Opening around parity for the Milan Stock Exchange
Piazza Affari starts the day with a drop of 0.1%. The other markets of the Old Continent were also slightly negative: Paris (-0.1%), London (-0.28%). Frankfurt marks a cautious +0.6% as does Madrid (+0.78).
This morning the spotlights are on Spanish inflation: the consensus expects a cooling to +3.4%, from the previous +3.8%. German inflation comes out tomorrow. The BTP is strengthened and the spread holds the positions. Tomorrow Congress votes on raising the US debt ceiling: Wall Street thinks it’s just a formality: Nasdaq futures gain 0.4%. Even President Joe Biden is reportedly calling the House representatives called to vote, probably tomorrow, in favor of the legislative provision that avoids the default of the United States.
Il House Republican leader Kevin McCharty he would be trying to convince Republicans close to Trump who for days have been threatening not to vote on raising the debt ceiling if there are no drastic cuts in public spending that McCharty asked for but did not get.
The commitment fuels expectations of a positive closure of the debt ceiling affair, the future of the S&P500 index is up by 0.2%.
On the currency, the prospect of a new tightening of the Fed monetary policy supports the dollar: the euro fell below 1.07 and is indicated at 1.0688 from 1.0723 yesterday. The greenback is also worth 140.89 yen (from 140.64), while the euro/yen is at 150.60 (150.80).
Türkiye’s currency weakens to 20.22 this morning. Second Thomas Gillet, Director of Sovereign Ratings at Scope Ratings, Turkey’s creditworthiness is bound to remain under pressure, also as a result of the difficult economic context. President Recep Erdogan has extended his mandate for another five years and the expansionary policy is reflected in the lira exchange rate, while the 5-year CDS spread has increased significantly.
Capital controls and macro-prudential measures are probably the basis of Turkey’s economic policies. The government’s lyrisation program has increased residents’ bank deposits in local currency, but its long-term effectiveness is uncertain. Turkey may need more external aid to partially alleviate acute pressures on the balance of payments and external buffers. Worsening macroeconomic imbalances would inevitably increase the risks of disorderly adjustment and make any long-term policy normalization more difficult.
Oil prices are down: the July future on WTI drops 0.86% to 72.33 dollars a barrel, while the same delivery on Brent slips by 0.75% to 76.49 dollars. Down 0.3% to 24.9 euros per megawatt hour in July natural gas futures in Amsterdam
It holds the highs of the last thirty-three years there Tokyo Stock Exchange, little moved this morning. Softbank settles, down by 1%, from +8.5% yesterday. The title of the conglomerate of holdings in ultra high tech companies, had managed to lose 5% tonight, also due to a cut in the target price by Nomura. Unemployment data in Japan came out tonight: in April, the rate fell to 2.6%, from 2.8%
The rebound in China’s stock markets did not last long. L’indice Hang Seng in Hong Kong, down 0.8%, it is in the fifth consecutive session with the minus sign. The Shanghai Composite is down 0.8%. The mobilization of the media close to the state authorities has also continued in recent days against what is defined as a sort of economic siege of the United States.
THE WINNERS OF DE-GLOBALIZATION
The thirty-year economic cycle of globalization is over, a new world order is imposing itself. Which economies and which stock markets will benefit? The answer from Andrew Rymer, Senior Strategist, Strategic Research Unit and David Rees, Senior Emerging Markets Economist at Schroders, is as follows.
“India is the most interesting market. It is predicted that by 2028 it will offer the largest pool of working-age labor. Other supporting factors are relatively lower labor costs and relatively high productivity. However, India does not score well when it comes to free enterprise. Vietnam is the runner up. Relatively low wage costs, competitive productivity and working-age population make this economy an attractive destination, even if its score in terms of free enterprise is less positive. South Korea is in a good position, underpinned by the Enterprise Freedom and Productivity Rankings. Also there Thailand and Indonesia they are among the most competitive countries at a regional level, thanks to wage costs and demographic dynamics”. Central and Eastern European markets also feature in the top 20, led by Poland.