Stock market, fears about banks still weigh. Weak Europe

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(Il Sole 24 Ore Radiocor) – Start of session in red for European stock exchanges, which continue to be impacted by renewed fears over the US banking crisis after First Republic Bank’s deposit flight in the first quarter. On the eve of the lists also reacted badly to the accounts of Santander and Ubs and at the moment the better than expected quarterly reports published by Standard Chartered and the Swedish Seb do not seem to be enough. Good news has come instead for the techs, with the accounts Microsoft and Alphabet which surprised positively. The accounts of Meta and Boeing are expected during the day.

Attention remains high on central banks: confirmation that the Bce he still does not believe the time has come to interrupt the rate hike, he advised investors to be more cautious, who today will look to the decisions of the Swedish central bank for new indications on monetary policy.

In Asia, Tokyo lost 0.8%, while the Chinese stock market is buoyed by the prospect of new public support interventions. In addition to banking stocks, mining stocks were hit by the sell-off after iron ore prices fell below $100 a ton for the first time since December, suggesting that China’s demand recovery for raw materials is still fragile. Returning to the lists of the Old Continent, futures on the Eurostoxx 50 drop by 0.6%, while contracts on the Ftse Mib in Piazza Affari show -0.58%. On the other hand, the previous losses were canceled by derivatives on Wall Street indices thanks to the quarterly reports of Microsoft and Aplphabet, which arrived after the closing of the stock market.

On the currency market, the euro remains just below $1.10 and trades at 1.0993 from 1.0977 at yesterday’s close. The single currency is also worth 147.00 yen (from 146.90), while the dollar/yen ratio is 133.71 (133.93). Natural gas remains below 40 euros per megawatt hour and is worth 39.7 euros (-0.3%) in the May contract on the Amsterdam TTF. The price of oil partially recovers after the weakness of the day before: WTI in June trades at 77.77 dollars a barrel (+0.91%) and Brent in June at 81.26 dollars (+.61%).

After yesterday’s declines, caused largely by the quarterly accounts of First Republic Bank which reported 100 billion dollars of deposits that fled between January and March, the stock exchanges keep their eyes focused on the banks and on the quarterly reports. Some 170 US companies are reporting quarterly data this week, with analysts expecting profits to fall 5-6% on average. Yesterday evening, with the markets closed, Microsoft and Alphabet communicated their results.

Eyes on the banks

One of the focus of the markets remains the banks. The market wonders, after the quarterly results of First Republic Bank, whether the bleeding of deposits and the crisis of the regional bank is an isolated case or not. The market also fears the impact on the economy: if the banking crisis hadn’t ended, a further contraction in credit would in fact be foreseeable. And given that medium-sized banks in the United States are the most active in financing the real economy, the risk is that the repercussions on GDP are yet to be felt.

Waiting for the central banks

And this brings the eyes of the markets to the other issue: that of central banks. Next week both the US Fed and the ECB meet. Just Tuesday Philip Lane, chief economist of the ECB, declared that the tightening on rates is not over: in the next meeting on May 4th the ECB will therefore make another move. But the Fed should also raise rates again: the market is expecting another 25 basis point tightening, with a fairly high degree of probability. This too could have negative effects on the economy in the long run.

Quarterly accounts: the hour of big tech

In this context, the quarterly results of the companies will be decisive in defining the mood of the markets today and in the coming days. The accounts of many big techs are arriving these days, after Alphabet and Microsoft. Their results will be important to really understand what is happening to the real economy. Finally, on the macroeconomic front, data on consumer confidence in Germany and France and the trend of the trade balance in the USA are expected today.

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