MILAN – Still weak stock exchanges in a climate of strong expectation for the decisions of the Federal Reserve next week, accompanied by a rise in yields on US government bonds that signals the possibility of a maxi-hike in rates in sight: it is now fully the market priced a 75 basis point intervention, but if you look at interest rate futures there is 24% of bets on a full point move.
For now, the signs of unexpected strength of the Chinese economy have been of little use, with industrial production and sales beyond expectations. Investors are caught in the grip of rate hikes but the risk of recession on the other, amply evidenced by the widening of the inversion of the yield curve of US Treasuries: those with a two-year maturity (which discount monetary policies) are higher than those with a two-year maturity. ten years (which are linked to the economic outlook).
If for Italy it was Fitch and Confcommercio that sounded the alarm bell of the “minus” sign in front of GDP, at a global level the World Bank made itself heard, for which the world economy risks sinking into recession , with inflation at the top for decades and the monetary tightening initiated by central banks that may prove insufficient to contain it. According to Washington, the global economy is experiencing the most marked slowdown since the post-recession recovery of 1970 and consumer confidence has already fallen more than ever before in similar situations. In the worst-case scenario designed by the institute, the global base rate of inflation, excluding energy, could be around 5% in 2023, almost double the five-year average before the pandemic. To cool the cost of living, central banks may have to raise interest rates by another 2 percentage points, on top of the 2 percentage point increase already recorded compared to the 2021 average. financial markets, would slow global gross domestic product growth to 0.5% in 2023, equivalent to a 0.4% per capita contraction, which would meet the technical definition of a global recession.
On the other hand, notes Radiocor, today the high volatility is probable given the expiry of the so-called “four witches”, that is the quarterly expiry of futures and options on indices and securities.
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Chinese economy, unexpected signs of strength
Heavy Tim, Barclays cuts
It slips into the Tim stock exchange after Barclays braked the target price. The stock fell 5.17% to 18.89 cents, 3 more than the 15 cents indicated by analysts, with a 23% cut compared to the previous indication. According to Barclays, the stock is to be ‘underestimated’ (underwieght) compared to the weight in the Piazza Affari basket.
Tokyo closes down sharply, -1.1%
The Tokyo stock market fell sharply after yesterday’s losses on Wall Street due to poor data and concerns about the global economy. The leading Nikkei index lost 1.11% to 27,567.65 points, dropping 2.3% for the entire week. The Topix index limited losses (-0.61% to 1,938.56 points). Also in Hong Kong the Hang Seng index was in the red in the afternoon (-0.66% around). Investors in Japan are expecting a three-day weekend with an extra public holiday Monday for the Tokyo stock exchange. The Fed’s monetary policy decision expected on Wednesday monopolizes the minds of investors: it could announce for the third consecutive time a further 0.75 percentage point hike in rates amid high inflation.
Gas in decline in early trading
Gas opens down at the Ttf in Amsterdam, arriving after the first trades at 208 euros per Mwh (-2.93%).
Fears of recession sink the openings
Milan starts down by 1.2%, Frankfurt falls by 1.02%. Paris is also bad, leaving 0.93% on the ground. London is down 0.33%.
Asian price lists in sharp decline
The main Asian stock exchanges are in sharp decline in the wake of the negative closing on Wall Street. Ahead of the Fed meeting next week, traders are worried that the monetary tightening initiated by the US central bank may turn out to be longer and tougher than expected, and fears of a global recession are growing following warnings from the World Bank. and the International Monetary Fund.
In Tokyo, the Nikkei index leaves 1.01% on the ground. The Chinese markets also hurt despite the data that showed a surprising resilience of the economy in August, which gave some support to the market. Shanghai loses 1.49% and Hong Kong’s Hang Seng loses 0.60%. Seoul is also down with -0.60%.
Weak futures, closing down on Wall Street yesterday
A weak start is expected for European stock exchanges in the wake of the negative closing on Wall Street.
Ahead of the Fed meeting next week, traders are worried that the monetary tightening initiated by the US central bank may be more aggressive than expected. Futures on the Eurostoxx 50 fall by 0.57%, those on the Dax lose 0.93% and those on the Ftse 100 fall by 0.31%.
Yesterday, sitting down on Wall Street. The Dow lost 173.07 points (-0.56%), falling to the lows of the last two months. The S&P 500 lost 44.69 points (-1.13%), the Nasdaq closed down 167.32 points (-1.43%). Futures today still indicate a weak opening.
Chinese economy, unexpected signs of strength
The Chinese economy signals surprising resilience in August with industrial production and retail sales beyond expectations despite the anti-Covid lockdowns, the exceptional heat wave and the housing crisis. Production rose 4.2% annually, the fastest pace since March, over 3.8% of analysts and 3.8% in July. Sales increased by 5.4%, beating forecasts of 3.5% and 2.7% in July, reaching the highs of 2022. Urban unemployment improves (to 5.3% from 5.4% in July) , while the youth component (16-24 years) stood at 18.7%, against the record of 19.9% in July.