MILANO – 9:15 am. The Fed has confirmed in fact the imminent rate hike and the stop to purchases of the extraordinary program to revive the economy and the markets have read the words of Governor Powell as a rather “hawkish” positioning and in fact, after an initial recovery, the Wall Street indices turned lower last night. The same mood for Asia and for the European opening, in sharp decline. In the first exchanges a London the Ftse 100 drops 0.76% to 7,412.82 points, a Paris the Cac 40 drops by 1.26% to 6,894.24 points, a Frankfurt the Dax loses 1.44% to 15,236.45 points. TO Milano the Ftse Mib marks -1.30%.
Powell strengthened the Fed’s determination to fight inflation, which has now been well above 2% for a long time, and reiterated that the ongoing economic recovery allows this, given that – and it is a new signal in the Fed’s dialectic – also the world of work has made its recovery. And so the US central bank is ready to raise rates in March and immediately afterwards, with the end of bond purchases at the beginning of the month, it will start the process of reducing the balance sheet.
Two-year US government bond yields have jumped to their highest levels since the start of the pandemic during your speech, and the US yield curve has flattened (i.e. the gap between short- and long-term yields has narrowed) : a signal that growth expectations are being affected by the Fed’s stance. As analysts note a Bloomberg, the message traders got from yesterday’s conference is that the markets are essentially left to themselves by the Central Bank, which does not see the need to sweeten its messages and actions to avoid particular reactions in the trading rooms.
In light of these considerations, a lower opening is looming for Wall Street (yesterday the Dow Jones lost 0.4% and the S & P500 0.2%). Futures on the Dow Jones are down 0.87%, those on the Nasdaq fall by 1.25% and those on the S&P 500 fall by 1.04%.
In the morning, Asian stock exchanges traded lower in the wake of the negative close in the US: Shanghai yields l’1.33% and Shenzhen l’1,71%. A Hong Kong the Hang Seng index falls by 2.69%. The Nikkei a Tokyo ends down 3.11% at 26,170.30 points.
High attention in the banking world. Last night it emerged that the ECB warned European lenders with significant exposure in Russia to prepare for the imposition of international sanctions against Moscow should it invade Ukraine. The warning of the ECB, writes the Financial Times, which oversees 115 of the eurozone’s largest banks, comes the day after the US warning of “enormous consequences” should Russia invade Ukraine. The sanctions would increase the risks for international banks with broad exposure to Russia such as the US Citi, the French Sociètè Gènèrale, the Austrian Raiffeisen and the Italian UniCredit. ECB officials asked for details on how banks would handle the different scenarios and how to prevent Russian banks from accessing the Swift international payments system.
Among the raw materials, Petroleum down at the start of the day. WTI changes hands at 86.52 dollars (-0.95%), Brent at 89.21 dollars per barrel (-0.83%). Boot down for theoro. The precious metal changes hands at $ 1,813 an ounce down 0.36%.