(Il Sole 24 Ore Radiocor) – The European stock exchanges they are slightly up thanks to the purchases of tech stocks and raw materials which balance the sales of banks. The stock markets continue to be conditioned by the deadlock in the negotiations for raising the US debt ceiling, on which there is greater optimism, and by the uncertainty about the next moves by the central banks. Doubts about monetary policy are fueled by the latest US macroeconomic data: in the first quarter both GDP andinflation “core” rose more than expected, giving the Federal Reserve arguments to further raise the cost of money, and the latest PCE inflation data for April – the Fed’s preferred measure to monitor price trends – confirmed this acceleration with an annual +4.7% in the core component.
The good momentum of the technology sector is not enough thanks to the optimism created by Nvidia which published higher-than-expected quarterly accounts and revised upwards the forecasts for the second quarter, driven by the requests for chips necessary for artificial intelligence. Shares of the company boasted a 24.3% gain on Thursday and so supported the Nasdaq, which rose 1.7% (the Dow Jones lost 0.11%, the S&P 500 rose 0.88 %). The FTSE MIB Milanese is little moved, held back by bank stocks. Well instead Stmicroelectronics, which is trying to hook up the sprint of the sector after experiencing a day without high notes on Thursday. Utilities are also up.
Allocated 6 billion BoT, yields on the rise
Yields up sharply for the first tranche of six-monthly BoTs. The Treasury has allocated 183-day BoTs for 6 billion, against demand for 8.67 billion, for a coverage ratio of 1.45. The yield shot up 20 basis points to 3.528 percent, the highest since December 2011.
Light up on US debt, Wall Street on the rise
Wall Street rises thanks to clearings on the negotiations on the US debt ceiling. Republican and Democratic negotiators are closer to an agreement to raise the debt ceiling for two years, with time running out to avoid default. There is no agreement yet on the spending ceiling, but according to the US press, the two parties are in agreement on a 3% increase in defense spending and on the need to modernize the national electricity grid. Yesterday the president, Joe Biden, after yet another meeting with the Republican speaker, Kevin McCarthy, said: «Ab We agreed that there will be no US default». The rating agencies have become alarmed given that the June 1 deadline is approaching and the US Treasury currently has only 60 billion in the Fed’s coffers. In the absence of an agreement, the States will fall into default as early as the beginning of June.
On the macro front, it emerged that US GDP in the first quarter increased more than expected, at an annualized rate of 1.3%, after +2.6% in the fourth quarter of 2022. Investors, however, fear that at this point the Federal Reserve also has room for further rate hikes, even if in the mid-June meeting the institute should leave the cost of money unchanged, at least according to the experts’ expectations. Even in Europe the puzzle over the ECB’s moves remains, even if the number one, Christine Lagarde, has repeatedly reiterated that the priority for the institute is to fight inflation, thus foreshadowing new rate hikes. Still on the macro front, it was announced today that UK retail sales increased in April by 0.5% in volume compared to March, when they recorded a revised decline of 1.2%. Year-over-year, the decline is 3%, slightly down from the -3.9% recorded in March. Compared to the pre-coronavirus (COVID-19) level in February 2020, total retail sales increased by 16.5 % by value, but volumes were down 0.8%.