That European bags They declined in the middle of the session. That Capricorn 35 was the first to start falling after the open, after gaining 2% yesterday. The selective Spaniard and the Italian Mib lead the descents in Europe. Doubts overwhelm the indices on a day marked by the presentation of business results, a day before the meeting of the European Central Bank (ECB). Christine Lagarde will have to weigh her words very carefully if she doesn’t want to further scare the market, pricing in a recessionary scenario.
The Ibex 35 lost around 1.5% and bid farewell to 8,100 points, jeopardizing the 8,000 mark. The bank, which posted strong gains the previous day on a potentially higher-than-expected rate hike, is now trading in the red with Sabadell and Bankinter down 4.5% and CaixaBank exiting 4%. Santander and BBVA lose more than 3%. Only Rovi and Siemens Gamesa are on the rising side.
UK inflation is expected to have risen to 9.4% in June, a 40-year high. Industrial prices in Germany also moderated their increase in June to 32.7%. But the big clue comes tomorrow when the ECB will make the first interest rate hike in the euro zone since July 2011 this Thursday, ending an era in euro zone monetary policy in the face of runaway inflation and the euro’s depreciation against the dollar in recent months, while Italy is undergoing a new political crisis.
Rumors that the ECB could talk about a higher-than-expected rate hike (by 50 basis points instead of 25 basis points) yesterday due to worsening inflation helped banks to regain lost ground following the government’s announcement of a bank tax. Today, however, they are dropping again after a hesitant morning.
In Italy, Prime Minister Mario Draghi today called on parliament to “rebuild” his coalition of national unity after the crisis caused by his partner Five Star Movement (M5S) that forced him to resign, which he is reconsidering for the time being the rest of the parties is pronounced.
In the bond market, the possibility of Mario Draghi remaining in position has eased pressure on transalpine bonds, with the required yield on the Italian 10-year bond falling to a one-week low. Interest rates fell to 3.269% after surpassing 3.5% these days.
The bullish finish from Wall Street, which was also up over 2% on yesterday’s strong earnings reports, helped Asian equity markets to end on a positive note. The Tokyo Nikkei is up 2.67%. The Shanghai Stock Exchange gained 0.77% and the Shenzhen Stock Exchange 0.63%. Today, Dow Jones futures expect slight declines.
Investors are scrutinizing second-quarter earnings for signs of how the highest inflation in decades is hurting business and consumer spending.
The Bank of Japan (BoJ) today opened its monthly monetary policy meeting amid surging prices attributed to the Russian invasion of Ukraine, although it is expected to maintain its current strategy.
For its part, the euro has rallied for the fourth straight day against the dollar and is already up more than 2% since touching parity against the greenback last week. One euro is exchanged for 1,025 dollars. On the other hand, various sources consulted by Reuters indicate that Russian gas flow through the Nord Stream 1 gas pipeline will resume on time tomorrow after the completion of scheduled maintenance work, easing investors’ concerns about gas supplies to Europe.
In the commodity market, central banks’ efforts to control inflation are putting pressure on oil prices. Brent oil, a benchmark in Europe, fell 1% to $106.22.