A sluggish day for Piazza Affari, with the Ftse Mib closing trades down by 0.3% to 24,621 points. Purchases on Amplifon (+3.2%), Banca Generali (+2.4%), Campari (+2%) and Finecobank (+1.9%). On the other hand, Moncler (-3.2%), Telecom Italia (-2.1%), Stellantis (-2.05%) and Erg (-2%) fell back.
The other European stock exchanges moved little, while Wall Street proceeds in decline after the publication of the November employment data. The Dow Jones fell 0.4%, the S&P500 0.6% and the Nasdaq 0.8%.
The job report highlighted the creation of 263,000 new jobs, well above the 200,000 expected by analysts. Furthermore, the October survey was revised upwards to 284 thousand units, from the 261 thousand initially communicated. Unemployment stable at 3.7%, while average hourly wages grew by 0.6% on a quarterly basis and by 5.1% on a trend basis, more than estimates.
Labor market tightness and upward pressures on wages confirm Jerome Powell’s view this week that the Federal Reserve still has a long way to go to get prices under control.
On Wednesday, the president opened to a slowdown in interest rate tightening, reinforcing the prospect of a 50 basis point hike in December, but he also stressed that the cost of borrowing will have to rise to 5% or even more.
Today’s data shouldn’t change expectations on the extent of December’s intervention, but could give rise to a more restrictive tone for the future. The numbers, in fact, justify the arguments of the more hawkish members of the FOMC who are pushing to keep the cost of money at high levels for a long time to come in order to effectively fight inflation.
The report triggered volatility in forex and pushed up yields on US bonds, and consequently those of Europe. In particular, the euro/dollar fell to 1.047 and then returned to 1.05 while the US 10-year rate rose by 10 basis points to 3.6% and the two-year rate, more sensitive to expectations on the Fed’s moves, it soared more than 13 points to 4.36%.
October producer prices in the Eurozone were also released during the day, down 2.9% after +1.6% the previous month. On an annual basis, the figure marks +30.8% from 31.5% expected and +41.9% previously. Euro area producer prices fell more than expected in October, suggesting that inflationary pressures could perhaps ease further in the coming months. It is the first time that producer prices have declined on a monthly basis since May 2020. Looking at the details, the 6.9% drop in energy prices was the main drag on overall prices.