MILANO – Another positive day for the European stock exchanges. Business Square shines under the pressure of a flurry of good quarterly, from Tenaris to Cnh, and closes with a profit and 1.93%. A climate of optimism that is breathed, however, throughout the continent: Frankfurt adds 1.81% to the finish, Paris rises by 15% while London follows at + 0.55% per cent. European trade does not weigh new forecasts released today by the European Commission, which sees a slower than expected way out of the Covid crisis for the economies of the Old Contintent.
As for the US, the lists are back on track after yesterday’s excellent session following the presidential vote and the close of trading in Europe, the Dow Jones and Nasdaq gain 2.03% and 2.53% respectively. Earnings driven by the usual technology sector that seems positioned to still profit from the new lockdowns and the digitization of lives and economic activities, together with the fact that the absence of a democratic “blue wave” lowers fears of a regulatory tightening on Wall Street as a whole and on a complete reverse from the tax rate cuts that characterized the Trump presidency.
While the expectations of one rose victory of Joe Biden, investors also took note of statements by Republican Senate leader Mitch McConnell that another aid package is needed by the end of the year. The reasoning is that probably with the split Congress there will not be the massive fiscal intervention that put the Democratic candidate in the program, but an agreement will have to be found in one way or another. The Treasuries benefited from these arguments, which strengthened (with the opposite decline in yields) in the absence of the reflationary scenario that the maxi-democratic investment plan would have fueled.
The rises in the technology sector helped to push Asian markets. Hong Kong salt of 3.11%, Tokyo 1.73% to the top since October 2018, Alone 2.4%, Shanghai 1.3%. Write down Bloomberg that for the Asian stock exchanges as a whole the highs since February 2018 have approached.
In short, the markets seem to believe that a bid by Biden but tempered by the maintenance of a certain status quo (on deregulation, on tax cuts) can ultimately generate a favorable mix. Central banks will undoubtedly play their part, and between now and the end of the year they are expected to see a new round of stimuli due to the worsening of the pandemic in the western part of the world. Federal reserve, from which no particular news is expected. But there is a feeling that – in a landscape of political stalemate – Powell will have more leeway if necessary. An idea reinforced by the data on unemployment benefits, which in the last week surveyed have fallen by only 7 thousand units to 751 thousand: a trend worse than expected. Productivity is also below expectations, whose index rose by only 4.9% in the third quarter.
The Boe has given a first signal in the direction expected by the markets and has stepped up its asset repurchase program to revive the British economy, weakened by the Covid-19 pandemic. The Bank of England is putting another £ 150 billion on the table, for a total of £ 895 billion.
Price of Petroleum down today, after the recent rises linked to the prospect of an OPEC cut: the barrel of crude oil changes hands at 38.63 dollars with a reduction of 1.33% while Brent is trading at 40.85 dollars with a decrease in 0.92%.
Finally still downhill it spread: the BTP / Bund differential stopped today at 126 basis points, with the Italian ten-year yield at 0.63% on the secondary market.
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