Alert spread, Giavazzi: “The ECB is wrong to raise rates, we need to accelerate the NRP”
by Giovanni Pons
MILAN – No rebound after Black Friday cost Piazza Affari 5%, indeed another difficult day for the markets. At the end of the session, Milan it rises slightly from the lows but loses 2.79 per cent. The whole of the Old Continent ends in sharp decline, also due to the very negative indications coming from the USA: London loses 1.59%, Frankfurt 2.52% e Paris 2.67%. Overall, Europe burns 235 billion in capitalization. In sharp decline Wall Street, where the S & P500 loses more than 3% and officially goes into a “bear” phase, one in which the distance from the previous peak exceeds 20%. The Dow Jones also lost 2%, while the Nasdaq plummeted 3.7%.
The turning point of the ECB, which is about to raise rates with the next meeting in July, continues to fuel the concern of investors already grappling with fears of a sharp slowdown in growth. And for the United States, the recession could come as early as next year. At least this is the result of a survey conducted by Financial Times with Initiative on Global Market. 40% of economists surveyed predict that the National Bureau of Economic Research will declare recession in the first or second quarter of 2023 while for a third of respondents it will do so in the second half of next year. However, the week looks above all to the Fed meeting tomorrow and Wednesday, from which new indications are expected on the path of rate hikes taken by the US Central Bank. If until a few days ago it was assumed that an upward adjustment of 50 points in June was taken for granted, after last Friday’s reading with US inflation above expectations, the market went so far as to hypothesize a rise of 75 basis points.
In the evening from Bloomberg it emerged that the members of the ECB would be increasingly determined not to reveal the tools they intend to use to counter the stress on the bond market as they are convinced that there are few advantages in anticipating an anti-crisis measure and they fear that uncovering the cards could push investors to test the ECB. According to the central bank’s policy makers, he will expect a threat to materialize, in which case the Eurotwer will act with due determination and if necessary.
by Giovanni Pons
Reasoning that pushed up the yield on Treasuries, the ten-year American government bonds, to the highest since the autumn of 2018 above 3.3%. There was also a strong sell-off on Eurozone stocks, with the German two-year bond yield above 1 percent for the first time in more than a decade. Italian government bonds do not escape this dynamic and continue to be the target of sales. The rate of returns of Italian BTPs has broken through 4%, a level that has not been recorded since the end of 2013, while the spread between BTP and German Bund which exceeds 240 points and at the end of the session stands at 245.
by Andrea Greco
Asia is also suffering, weighed down by the new risk of anti-Covid lockdown in China. Beijing authorities were quick to contain a new outbreak, forcing millions of people to undergo testing and forcing new targeted closures, while Shanghai completed mass testing for most of the 25 million residents over the weekend. Heavy closing of Tokyowith the Nikkei leaving 3.01% on the ground. Shanghai loses 0.9%, Seoul 3.52%, Hong Kong 3.4%.
L’EUR closed weak in the 1.0420 zone. On the other hand, the yen partially recovered and, after falling to levels not seen since 1998, now travels at around 133.90 against its star and stripes counterpart and around 139.60 against the European one.
by Carlotta Scozzari
Increasingly related to risky assets, the Bitcoin it moves sharply down and goes below 24 thousand dollars, the first time since 2020. Negative performance also for Ethereum which loses 21.2% to $ 1,191. This confirms the correlation between the crypto world and risky financial assets, those placed in greater difficulty by the Fed’s monetary tightening and therefore by the generalized rise in rates. Antoni Trenchev, of the Nexo platform, speaking with Bloomberg explained: “We hear that there are forecasts on Bitcoin in the parts of 10-15 thousand dollars or even in ‘single digits’ (ie under 10 thousand, ed), which says a lot about that kind of macro environment the crypto world is facing for the first time, and fear levels. ” What’s more, after the Earth / Moon affair in these hours the difficulty of a single platform has been staged again: the cryptocurrency lending company Celsius reported that it will suspend all withdrawals, exchanges and transfers between accounts “due to extreme market conditions”. Also Binance it froze operations, but in this case it would be a measure taken due to a “blocked transaction”, which would be creating arrears in the normal flow of assets. The combination of factors precipitates Coinbase, which sells about 13% to Wall Street for an overall -80% since the beginning of the year. It is significant that the total market value of crypto has fallen below one trillion, while in November alone it was above 3 thousand.
L’EUR is down sharply against the dollar at 1.0485, down 0.26%, and the pound also fell 0.43% to $ 1.2259, drawing little support from the Bank’s expectations of a rate hike of England.
Burdened by the general climate of the markets, the prices of the Petroleum the decreases widen, with Brent losing 2% and slipping below 120 dollars a barrel. The WTI loses 2.14% to 118.09 dollars. Gasoline prices in the US also averaged over $ 5 a gallon for the first time on Saturday, extending a rise in fuel costs that is driving soaring inflation.
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