European stock markets close the last session of the week with a sharp risenear the day’s highs, after Federal Reserve Chairman Jerome Powell reinforced expectations that the U.S. central bank will cut interest rates next month. “It’s time for policy to adjust. The direction of travel is clear and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks,” he told the Jackson Hole symposium.
The performance of the main indices
Among the Euroland indices, good performance for Frankfurtwhich grows by 0.76% today and by 2.4% on a weekly basis, a modest performance for Londonwhich shows a moderate increase of 0.48% today and a trend almost unchanged on a weekly basis, and supported Pariswith a decent gain of 0.70% today and a +2% in the last week.
At Piazza Affari, the FTSE MIB ended the day with a 1.02% increase, at 33,650 points, which allowed it to close the week with a +4%; along the same lines, the FTSE Italia All-Share gains 1.04% compared to the previous session, closing at 35,836 points, also in this case marking a +4% on a weekly basis. Positive Friday also for the FTSE Italia Mid Cap (+1.23%) and the FTSE Italia Star (+1.2%).
Positive week for stock markets too Americans And Asians.
The push from Powell
What drove the buying in stocks today were Powell’s words in the afternoon, who in his speech at Jackson Hole stated that it is the time has come for the US central bank to cut its rate benchmark, confirming expectations that borrowing costs will be lowered at the September meeting and making clear its intention to prevent a further cooling of the labor market.
Powell said he was “increasingly confident that inflation is on a sustainable path back to 2 percent” and stressed that “the cooling of labor market conditions is unequivocal.” He also stressed that “the current level of our policy rate gives us ample margin to respond to any risk that we may encounter, including the risk of a further unwanted weakening of labor market conditions.”
The indications of the minutes
Also supporting the price lists this week were the indications from the minutes of the latest Fed and ECB meetings. On the first front, at the July meeting, most policymakers thought that “if data continued to come in more or less as expected, it would probably be appropriate to ease policy at the next meeting.” They also noted that “many” Fed officials viewed the stance on rates as restrictive, and “some participants” argued that, amid an ongoing cooling of inflationary pressures, no change in rates would mean that monetary policy would increase the drag on economic activity.
The minutes of the last ECB meeting also fueled expectations of a new cut in September, considered by the board to be the most appropriate month due to the greater completeness of the data. “The September meeting was widely considered a good time to reassess the level of monetary policy restriction,” emerged from the minutes of the meeting. meeting should be approached with an open mind“.
Macroeconomic data
New information on the economic trend in the Old Continent has emerged from the usual S&P Global survey of purchasing managers. In Eurozone theAugust Composite PMI rose to 51.2 from 50.2, the highest since May. The reading was impacted by an increase in the services PMI (53.3 from 51.9, the highest level since April) while the manufacturing PMI fell again after two months of stability, falling to 45.6 from 45.8, the lowest since December 2023. On a national basis, the composite PMI fell for the third month in Germany (48.5 from 49.1) and rose in France (52.7 from 49.1), mainly due to the Olympics.
