MILANO – Heavy futures on Wall Street with the technology sector suffering the disappointment for Meta’s accounts, while they are contrasted in Europe pending the decisions of the ECB and BoE. Yesterday’s data on Eurozone inflation, which was higher than expected (+ 5.1% compared to + 5% in December and above an expected + 4.4%), put further pressure on President Christine Lagarde. It is true that the energy component remains decisive in the flare-up, but they could sound like an alarm bell for the ECB, especially since according to the FT, the markets expect “at least two rate hikes in 2022” while Lagarde has always hinted not to have foreseen any for the current year.
The ECB and analysts’ expectations
“Lagarde will recognize that inflation is in an uptrend and hence the need in March to revise inflation forecasts for this year in this direction “, say from La Francaise AM, not expecting monetary policy decisions. In consideration of the lack of new macro estimates produced by the ECB staff, also Jupiter’s managers expect the president’s words “emphasize “patience”, without any changes in interest rate or balance sheet policies. “They add from Generali Investments:” The grip of the pandemic on euro area activity is weakening, while headline inflation will remain well below above the target for most of 2022, due to high energy prices and persistent supply bottlenecks. On the contrary, underlying inflation is set to fall below the 2% threshold again and remain there. “According to specialists,” the increase in energy prices and the secondary effects in the 2022 wage negotiations will “trigger” a first hike. interest rates by 20 basis points as early as June 2023 “.
Unicredit does not expect monetary policy decisions, much less “new signals” in this sense after the important announcements in December. “But after the surprisingly strong inflation data, Lagarde’s words will be watched very closely.” Even the ECB directorate, for the Italian bank, should not change the outlook on prices in the medium term considering that there are no signs of wage warming. “Lagarde is likely to reiterate that the forecasts for 2023-2024 are not in line with the rate hike forecast already this year that the market appreciates, leaving the doors open for 2023”. The situation is different for the BoE, from which Unicredit expects a rate hike of 25 basis points to 0.5%.
Tech and markets
In the morning, the Nikkei 225 index of the stock exchange Tokyo closed the day of trading down 1.06% to 27,241.31 points, discounting the geopolitical tensions and fears of a slowdown in the American economy. The Singapore stock exchange, on the other hand, was up by more than 2%, and also the Kospi of the Seoul stock exchange (+ 1.92%). Several markets in Asia, including the Shanghai and Hong Kong stock exchanges, remain closed for the Chinese Lunar New Year holidays. The Sydney stock market drops by 0.14%. Yesterday, fourth consecutive upward session a Wall Street. The communication sector, among which titles it falls Alphabet, was the best of the day, with a rise of 3.08%; tech, after a negative transition, closed positively (+ 0.81%); the energy sector, which has been declining for a long time, gained 0.38%. The worst was the title of PayPal, which collapsed by 24.59% after providing disappointing guidance, partly – according to the company – caused by inflation; earnings were $ 1.11 per share, one cent below expectations, on revenues of $ 6.92 billion, against the 6.87 billion expected by experts. The reaction to the Meta / Facebook accounts, which reached closed markets, was also very strong (and negative, around -20% in the after-hours).
The escalation of geopolitical tensions, with the Ukraine factor, remains the protagonist, after American sources close to the White House reported that the Biden administration has decided to send further troops to Poland, Germany and Romania, in the face of strong tensions with Russia by Vladimir Putin. The Russian Deputy Foreign Minister, Alexander Grushko, reacted to the news, speaking of an “unjustified, destructive measure, which increases military tensions and reduces the field for political decisions”.
Prices of Petroleum down on Asian markets after weak US wage data and some profit-taking. However, they remained supported by a tight supply, as Opec + producers stick to the expected moderate increases in production (+400,000 barrels per day also in March). WTI crude oil lost 0.58% to 87.75 dollars a barrel, Brent crude lost 0.48% to 89.04 dollars. Price oforo slightly down on
Asian markets. The immediate delivery metal is down 0.06% to $ 1,805 an ounce.