MILANO – It is the decisive week for the Fed and the ECB, which between Wednesday and Thursday will give their response on the rates and monetary policy they intend to pursue in the coming months. If the markets are quite clear in expecting increases of 25 and 50 basis points respectively, expectations are high for the words of Powell and Lagarde and for the trajectories that will draw on the next developments in their tightening after the long years of sub-zero rates. In the trading rooms and in the Anglo-Saxon financial press, however, just a few hours after the answers from the central banks, the doubts and anxieties of investors make their way. The Financial Times for example, it collects the reflections of some investors who wonder whether the bond race, with the very strong rebound in 2023, has not been too optimistic: Wells Fargo points out that the market prices a scenario without a recession which in any case – despite the latest positive data from the economy – the basic one for economists does not remain. From Bloomberg the focus is on Europe and on the stock market: with a +10% in January, the Eurozone also beat the USA for the best start of the year ever. But from BlackRock to Amundi, doubts are growing that investors have been too optimistic. The hawkish position of the ECB, the downgrades in sight for the cons of EU companies and the fact that the end of the war in Ukraine still remains a mirage do not bode too much confidence. “Markets have not yet priced in the depth of the upcoming corporate earnings downgrades,” Amundi wrote. “It’s dangerous to think that since the shares are going up, everything is ok.”
The Asian stock exchanges close in no particular order. Tokyo in progress (+0.2%), Hong Kong collapses
Asian stock exchanges close the first session of the week in no particular order, awaiting Wednesday’s Federal Reserve meeting, the week’s key economic data and the numerous upcoming quarterly reports. In Tokyo, the Nikkei index closed the session with an increase of 0.19% to 27,433.40 points, while the broader Topix index recorded +0.01% to 1,982.40. Chinese stocks, which resumed trading after the long lull over the Lunar New Year, rallied with the Shanghai Composite index gaining 0.14% to 3,269.32 points prolonging January’s rally in the wake of China’s reopening of anti-brakes -Covid and expectations of a slower pace of monetary tightening by major central banks. Hong Kong did badly, with the Hang Seng index dropping 2.8% to 22,053.00 points due to the heavy losses of big tech stocks, such as Alibaba Group Holding and Tencent Holdings. A series of quarterly earnings reports for the fund in the US are expected to be released this week and should provide further insights into global tech stocks. The Indian Index was also down, slipping by 0.74% to 58,889.27 points due to the losses of the companies of the Adani group, whose total red rose above 60 billion dollars after the attack by the hedge fund Hindenburg. South Korea’s Kospi fell 1.35% to 2,450.47 points.
Spain, inflation in January -0.3%. But it goes up slightly on a year-over-year basis
Spain’s inflation rate came in at 5.80% year-on-year in January, up slightly from a 13-month low of 5.7% in December, according to a preliminary estimate. On a monthly basis, the consumer price index decreased by 0.30% from December.
Cautious start for European stock exchanges. Toned Tim at Piazza Affari
A slow start for Piazza Affari. The Ftse Mib index began trading down by 0.19% to 26,384 points. The start of the session fell for the stock market in a crucial week which features the meetings of the Fed and the ECB which will have to decide the next moves on interest rates. The Ftse Mib index marks -0.29% at 26,374 points. Piazza Affari does little better than the other European stock exchanges. The data on Germany’s GDP and on the economic sentiment of the Eurozone is expected during the day, while in Spain the monthly inflation data marks a surprise increase. Highlights on the price list for Tim (+4%) after press rumors according to which in mid-February Cdp will present a new offer for the network. Oil companies are down with the drop in crude oil, with eni -0.8%, Tenaris -2.3%. Among the other blue chips, declines for Prysmian, Recordati, Moncler. On Stellantis (+0.4%), Terna and Banca Generali.
Weak oil in Asia
Falling oil prices on Asian markets at the start of the week awaiting the decisions of OPEC+ and the Federal Reserve, both scheduled for Wednesday. Global crude oil producers are likely to keep output unchanged and investors are cautious ahead of a US central bank meeting that could spur market volatility. Futures on WTI contracts drop 0.49% to 79.28 dollars a barrel while those on Brent contract drop 0.53% to 86.22 dollars a barrel.
Future in calo per Wall Street
Negative futures on Wall Street ahead of the Federal Reserve’s rate decision to be announced on Wednesday. Although the US central bank is expected to raise interest rates by 25 basis points, its monetary policy outlook will be closely watched as recent data has painted a rather mixed picture of the stars and stripes economy.
Futures on the Dow Jones are down 0.30%, those on the Nasdaq are down 0.40% and those on the S&P 500 are down 0.33%.
Contrasted Asian stock exchanges. Back to trade China, bad Hong Kong
Major Asian stocks are mixed on caution ahead of the Federal Reserve meeting and key economic data this week. Chinese equities are advancing in positive territory, having soared as trading reopened following the Lunar New Year lull. The Shanghai The Composite index gained 0.13% as markets bet that the country’s economy was further buoyed by the first Covid-free Lunar New Year holiday in three years. State media reported that travel and domestic consumption rebounded strongly in the past week. Over the weekend, the Chinese government also reaffirmed its intention to support spending and promote local consumption. Investors are awaiting data on Chinese economic activity this week to assess how much the economy has benefited from the easing of anti-Covid measures. Tech stocks are the day’s worst performers, with the Hang Seng Index by Hong Kong which dropped 2.17% due to the heavy losses of important stocks such as Alibaba Group Holding and Tencent Holdings. A number of US tech results are expected to be released this week, which should provide further insights to global tech stocks. The Kospi of South Korea falls by 1.34%, while the Japanese Nikkei 225 index Tokyo travels flat.
Negative futures for Europe ahead of the Fed and the ECB
A weak start is expected for the European stock exchanges in anticipation of the meetings of the Fed and the ECB scheduled for Wednesday and Thursday. In the first case, the market is pricing in a 25 basis point hike, but investors are awaiting the words of Jerome Powell to understand if the Fed intends to confirm its intention to bring the Fed Funds above 5% at the end of the year. In the case of the ECB, the rise from 50 basis points on Thursday is largely discounted, but it will be important to check whether Christine Lagarde he will confirm his willingness to continue at this pace also in the March meeting and with increases until the summer, as indicated by several members of the board. There will also be strong anticipation for the details on quantitative tightening. Futures on the Eurostoxx 50 drop by 0.36%, those on the Dax drop by 0.32% and those on London’s FTSE 100 show a decrease of 0.36%.