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(Il Sole 24 Ore Radiocor) – The FTSE MIB of Piazza Affari is moving sharply down with the shares of the main credit institutions in deep red, weighed down by the news that yesterday the government approved a legislative decree which provides for a tax on the extra profits of the banks . Following Milan, the other main Stock Exchanges of the Old Continent are also down: the FT-SE 100 in London, the CAC 40 in Paris and the DAX 40 in Frankfurt. On the macro front, German July inflation was confirmed at +0.3% on month and at +6.2% on year, when expectations rise for US inflation which will be published on Thursday 10 August, while on Friday 11 will be the turn of producer prices. Meanwhile, the Chinese trade balance surplus rose beyond expectations, even if exports suffered a decline of 14.5% on an annual basis against an expected -13.2%: this is the most significant drop since February 2020 Globally, investors are wondering when the Federal Reserve will start cutting interest rates, after 11 hikes in less than a year and a half. An interest rate cut is possible in the first half of 2024, but it will depend on the data, according to John Williams, chairman of the New York Fed. However, for Fed board member Michelle Bowman, further increases may be necessary if inflation is not brought down to 2 percent.
In Milan banks in the red with the tax on extra profits
In Milan, the main banking stocks are in deep red after the news that the Omnibus Decree has included, surprisingly, a rule to tax the interest margins accrued by banks at 40%. So they lose Bper, Banco Bpm, Intesa Sanpaolo, Banca Mps, Unicredit and Mediobanca. Asset management is also down sharply, with Finecobank going down, as well as Banca Mediolanum and Banca Generali. The Omnibus decree approved by the Council of Ministers provides for a levy on bank profits to allocate the proceeds to measures on first home loans and tax cuts: the first estimates circulating on the market assume a revenue of between 2 and 3 billion. The securities of the main European credit institutions are also worsening during the day: the fear, on the market, is that other Governments, after the Spanish and Italian ones, could put in the pipeline possible measures to hit extra bank profits (as happened, moreover, in last year for the energy sector).
FTSE Mib Stock Exchange performance
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Euro on threshold of 1.1 dollars, crude oil down slightly
On the foreign exchange market, the euro returned below the threshold of 1.1 dollars and changed hands at 1.096 dollars (1.1002 at yesterday’s close). The single currency is also worth 156.985 yen, while the dollar/yen ratio is at 143.146. Oil prices are down: the October delivery contract on Brent loses 1.71% to 83.88 dollars a barrel and the September contract on the WTI loses 1.60% to 80.64 dollars a barrel. Finally, in Amsterdam the price of gas fell by 0.75% to 30.26 euros per megawatt hour.
Spread drops to 165 points, 10-year yield down to 4.16%
The spread between BTp and Bund is stable while the yield on the 10-year Italian bond is falling. The yield differential between the 10-year benchmark BTp (Isin IT0005518128) and the German security of the same duration is indicated at 165 basis points, one less than the last position on Monday’s closing. More significant contraction for the yield of the ten-year benchmark BTP which stands at 4.16%, from 4.25% of the previous reference.
Tokyo closes at +0.4% between the weak yen and the accounts of companies
Second consecutive timid rise for the Tokyo Stock Exchange after the heavy performance of the first week of August (-1.8%). The NIKKEI 225 index finished trade up 0.4% while the broader Topix index rose 0.35%. The recovery was favored by the performance of Wall Street and by the weakening of the Japanese yen, which returned to trading above 143 for one dollar and in the 157.5 area for one euro, but also by expectations of corporate results from big names such as Softbank Group and Kawasaki Heavy Industries. Up 0.58% Toshiba on the day the takeover bid was launched by a consortium led by Japan Industrial Partners funds which values the electronics company at approximately 14 billion dollars.