Stock markets have had a negative week, including Piazza Affariwith investors focusing on the message that arrived on Wednesday evening from Fed now seen as more cautious on the pace of interest rate cuts. As expected, the US central bank cut rates by 25 basis points at its December meeting, with the FOMC statement having only one substantive change: the forward guidance language now refers to “the magnitude and timing of further adjustments”, rather than just “additional adjustments”; In the press conference, Chairman Jerome Powell also made it clear that a slower pace of cuts is the base case, arguing that inflation is still headed in the right direction and noting that the job market is still cooling, if only gradually.
The other central banks
Today the Russian Central Bank maintained the reference interest rate at 21%, against expectations of a new increase aimed at counteracting price growth, with the decision being motivated by the already restrictive effect of the previous 200bp increase in October. However, the week was full of events for the central banks. There Bank of Japan decided, with a majority of 8 to 1, to leave interest rates unchanged at 0.25%, meeting analysts’ expectations. There Riksbankthe Swedish central bank, has decided to cut the reference rate by 0.25 percentage points to 2.50%, to provide further support to the economy and help inflation stabilize at the target. There Norges Bankthe Norwegian central bank, has decided to keep the reference rate unchanged at 4.5%, but signaled that it will most likely be reduced in March 2025. The Bank of England ended its last meeting of the year with a decision to leave interest rates unchanged (it has already raised its key rate from 5.25% to 4.75% this year in two quarter-percentage-point moves) .
The PCE and its effects on the Fed
The most important macroeconomic indication of the week has almost arrived. On Friday afternoon, the US Bureau of Economic Analysis (BEA) reported that personal consumption (PCE) increased by 0.4% in November 2024, compared to +0.3% in the previous month and below +0.5 % expected by analysts, while personal incomes recorded an increase of 0.3%, below the +0.4% estimated by the market and compared to the +0.7% recorded in the previous month. But above all the PCE price index core, the Fed’s preferred measure of inflationshowed a positive change of 0.1% on the month (+0.3% the previous month and +0.2% expected by analysts) and 2.8% on the year, below the 2.9% expected by analysts , same as October. This contributed to the U.S. stock market’s turnaround, with Wall Street – after a lower opening – sharply higher on improved bets that the Fed will cut rates next year.
Today’s session in Milan
Between the markets of the Old Continent weak Frankfurt, which showed a small decrease of 0.27%, modest decline for London, which dropped a small -0.26%, and thoughtful Paris, with a fractional decrease of 0.27%.
Closing on parity for the Milan Stock Exchange, with the FTSE MIB which stands at 33,766 points; on the same line, the FTSE Italia All-Share remains around the parity line, closing the day at 35,956 points. The FTSE Italia Mid Cap rose moderately (+0.69%); along the same lines, the FTSE Italia Star was slightly positive (+0.26%).
At the top of the rankings most important titles in Milanwe find Amplifon (+1.64%), Brunello Cucinelli (+1.45%), Italgas (+1.32%) and ERG (+1.29%). The strongest declines, however, occurred on Saipem, which closed the session at -6.09%. Sales are concentrated on Telecom Italia, which suffers a drop of 3.67%. Sales on Nexi, which recorded a decline of 2.16%. Banca Popolare di Sondrio hesitates, with a modest decline of 1.46%.
