New vigorous surge in US inflation, which went beyond expectations. The CPI index rose to + 7.5% yoy in January (consensus was + 7.2%), on the new top at 40 years. Core inflation marks + 6%. Inflationary dynamics further fueling pressure on the Fed to quickly implement a rather sustained cycle of rate hikes. After today’s figure, the yield on Treasuries moved to around 2%, fueling sales especially on growth stocks.
“It is not only the rate of inflation that should worry the Federal Reserve, but also the extent of the pricing power of companies – he remarks James Knightley, Chief International Economist of Ing -. With wages, commodity prices and supply chain tensions contributing to the jump in inflation, the Fed will have to respond aggressively with a very real outlook that chooses to signal its resolve with a March rise of 50 basis points“.
Possible peak this month
Looking forward, Silvia Dall’Angelo, Senior Economist for Federated Hermes’ international division, believes US inflation is likely to peak in February and then begin a gradual decline in March-April. “The base effects, the stabilization of energy prices and, above all, an easing of the constraints of the global supply and the improvement of the conditions on the labor market, should contribute to bring down inflation more rapidly in the second half of the year. That said, there is still a lot of uncertainty about the prospects. The longer inflation remains at high levels, the greater the risk of it taking root, through expectations and wage dynamics. Indeed, long-term inflation expectations have already risen (although they do not seem to have unanchored) and wage inflation has risen over the past two quarters in the context of a tight labor market. ” The Federated Hermes economist still points to a 25 basis point rate hike as a base scenario, but does not rule out a broader intervention (50 basis points) if the Fed wants to give a stronger signal.
Milan holds thanks to the big banks
In Piazza Affari the Ftse Mib, fresh from the jump of 2.7% on the eve of the eve, marks at the end of + 0.23% 27,190 points after a short foray into negative after the weak start of Wall Street. Among the big names in Piazza Affari, Enel has approximately -0.5%. The dear bills discourse is being held with the Government, which is said to be working on further measures in favor of reducing energy costs. According to what Il Sole 24 Ore reports, an intervention of 5-7 billion is outlined with the emergence of the hypothesis of an `exchange` for industrialists who, in the face of the benefit of about 25TWh of renewable energy delivered to the GSE (Regulator renewables) and from this transferred to industrialists at controlled prices, these would undertake to achieve 12 GW photovoltaic and 5GW of wind through long-term contracts (PPA), contributing to decarbonisation and the achievement of green targets.
Among the best of today stand Unicredit (+ 2.9%) and Intesa with over + 2%. Closing at + 4.3% for CNH.
TIM Pause, sick Nexi
Telecom Italia also did well (+ 1.7% to € 0.424) which announced that the offer presented for the purchase of the mobile activities of the Oi Group, together with Telefônica Brasil (VIVO) and Claro, was approved by the Antitrust Authority Cade (Conselho Administrativo de Defesa Economica). Meanwhile, the latest indiscretions reported by Bloomberg see Cassa Depositi e Prestiti (CDP), which owns 10% of the Italian telecommunications company with a stake of 82 euro cents per share, reluctant to accept the offer of 50.5 cents from the fund private equity KKR.
Finally, a day of strong volatility for Nexi (-4.77%), the worst stock in the Ftse Mib after it had risen by more than 3% in intraday on rumor of possible sale of its German asset Ratepay (possible valuation of over 1 billion euros) and then abruptly reversed the course after the spread of the 2021 accounts. The Italian paytech reported in the fourth quarter of 2021, revenues amounted to 618.1 million, up 11 , 1% compared to the same period of 2020 and the Ebitda increased by 11.6% to 319.7 million, while the Ebitda Margin reached 52%.