European stocks closed higher, buoyed by the European Central Bank’s decision to cut interest rates by 25 basis points, in line with economists’ expectations. Attention now turns to the Federal Reserve, which is set to announce a further rate cut on September 18. However, the size of the cut remains uncertain, which could be 25 or 50 basis points, due to mixed data on jobs and inflation. According to the CME Group’s FedWatch Tool, the probability of a 50 basis point cut rose to 43%, from 28% the previous day, while 57% of analysts expect a 25 basis point cut.
In the panorama of European stock exchanges, Frankfurt stands out with a positive performance, recording a significant increase of 0.98%. London marks a more modest increase, of 0.39%, while Paris closes with a moderate increase of 0.41%. In Milan, the FTSE MIB gained a timid +0.34% at the close, while the FTSE Italia All-Share index marked an increase of 0.40%, reaching 35,693 points.
Campari drops in the finale
Amplifon closed the session up 1.58%, benefiting from analysts’ relief regarding concerns about the new software for AirPods, considered a complement and not a replacement for hearing aids. Among the best performers in Milan, Iveco (+2.52%), Telecom Italia (+2.41%), STMicroelectronics (+1.92%) and DiaSorin (+1.91%) stood out.
In contrast, Campari suffered a flurry of sales at the end of the session at Piazza Affari, closing down 5.56%. Weighing in were the statements of CEO Matteo Fantacchiotti during a roadshow organized by Bank of America, in which he highlighted the persistent weakness of the beverage sector. In particular, Fantacchiotti underlined that in the United States, where an improvement was expected in the third quarter, consumption remains weak.
Nexi also closed in the red (-2.84%), influenced by the profit warning issued by French Worldline, which lost 14.38% in Paris. Worldline announced the departure of CEO Gilles Grapinet and revised its forecasts for 2024, estimating a 1% decline in revenue, compared to the previous increase of 2-3% expected in August. Jefferies analysts pointed out that this is the third warning on the company’s accounts.
Stock Market 12:00 PM: Piazza Affari Still Positive Despite Disappointing European Industrial Production Data
Eurozone industrial production data is negative but European stock markets continue to rise. Frankfurt advances by 0.42%, Paris by 0.38%, London by 0.13% and Milan gains 0.18%, settling at 33,515 points at 12, driven by stocks such as Banco Bpm, DiaSorin, Tim, Eni and Amplifon.
US futures are also positive, with the Dow Jones up 0.23% and the S&P500 up 0.27%. On the economic data front, Eurozone industrial production fell 0.3% in July on a monthly basis, worse than economists had expected a 0.2% decline. On a year-over-year basis, production fell 2.2%, improving from a revised 4.1% contraction in June.
Stock Market 9am: ECB cut and energy stocks bring Milan to positive ground
European stock exchanges slightly up at the start of the session: Frankfurt +0.15%, London +0.03%, Paris +0.09%, Milan +0.13%. The premises are positive, given that Wall Street closed in positive territory and the trend is expected to be the same in Europe, also in light of the rate cut made yesterday by the ECB. Now it’s the Federal Reserve’s turn; it will probably be a rate cut, but it remains to be seen whether it will be 25 or 50 basis points.
In Milan Enel and Eni do well, Nexi collapses
At Piazza Affari, the day’s biggest increases were led by Amplifon, which advanced by 1.29% to 27.58 euros, Brunello Cucinelli with an increase of 0.95% to 84.95 euros and Campari, which grew by 0.85% to 8.338 euros.
Diasorin and Iveco Group both recorded an increase of 0.83%, respectively at 102.90 euros and 8.718 euros. Eni rises 0.75% to 13.954 euros, after launching the new corporate organization that aims to bring out the value of the satellite companies Vår Energi, Azule, Plenitude and Enilive through the entry of new partners and the listing.
It also grows Stellantis of 0.70% to 13,606 euros. In the meantime, the production of the 500 Bev at Mirafiori will undergo a suspension of activities that will last until October 11.
Telecom Italia gains 0.67% to 0.242 euros, Moncler grows 0.63% to 51.44 euros and Stmicroelectronics ends the day with a rise of 0.61% to 25.43 euros.
The main decline of the morning is Nexi, which falls by 3.09% to 6,158 euros. Italian PayTech company, the reason for the decline is due to the decline of Worldline on the Paris Stock Exchange. Operating in the payment technology sector, Worldline announced a change of CEO and revised downwards its forecasts for revenue and EBITDA for 2024, citing “specific performance issues” in some of its activities.
Leonardo also performed badly with a 0.92% drop to 20.39 euros, while Tenaris lost 0.62%, falling to 12.855 euros. Finecobank was down 0.59% to 15.055 euros and Unicredit recorded a decrease of 0.39% to 37.05 euros, still struggling with the purchase of Commerzbank and which also received the favorable opinion of Christine Lagarde.
Continuing the declines, Saipem fell 0.30% to 1.845 euros, Banca Mediolanum fell 0.18% to 10.93 euros, and Erg fell 0.16% to 24.86 euros. Recordati Ord and Italgas both closed down 0.10% to 50.85 euros and 5.20 euros, respectively.
What changes with the rate cut
As expected, the ECB cut interest rates by a further 1.5% yesterday. 25 basis points. The deposit rate fell to 3.5%, while the main and marginal refinancing rates were cut to 3.65% and 3.9%, respectively. Inflation forecasts remain unchanged from the June projections: 2.5% for 2024, 2.2% for 2025 and 1.9% for 2026. However, core inflation estimates have been revised upwards: 2.9% (from 2.8%) for 2024, 2.3% (from 2.2%) for 2025 and 2.0% (from 1.9%) for 2026.
Economists cut their rate cut forecasts from 35 to 32 cents for the end of the year, continuing to price in a further 25 basis point cut at December. However, according to ECB sources quoted by Reuters, a cut in October appears unlikely without particularly negative surprises on growth.
Spread at 138 points
At the opening, the spread between BTp and Bund remained almost stable. The yield spread between the benchmark 10-year BTp and the Bund with the same maturity fell to 138 basis points, compared to 139 points yesterday. The yield on the benchmark 10-year BTP is also down, settling at 3.51% compared to 3.55% at yesterday’s close.
