An uncertain day for the European stock exchanges, while Wall Street took the downward path after a cautious start, with traders intent on monitoring the company quarterly reports and the next moves in monetary policy.
Milan’s Ftse Mib ended up slightly (+0.3%) at 25,981 points, on average in line with the other continental indices. Leonardo stands out on the main list (+4.9%), in the wake of the upgrade by Goldman Sachs which raised the recommendation from Neutral to Buy while keeping the target price unchanged at 11.7 euros. Also highlighted were Recordati (+4.4%), supported by the buyout of Intermonte, as well as Tenaris (+3%). Instead, Iveco (-2.2%), Bper (-1.5%) and Intesa Sanpaolo (-1.05%) fell back.
On bonds, the Btp-Bund spread falls below 180 basis points, with the Italian 10-year yield falling sharply to 3.88%, in the wake of rumors that the ECB is evaluating a slowdown in the pace of rate hikes interest. By now taking for granted a 50 basis point adjustment in February, the hypothesis of a 0.25% tightening in March takes shape.
ECB chief economist Philip Lane reiterated to the Financial Times today that interest rates will have to move into tight territory to bring inflation back to target. Christine Lagarde, head of the Frankfurt institute, will speak on Thursday from the Davos forum.
Meanwhile, the quarterly season has resumed in the USA with the accounts of Goldman Sachs and Morgan Stanley. The former retreated after reporting below-expected net revenues in the fourth quarter, while the latter gained ground on the back of positive revenues from the asset management business.
On Forex, the euro/dollar remains just above 1.08 while the dollar/yen drops to 128.2 in anticipation of tomorrow’s Bank of Japan meeting, which could lead to new decisions on controlling the interest rate curve. Among the raw materials, oil is advancing with Brent in the 85.8 dollar area and natural gas is back in the 60 €/MWh area after the sharp drop on the eve.
From the macroeconomic agenda, we note the improvement of the German Zew index, on its highest level for almost a year at 16.9 points in January.