prudent closing awaiting data and outcome of the US vote

THE stock markets they traded this week without clear directionwith most of them still closing the eighth at a loss. Investors are looking above all to the next decisions of the central banks and to the presidential elections in the United States (with a head-to-head between the two candidates Donald Trump and Kamala Harris), while the season of quarterly results comes into full swing (which so far have been conflicting on the two shores of the ocean).

From a macroeconomic point of view, this week the Eurozone PMI indices signaled continued weakness in economic activity, while in Germany the IFO index rose for the first time since April. Statements from ECB officials were dovish, indicating that further rate cuts are expected as risks to inflation and growth change. However, a 50 basis point cut in December remains unlikely for most analysts. The IMF has widely confirmed its global growth forecasts for this year and next at a disappointing 3.2%, with upward revisions to the US numbers offsetting downward revisions for the eurozone.

Today’s session

Among them Eurozone indicestoday was a neglected session, Frankfurt, which remained glued to the levels of the day before, London wavered, with a modest decline of 0.25%, and nothing accomplished for Paris, which closed at parity. The Milanese price list showed a timid gain at the end, with the FTSE MIB posting a +0.22%, while, on the contrary, the FTSE Italia All-Share remained around the parity line, which closed the day at 36,900 points . The FTSE Italia Mid Cap was slightly negative (-0.3%); along the same lines, the FTSE Italia Star fell slightly (-0.43%).

The exchange value in the session of 10/25/2024 in Piazza Affari it was equal to 2.12 billion euros, down compared to the 2.28 billion on the day before; while the volumes traded went from 0.44 billion shares in the previous session to 0.41 billion.

At the top of the classification of the most important stocks in Milan, we find Iveco (+3.24%), Saipem (+3.16%) and Tenaris (+1.89%). The strongest sales, however, hit Unipol, which ended trading at -1.62%. A slow day for Nexi, which recorded a drop of 1.11% and for Hera, which traded at -0.98%.

The best FTSE MIB stocks in thelast week they were Iveco (+9%), Saipem (+6% after better-than-expected accounts and 2024 guidance revised upwards) and Stellantis (+6%). Banco BPM, TIM and Unipol did badly (all with drops of more than 5%).

The sell-off on US Treasuries

A theme of the week was the rise in US government bond yieldswhich returned to levels not seen since last July, before recovering slightly in the last two sessions. Treasuries have come under selling pressure since much stronger-than-expected U.S. jobs data was released. This has accelerated in recent days, with investors scaling back their expectations of Fed easing, compounded by uncertainty over the outcome of the presidential election.

The performance of the BTP

The BTPs had good performances recentlywith the 10-year BTP-Bund spread narrowing to 120 basis points and the 10-year OAT spread narrowing to around 45 basis points. The positive performance reflects Fitch’s decision to improve its rating outlook on Italy (and to some extent the relative improvement compared to France, whose rating outlook was changed to negative the previous week). In this favorable market context, theItaly has issued 10 billion euros of a new 7-year BTP and reopened a 30-year BTP for 3 billion euros: the demand has been exceptionally strongwith orders for over 200 billion euros.

The next macro data

The highlight of the week will be the October jobs report in the United Statesscheduled for November 1st, which however will be overshadowed by the impact of hurricanes, which will make it a little difficult to interpret. Looking at theeuro areainvestors’ attention should focus on the data oninflation and GDP for the third quarter. Headline inflation is likely to see an increase from the previous month, while remaining below 2%. The increase should be explained by energy prices, largely due to a base effect, as ECB President Lagarde recently recalled.