week concluded, the Bank of Japan who decided to keep rates at 0.50%, but two members disagreed in favor of a modification to 0.75%. With core inflation still 3.3% on an annual basis, some members are starting to openly express the concern that the boj is late compared to the curve.
Euro area: balanced inflation, worry the highest yields on long -term titles
The decision to keep the rates unchanged last week, confirms that the ECB remains in Wait-and-See mode: with an inflation of around 2%, there are no valid reasons for a cut next month, they explain by Scope Rings that include an inflation of 2.1% for this year and 1.9% in 2026, compared to 2.4% of last year and 5.4% of 2023. Monetary is still making effect on the economy of the euro area after the rates cuts between June 2024 and June 2025. The recent commercial agreement between the United States and the European Union has reduced the downward pressure on rates, while the re-orientation of low-cost goods from China and other countries due to the increase in US duties should contain prices in the short term. In the meantime, the appreciation of the euro compared to the dollar and other currencies has a disinflation effect.
Gold on new record over 3,700 dollars and euros at 1.18
The gold touches new historical records, also breaking through the threshold of $ 3,700 the ounce, in the wake of the progressive weakening of the green ticket with the euro that flies to 1.18 USD already strong before the FOMC meeting, which announced the cutting of the rates.
The weekly performance of bags
The worst performance of the week is recorded by the London square which marks a drop of 0.8%. Madrid slips by 0.4% and Frankfurt and Milan record a descent of about 0.3%. The only positive sign Paris that rises by 0.4%. The ending sets positive for the Wall Street bag.
The best and worst in Piazza Affari
Redaa Piazza Affari, Best Performer is the STM stock that takes home a+5.6%followed by Brunello Cucinelli (+5.1%) and Stellantis (+3.7%), both subject to analysts. Unipol and BPM uphill of about 3% also good. Among the worst, Recordati guides the discounts and gives 3%: Luigi La Corte, current Group CFO and member of the Board of Directors of Recordati, has resigned from the role of Group CFO for personal reasons and to embark on a new professional chapter. He will leave the company at the end of the year, while maintaining his office in the Board of Directors. The company has a large squad of candidates, interiors and external, for the role of CFO and will communicate the appointment of the successor in due course.
