European stocks closed positively, albeit far from intraday highs, in line with Wall Street, as investors bet on a possible 50 basis point Fed rate cut. Markets were supported by data on retail sales, which surprisingly increased in August. Milan closed with a 0.6% gain, Frankfurt advanced by 0.6% and Paris by 0.5%. Defense stocks recorded losses due to hopes of a ceasefire in Ukraine. Leonardo was the worst performing stock (-4.5%), followed by Mps (-1.5%) and Campari (-0.7%). Nexi shone with a +4.58%, followed by Iveco (+3.66%) and Tenaris (+3%).
Stock Markets 12pm: Milan Still Rising
European stock markets remain higher despite sharp deterioration in the index Zew in Germany. London rose by 0.71%, Paris by 0.61% and Milan by 0.76%, with the index standing at 33,825 points at 12:00, mainly driven by Campari, Ferrari, Interpump, STMicroelectronics, FinecoBank, Unicredit and Nexi.
Frankfurt also gained 0.51%, despite the ZEW index, which measures the economic sentiment in Germany, recorded a significant fall in September, falling to 3.6 points, a full 15.6 points below the value of August. This result is significantly below the expectations of analysts, who expected an index of 17 points. According to the research institute ZEW, the optimism that had emerged in economic expectations since November 2023 has almost completely evaporated.
The assessment of the current economic situation in Germany also continued to deteriorate, with the corresponding indicator falling by 7.2 points to -84.5 points, the lowest level recorded since May 2020.
Stock Markets 9am: Piazza Affari up ahead of Fed, other European markets also positive
The European stock exchanges open higher, while traders’ bets on a possible cut in interest rates grow Federal Reserve of 50 or 25 basis points, bringing the cost of money into the range of 4.75-5.00%. Frankfurt gains 0.50% like Paris, London 0.71% and Milan the 0.45% at 33,720 points.
Piazza Affari in positive thanks to Tim and Nexi
This morning Milan sees Telecom jump to the top with a boost of 1.44%. It follows then Nexi who earns 1.38%, reaching a value of 6.16 euros, while Brunello Cucinelli rose by 1.12%, reaching 86.00 euros. STMicroelectronics saw a rise in 0.94%, with a value of 25.13 euros. Ferrari recorded an increase of 0.89%, with the share price at 420.50 euros, and Tenaris saw an increase of 0.86%, with the stock at 12.93 euros. Also doing well were utilities: Erg gained 0.81%, reaching 24.96 euros, while Enel increased by 0.70%, with a price of 7.182 euros. Finally, Interpump Group saw an increase of 0.68%, reaching 38.50 euros.
At Piazza Affari, Unicredit rose 0.49% to 37.28 euros. Meanwhile, in Frankfurt, Deutsche Bank rose 1% to 15.76 euros as it prepares for a possible strategic move on Commerzbank. Deutsche Bank could acquire part or all of the 12% stake in the institution still held by the German state.
Among the declines to be reported, banks are leading the way for the time being. Unipol has seen a decrease in 0.79% falling to 10.03 euros. Banca Monte Paschi Siena fell by 0.32%, with a value of 4.984 euros. Generali recorded a slight decline of 0.15%, reaching 25.94 euros, while Bper Banca saw a decrease of 0.06%, with the stock at 4.866 euros. Diasorin marked a decrease of 0.05%, with a value of 103.55 euros, and finally Poste Italiane fell by 0.04%, with the price of the shares fixed at 12.67 euros.
The two-day FOMC is underway, what to expect
Meanwhile, the Fed meeting began today, which will end tomorrow, September 18, with the long-awaited announcement on interest rates, which is bound to influence the markets. The start of monetary easing now seems certain, with the debate focusing on the extent of the reduction.
According to estimates by the FedWatch Tool, the probability of an interest rate cut in the 0.5% rose to 67%, while that for a single cut of the 0.25% has fallen to 31%. However, the prevailing view is that the Fed will opt for a 25 basis point reduction, given that the US economy seems headed for a soft landing. A new indication is expected today from US retail sales for August, which are expected to have slowed compared to the previous month.
Futures contracts on the main European stock indices showed positive signs, with the Eurostoxx up 0.44% and the Ftse Mib up 0.37%. Wall Street closed the last session with mixed performance, with the Dow Jones up and updating its historical highs. In Asia, Shanghai remained closed for holidays, while Hong Kong recorded an increase and Tokyo ended trading in the red.
Spread at 135 points
Today’s opening saw a slight decline in spread between BTPs and Bunds. At the start of the session, the yield spread between the benchmark 10-year BTP and the German Bund stood at 135 basis pointswith a reduction of one point compared to yesterday’s close. The yield on the benchmark 10-year BTP also showed a decline, marking a first position at 3.46%, compared to 3.48% of the last reference.
