A week ends of the weakness for the world financial markets, from one side of the ocean to the other, with the London stock exchange that was affected by the climb of inflation. The attention of investors also focused on the ECB and on the Federal Reserve. In the meantime, investors continue to monitor the news on the duties of the US administration and geopolitical tensions. The wait for the German elections, on the weekend, rises, which could have a implication on the relaunch of the economy in difficulty.
3%UK inflation: Boe challenges
In January The inflation of the United Kingdom It stood at 3% on an annual basis, slightly above the forecasts. Transport, food products, soft drinks and education were the main increase factors.
Core inflation, which excludes energy and food costs, has risen to 3.7%, in line with the consensus estimates. The Office for National Statistics (ONS) hypothesized that the introduction of VAT on private school fees can be at the origin of the increase in education prices.
This data, he explains Richard FlaxChief Investment Officer of Moneyfarm, highlights the challenges that the bank of England continues to face to return to an inflation of 2%. Towards the end of 2024 there was optimism on the possibility that in 2025 the Central Bank of the United Kingdom reduced rates on a quarterly basis, and some estimates even included five or six cuts during the year. “However, the existing inflationary pressures, including the sustained growth of wages and the possibility of an increase in commercial duties, could limit the maneuvering margin for further rates cuts in 2025”.
ECB towards two other cuts in the first half
Between elections in Germany and inflation, Two other ECB cuts are expected in the first half. This is what Schroders Economics Team analysts include. The ECB has taken on a more accommodating attitude, shifting its attention from high inflation to slow growth. “Although having changed our forecasts to include a further cutting of the rates, we still maintain a relatively aggressive position on interest rates. We expect the ECB to stop cutting rates in June, keeping the deposit rate at 2.25%. On the contrary, the markets expect the ECB to reduce the deposit rate below 2%”, underline analysts who expect” a stagflation scenario in the eurozone, where a slight recovery of growth will be supported by stronger consumption , but investments will remain content. With the inflation that remains high, the ECB It should only make two further rates cuts this year. ” We have updated our forecast on Headline inflation for 2025 from 2.2% to 2.4% on an annual basis, in the wake of the increase in energy prices and food, while we continue to predict that core inflation It will remain high, at 2.3%. The inflation of services also seems to remain high, since the resilience of the labor market allows unions to maintain a strong contractual power in wage negotiations. In particular, Germany is entering a critical period of wage negotiations, at a time when both inflation and inflation expectations are increasing.
The Fed and the first time of the Reserve Bank of Australia
The Australian central bank He cut his interest rate for the first time since November 2020, warning against global turbulence that could hinder further monetary ease. The Reserve Bank of Australia, in a note, reported having adopted the file of 0.25%, to 4.10%, thanks to the inflation “fallen substantially from the peak of 2022”, while remaining “cautious” on future developments . The geopolitical and political uncertainties, in fact, “are pronounced and could weigh on the activities in many countries if families and companies delayed expenses pending greater clarity on the outlook”.
From the minutes of the FOMC The Fed meeting, of 28-29 January, emerged the cautious approach of the central bank led by Jerome Powell, with the members who declared that they “want to see (provided that the economy remains close to the highest level of employment) further) progress on inflation before making new adjustments “on reference rates.
The manufacturing sector remains in contraction in Eurozone but with signals of improvement
In Eurozone the PMI index manufacturing of February preliminary rose to 47.3 points from 46.6 in January. The manufacturing sector therefore remains in contraction (below 50 points) although it shows signs of improvement. As for the services, the PMI index in February stood at 50.7, decreasing from 51.3 points of the month of January. In the UK, inflation stood at 3%, in January, above the analysts’ forecasts, while the “core” that excludes energy and food costs, rose to 3.7%, in line with the consensus estimates . In Germany, the Zew Institute has detected an improvement in the sentiment investors, in February.
The gold race does not stop. Goldman Sachs raises price estimate at $ 3,100
Gold continues to run and has now almost reached a value of $ 3,000 the ounce. Goldman Sachs analysts have just reviewed the forecasts on the price of gold, based on a series of factors, not least the purchases of the central banks, and advise to “buy”. “We have revised our predictions on the price of the golden gold at the end of 2025 at $ 3,100/toz, compared to the previous 2,890 dollars/toz – reports the US business bank – due to a structurally higher demand by banks central, with our “GS Central Bank Nowcast” (short forecast on the moves of the central banks) which once again surprises upwards in December, e We reiterate our recommendation for Long trading (purchase) on gold “.
Among the Commodities, sThe rises are moved by the oil prices, supported by fears for the interruptions of the offer in Russia and the United States.
The weekly performance of bags
The palm of the upside, in this week, is conquered by the Piazza di Milano which brings home about 1.3% progress, mainly supported by the bank risk. Slightly positive Madrid +0.12%. The other squares of Eurolandia weak: the Paris Stock Exchange Lima 0.12%, that of Frankfurt slips by 1.4%and that of London by 1.2%. The ending also weak for the Wall Street bag.
The best and worst in Piazza Affari
In Piazza Affari, the Best Blue Chips is STM which brings home a rise of 16.5%: he announced a new technology for data centers and clusters Ai with Amazon. Also well, Leonardo ( +14.9%) who raised the veil on the accounts 2024. Among the banks, it is good Bper with a +6.7% followed by Ban Bpm +4.5% and MPS +4.2 %. Unicredit +3.5%. Purchases also on Campari +6.5% who confirmed that they are working on a plan that includes an “organizational renovation”. On the side of the discounts, the descent of Interpump -19.6% is heavy and of recovered -11.8%.
