US manufacturing contracts in December, services expand
The US manufacturing activity index fell in December, contrary to expectations. The data – drawn up by IHS Markit – which measures the trend fell, in preliminary reading, to 48.2 points, after 49.4 in November. Expectations were for a figure of 49.5. A reading above 50 indicates an expansion compared to the previous month, while a reading below 50 indicates a contraction. However, activity in the US services sector remained expanding in December. The preliminary reading of the PMI services index, drawn up by Markit, rose from 50.8 in November to 51.3 points; expectations were for a figure of 50.7 points. The figure therefore remained at a level associated with expansion, i.e. above 50 points; from July 2022 to January it had been in contraction.
Wall Street slightly down, heading towards a seventh positive week
Opening slightly lower on Wall Street, with the indices still set to conclude the seventh consecutive week positively. On the eve, second consecutive record closing for the Dow Jones, on the wave of euphoria due to the interest rate cut now on the horizon and another series of macroeconomic data that showed the strength of the US economy. The US central bank kept interest rates at 5.25%-5.50%, as widely expected, but projected an interest rate cut of 75 basis points in 2024, compared to the 50 points foreseen by the previous estimate of September. The economy, still growing, shows that the United States will achieve a “soft landing”, contrary to what many economists predicted due to the most restrictive monetary policy in recent decades. For analysts, there is now a 65.6% chance that the Federal Reserve will cut rates by 25 basis points as early as March and they consider a total cut of 2 percentage points in 2024 possible (3.5%). according to the Cme FedWatch Tool. Economists at Goldman Sachs have indicated that they believe the possibility of three consecutive quarter-point cuts in March, May and June.
In Piazza Affari Tim leaps, Diasorin slips
Among the stocks on Piazza Affari, Stmicroelectronics ended at the top of the list on the basis of the improved recommendations of analysts, and Telecom Italia relating to the fact that the appeal made by Vivendi on the sale of the network would not be an emergency procedure. In negative territory is Cnh Industrial, which will leave the Ftse Mib on Monday and will be replaced by Brunello Cucinelli. In a sluggish session for the banking sector in Europe (-0.3% the Euro Stoxx 600) and in Italy (Banca Mps, Banco Bpm, Unicredit), Banca Pop Er is the worst on press rumors according to which it has already been work has begun on governance for the renewal of the Board of Directors, to be discussed at the April 2024 meeting, at the same time as the approval of the budget. The renewed hypothesis of a marriage between Bper and MPS also weighs down the stock, with the Mef which could take on the role of silent partner (shareholder without voting rights) in the combined entity of which it would own (assuming a 100% paper operation at prices current) around 18%. Diasorin queued awaiting the presentation of the industrial plan to 2027 after the markets close.
The dollar remains weak, oil and gas are falling
On the currency market, the greenback remains weak, with the single currency having seen a 1.3% rise on the cross in the last week, while investors continue to evaluate the Fed’s moves: the euro is worth 1.0908 dollars ( 1.098 at the start, 1.09 at the close on Thursday), while the exchange rate with the yen is at 154.705 (156.043 at the open, from 154.8). Oil is falling: January WTI contracts fall by 0.73% to 71.06 dollars a barrel, February Brent contracts by 0.67% to 76.1 dollars. January gas contracts traded in Amsterdam fell by 4.8% to 33.175 euros per megawatt hour.
Spread up to 171 points, yield at its lowest since January
The BTp/Bund spread closed higher in a context of decreasing yields on the European yield curve following the ECB meeting on Thursday which confirmed a still restrictive orientation in terms of monetary policy. The benchmark 10-year BTp underperformed compared to the same German maturity which saw the yield fall by 10 basis points just above the 2 percent threshold. At the end of the session, the yield differential between the benchmark ten-year BTp (Isin IT0005560948) and the German equivalent maturity thus stood at 171 basis points from 168 at Thursday’s closing. The yield of the benchmark 10-year BTp fell, marking a final position at 3.72 from 3.80% at the closing the day before, reaching its lowest level since last January.