The stock markets are returning to “normality”, after the various breaks for the Christmas holidays and the beginning of the year. Investors continue to focus on central bank developments, especially in light of the caution expressed by the Fed on rates for 2025, in view of Donald Trump’s economic policies.
In focus Fed and ECB
Minutes from the Federal Reserve’s December 17-18 meeting revealed that “many participants” saw the need for a “cautious approach” to monetary policy decisions “in the coming quarters.” They cited several reasons for this, including recent higher inflation data, resilient economic activity and reduced downside risks to the labor market. Concerns have also arisen about potential changes in trade and immigration policy under the new Trump administration.
If on one side of the Atlantic the Fed’s minutes fuel uncertainties about the next moves, on the other side the ECB bulletin confirms the slowdown in inflation, but also the risks for growth. ECB Governing Council member Francois Villeroy de Galhau said Frankfurt should continue to lower interest rates at each meeting until they reach a neutral level by the summer, as long as inflation moves in line with the bank’s projections central.
US macro data increases expectations of firm rates
The latest macroeconomic data has fueled speculation that the Federal Reserve may leave rates unchanged this month due to the strength of the US economy. Notably, the December jobs report beat economists’ expectations and the unemployment rate fell from 4.2% to 4.1%. The first big data of the year, along with the strong ISM report on prices paid for services, confirms that the labor market is still strong and the US economy is solid, calling into question the Fed’s support plans.
Gold: Goldman Sachs postpones the $3,000 target
Goldman Sachs now predicts that They will rise about 14% to $3,000 an ounce by the second quarter of 2026 (compared to December 2025 previously) and now expects it to reach $2,910 an ounce by the end of 2025. The estimate revision is driven mainly from the expectation of fewer Fed cuts.
Among other commodities, the prices of petrolium they rise further and exceed the threshold of 80 dollars a barrel with Brent, supported by the increase in Chinese demand and the reduction in American inventories. Added to this is the Biden administration’s decision on new sanctions against Russian oil production and exports.
On the currency market, the US dollar caused the euro to slide to its lowest level for over two years, strengthened by the hypothesis of a possible slowdown in the speed of interest rate cuts by the Fed in the wake of the solidity of the labor market. The next central bank meeting is scheduled for January 28th and 29th, and the employment trend seems to exclude a further reduction in the cost of money, also casting doubt on a possible cut in March.
The publication of the unemployment data also recorded a clear surge in yields US Treasuries. Meanwhile, in Great Britain the yield on the ten-year bond has reached its highest level since 2008 and that of the thirty-year bond at levels not seen since 1998. Investors are increasingly worried about British finances, in the face of the financial maneuver desired by Keir Starmer’s executive made tax increases of 40 billion pounds and, they fear a new “Truss effect” which triggered panic on the market, when the then Prime Minister Liz Truss presented a plan to budget marked by massive and unfunded expenditure.
The weekly performance of the stock markets
This week, the crown of increases was won by the Milan stock exchange which brought home an increase of around 2%. The Frankfurt Stock Exchange follows with +0.95% and the Paris Stock Exchange with +0.50%. Along the same lines, Madrid +0.38%. Weak, however, London shaved 0.14%. The finale is preparing for a decline for the Wall Street stock market with investor caution reigning supreme ahead of the Fed meeting.
The best and worst in Piazza Affari
Among the best and worst of the week, banking stocks recorded the best performances. Among these, Mediolanum rises by 6%, while BPER and MPS gain over 5 percentage points. Unicredit and Intesa Sanpaolo also did well, rising by 4%. Luxury is in demand, with Cucinelli and Moncler up by 4%. Outside the FTSE MIB, illimity soars by 13.5% after the launch of the public tender offer launched by Banca Ifis (+6.3%). On the downside, in the main basket, Campari -6%, Reply -4% and Inwit -3% slipped.
