Beginning of the session marked by volatility for the European stock exchanges after Putin’s speech and waiting for the Fed. Milan, after a negative start, is repositioning itself in positive territory and is now moving up by 0.64%. Frankfurt lost 0.21%, Paris 0.04% while London advanced by half a percentage point. Instead, the Moscow Stock Exchange collapses: the Moex index, which yesterday lost 8.8%, today lost up to a maximum of 9.6% at the start of trading and then recovered some ground and limited losses at 5.4%.
The gazes of the operators are turned towards Eastern Europe after the Russian President, Vladimir Putin, signed a decree of partial mobilization starting today. Putin said he wanted to defend Russian territories and that the West intends to destroy Russia. In a speech broadcast on television, Putin said that his goal is to “liberate” the Donbass region in eastern Ukraine, and that most of the region’s population does not want to return under the “yoke” of Ukraine.
Putin announces partial mobilization on TV: “The West wants to destroy us, we too have nuclear weapons”. 300,000 reservists recalled
The speech leads to a new escalation in the affairs of the area: «If the territorial integrity of our country is threatened, we will undoubtedly use all available means to protect Russia and our people. This is not a bluff, ”Putin said in his televised address to the nation.
In the context of renewed nervousness, defense titles are highlighted. The Italian Leonardo rose by 6%, Thales by 5.6%, the German Rheinmetall by 4% and the British Bae Systems by 5.5%.
Meanwhile, the euro is again losing ground: the exchange rate against the dollar moves in the morning in the 0.99 area from 0.996 yesterday. The boost comes from defensive dollar purchases. At the same time, the price of European gas is rising again and is back above 200 euros per mwh (+ 3%).
However, the expected meeting of the US Central Bank is also catalyzing the attention of the day. The Fed will most likely report a 75bp hike to 3% -3.25%. The move aims to counter the rise in inflation but worries markets that fear that the tightening could slow down the global economy and send it into recession. The speech that Jerome Powell, head of the Fed, will give in the evening is also highly anticipated.
Pending the words of the Fed on the Refinitiv platform, the yield of the Italian ten-year BTP is down to 4.156% from 4.190% at the previous closing. The yield differential between Italy and Germany on the ten-year stretch is 227.5 basis points from 221.3 at the previous end.