There stock market week on both sides of the ocean it was characterized by theAttention to US inflation datawhich turned out to be better than expected and, more generally, by central banks. A fact that, combined with the increase in the unemployment rate, could give policymakers a valid reason to proceed with the long-awaited rate cutalthough we will likely have to wait for the meeting of September. “In a soft landing scenario, with gradual rate cuts, more moderate inflation and economic growth, explains Jeffrey Cleveland, Chief Economist at Payden & Rygel, there is still limited downside room for Treasury yields over the next year, while the outlook for risk assets remains favorable and the dollar should weaken.”
At the end of the week it was The quarterly season has begun – first the big US banks – in anticipation of which the markets appeared more cautious this week, despite positive signs on the macroeconomic and monetary front.
The macroeconomic scenario
The highlight of the week was therefore with American inflation which showed a surprise slowdown. Price growth in June stood at 3%, slowing from the 3.3% recorded in May and below consensus estimates, which indicated growth of 3.1%. On a monthly basisconsumer prices showed a change of -0.1%, compared to the +0.1% estimated by analysts. Even the core index, excluding energy and food, most closely monitored by the Fed, recorded a slower trend growth of 3.3% compared to the previous and expected 3.4%.
The chairman of the US central bank, Jerome Powellin a congressional hearing had emphasized the reduced pressure on prices from the labor market.
In Europe, confirmed by the final surveys Inflation in Germany at 2.2% in June, while in United Kingdomthe data of the GDP he appeared more robust of expectations marking a May growth of 0.4% and 1.9% year-on-year. “These figures are starting to show that the UK is starting a new chapter, moving away from the threat of a prolonged recession that many feared at the start of the year and into a period of sustained growth. Labour, who came to power promising to make growth a central part of the Government’s ‘national mission’, are hoping this upward trajectory will continue and that policy measures, including planning reform, will help lift the economy further,” explains Richard Flax, Chief Investment Officer at Moneyfarm.
Spreads, currencies and commodities
The dollar collapses after the US inflation data in June and, in its wake, The euro returns above the psychological threshold of 1.09 dollars, at their highest levels in over a month. The semi-annual hearings of the Federal Reserve chairman contributed to the depreciation of the greenback Jerome Powell to Congress, between Tuesday and Wednesday. The currency started to weaken and then showed further declines after the inflation data in June, which fell more than expected to 3%. Developments following which the markets have reoriented their expectationsreflected in futures contracts, towards an interest rate cut at the Fed (Fomc) meeting on September 17-18. The GBP/USD currency pair moved from 1.2870 to 1.2930. The most significant movement was that of the dollar/yen which fell by almost 2 percentage points from 161.50 to 158.45 in the wake of sales operations by large funds that had many long positions open on the exchange rate.
They is about to close this week up more than 2 percentage points at around $2,350 an ounce. American WTI oil closes the eighth in drop of more than 1% after falling to $82.55 a barrel.
Positive trend for the spread between BTPs and Bunds. On the secondary electronic Mts, the spread with Bunds is down to 133 basis points compared to 134 at the closing the day before. On the American front, the ten-year T-bond yield is up to 4.204% from 4.192% the day before. The yield on the three-month bond is slightly down to 5.341%.
Weekly stock market performance
There weekly performance of the main European stock exchanges is positive although without major shocks. The Cac-40 of Paris takes home a +0.37% after the increase of more than 3% in the previous week, Milan’s gains are more markedwith the FTSE MIB index ahead by over 1.3%. Aadvance the Dax of Frankfurt +1.61%, followed by Madrid +1.67%. Timid climb for London +0.14%.
Even the American indices they are starting to close the week in positive territory: The Nasdaq 100 gained 1.30%, the S&P 500 1.58% and the Dow Jones Industrial 1.9%, which in Friday’s session exceeded the psychological threshold of 40,000 points for the first time.
The best and worst at Piazza Affari
Among the best titles of the week we can mention Prysmianwhich gains more than 7 percentage points, finding an assist from analysts. Close behind are Inwit, Buzzi and Snam up more than 4%.
In line is placed in the main FTSE MIB basket Amplifier which takes home a 6% loss after cashing in cautious judgments from analysts waiting to know the results of the second quarter of the year.
