The last session of the week closed lower for European stock markets, mainly influenced by the geopolitical tensions between the United States and Iran, which continue to slow down the prospects of a rapid resolution to the conflict. Madrid records the sharpest decline, while Frankfurt is the best and is positioned close to parity, driven by SAP’s performance.
On the macroeconomic front, in Germany, in April, the IFO index fell from 86.3 to 84.4 (minimum since May 2020) with a deterioration not only of expectations (as happened in March), but also of the current situation (signaling that the effects of the crisis in the Middle East are starting to slow down economic activity). As for central banks, the Bank of Russia has decided to reduce the reference rate by 50 basis points, bringing it to 14.5% and continuing the gradual easing of monetary policy.
European indices
Among the main European stock exchanges, Frankfurt stands still, marking almost nothing, prey to London sellers, with a decrease of 0.75%, and sales are concentrated in Paris, which suffers a drop of 0.84%.
The Milanese stock exchange closed the session just below parity, with the FTSE MIB trimming 0.52%; along the same lines, the FTSE Italia All-Share dropped slightly, closing the day below parity at 50,119 points. The FTSE Italia Mid Cap (-0.62%) is just below parity; as well as the FTSE Italia Star (-0.84%) negative.
The titles on Piazza Affari
At the top of the ranking of the most important stocks in Milan, we find Prysmian (+4.00%), Saipem (+2.72%), STMicroelectronics (+1.31%) and Generali Assicurazioni (+0.61%). The worst performances, however, were recorded on Avio, which closed at -7.15%. Bad performance for Stellantis, which recorded a decline of 4.94%. Black session for Fincantieri, which leaves a loss of 4.63% on the table. Sales on Leonardo, which recorded a decline of 3.02%.
At the top among Italian mid-cap stocks, NewPrinces (+2.74%), Cementir (+2.38%), Revo Insurance (+2.11%) and RCS (+1.64%). The worst performances, however, were recorded at Fiera Milano, which closed at -3.62%. Negative session for Safilo, which showed a loss of 2.78%. Webuild is under pressure, suffering a decline of 2.53%. Ariston Holding slips, with a clear disadvantage of 2.48%.
The oil knot
Thursday evening’s announcement of a ceasefire between Israel and Lebanon had little impact on the price of oil, which recovered to around $105 a barrel for Brent. The prices of several refined petroleum products, such as diesel and kerosene, have also started to rise again. News sources have suggested that negotiations between Iran and the United States will continue in Pakistan over the weekend. The connection to the negotiations is important, but the energy market is concerned that tanker traffic in the strait has not yet started to recover. According to Reuters, only five ships passed through the strait in the last 24 hours, compared to an average of 140 ships a day before the war.
Central bank meetings
Next week will be full of central bank meetings, which however should avoid changing rates while waiting to know the full implications of the crisis in the Middle East. The ECB is expected to keep its monetary policy unchanged and the deposit rate at 2.00%. The inflation outlook has clearly worsened due to escalating tensions in the Middle East and soaring energy prices.
The Fed is very likely to keep interest rates unchanged at its meeting on April 29. Rate guidance will likely be limited given high uncertainty and with Jerome Powell nearing the end of his term as president. Like other major central banks, the Bank of England is taking a wait-and-see attitude and is likely to keep its key rate at 3.75% at its meeting next week (the decision is expected on Thursday). The Bank of Japan is expected to keep its key rate unchanged at 0.75% on Tuesday.
