Europe’s Banks Struggle with Uphill Start Amidst Criticism

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(Il Sole 24 Ore Radiocor) – Uphill start for the European stock exchanges, in the wake of the Asian lists, weighed down by the negative performance of the financial sector. Investors’ attention is focused on banks, following the crises of US regional lenders and Credit Suisse and the words of US Treasury Secretary Janet Yellen. Weak Tokyo (-0.13%). On the foreign exchange market, the yen appreciated against the dollar to 130.20, on expectations of a pause in the monetary tightening by the Federal Reserve, and slightly above 141 against the euro. On the macroeconomic front, the PMI indices for the Eurozone, France, Germany, the United Kingdom and the USA are on the way. Spain’s GDP, consumer confidence and UK retail sales are also expected. Durable goods orders are expected from the United States.

All this after a day, that of Thursday, in which the European stock exchanges, including Milan, closed around parity, finding the backlash in the end to reset the losses of the previous hours, in the wake of the Wall Street rebound. The American Stock Exchange, in the aftermath of the sales following the decisions of the Federal Reserve, closed positive – the Dow Jones rises by 0.23% to 32,103.77 points, the Nasdaq rises by 1.01% to 11,787.40 points while the S&P 500 recorded a progress of 0.29% to 3,948.30 points – after the publication of some mixed macro data (the labor market is still strong, as emerged from the data on jobless claims, while the the Chicago Fed manufacturing index and new home sales fell short of expectations).

As expected, the US central bank raised the cost of borrowing by 25 basis points to 4.75%-5%, the highest level since 2007. The Swiss central bank also increased the cost of borrowing by 50 basis points to 1.5% despite expectations for a softer stance amid Credit Suisse chaos, while the Bank of England hiked rates by 25 basis points to 4.25% after UK inflation data were still very high, while the Norwegian central bank raised its key interest rate by 0.25 points to 3%. The central banks therefore confirm the course, despite the shocks to the banking system, and continue the fight against inflation

Dollar under pressure, euro revises 1.09 level

A day of strong increases for the euro, which strengthened against the greenback, even returning above the threshold of 1.09 dollars, briefly seen last February and, previously, in April 2022. The single currency changes hands 1,089 dollars, against 1,079 on the eve. «The dovish hike, the Federal Reserve’s non-aggressive rate hike and the words of US Treasury Secretary Janet Yellen have resulted in a sharp depreciation of the dollar. Conversely, the comments of ECB members have produced a strengthening of the single currency, which is sailing towards 1.10», underline the analysts of MPS Capital Services. That said, “while attempts to recover key resistance levels continue on the stock market, we are experiencing a rather chaotic and unclear phase on the other markets, especially the foreign exchange one”, add the experts of ActivTrades, underlining that “the currency unique also benefits from the narrative that in this moment of crisis in the banking sector, sees the European one more solid than the Swiss and American ones, which seem to pay for not having the same regulation, which in the old continent is more restrictive”.

Tokyo closes slightly down with yen appreciation

The Tokyo Stock Exchange closed a mixed session slightly down. A negative impact was the appreciation of the yen against the dollar, which has a negative effect on the accounts of exporting Japanese blue chips, such as automotive groups. The downward trend, however, was countered by the appreciation of technology stocks on the back of the good performance of the fund recorded in the session of the US market on Thursday. The Nikkei index of the 225 leading stocks thus closed with a slight decrease, equal to 0.13% at 27,385.25 points, while the index of the main list, the Topix, lost 0.1% at 1,955.32 points. Among the stocks, Toshiba stands out with a leap of 4.2% to 4,390 yen. The board of directors of the industrial and technological group accepted on the eve of a purchase offer worth about 2 trillion yen (about 14 billion euros). The takeover bid by the consortium led by JIP funds proposes a price of 4,620 yen per share and should be launched within the month of July.

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