Concerns remain about the resilience of the economy and the trend of inflation, while conflicting news arrives from both sides of the Atlantic
(Il Sole 24 Ore Radiocor) – In the aftermath of a session of reductions, the European stock exchanges they are moving cautiously, with interest rate fears remaining at the forefront. The decline on Wall Street, which on the eve of the session experienced its worst session since March, doesn’t help. Concerns remain about the resilience of the economy and the trend of inflation, while conflicting news is arriving from both sides of the Atlantic. Further indications will come with the numbers on consumer confidence (in Germany the figure fell again in October to -26.5 points and in France to 83 points).
On the economic policy front, in Italy the spotlight is on the Council of Ministers and the presentation of Nadef, the update of the economic and financial document while fears for a possible shutdown are increasing in the United States: investors are in fact closely monitoring the progress on the vote on the budget law, which sees Republicans close to former President Trump hardened on their proposals for spending cuts. The risk of obstructionism is bringing the government to the brink of shutdown with serious consequences also for the welfare programs of 6.7 million poor women and children who could remain short of funds for several days. Meanwhile, Moody’s Investors Service warned that a government shutdown would be a “credit-negative” US event.
Spread still rising above 190 points
The differential between yields on Italian and German government bonds is still rising. The spread between BTp and Bund is confirmed above the threshold of 190 basis points in a general context
increases in yields on the euro curve and marks a first position at 193 basis points, one point higher than the previous reference. The yield of the benchmark ten-year BTp remained stable, marking a first position at 4.72%. In the primary sector, the Ministry of Economy and Finance issues six-monthly BoTs at auction for 6.5 billion euros.
Oil on the rise, euro in the $1.05 area
Oil is on the rise, with the market focusing on reducing supply as we head towards winter: even if the trend of futures is not very indicative at this time, those of the November WTI are rising by 1.1 % to 91.37 dollars a barrel, and those of December Brent by 1% to 94.9 dollars. Gas prices are also down: futures traded in Amsterdam, after having achieved a first position at 39.4 euros per megawatt hour, drop 3.6% to 38.87 euros. On the currency side, the euro weakens further, with the greenback remaining at its highest level since mid-March: the euro/dollar exchange rate is worth 1.0565 (from 1.0587 yesterday), while the euro/yen is at 157.565 (from 157.66). The dollar/yen exchange rate is at 149.13.
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Chiara Di Cristofaro
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