The markets are still dealing with disappointing inflation data in the United States, with the inflation rate in March rising to 3.5%, up from 3.2% in February and above expectations. In response to the inflation data, the dollar strengthened against the euro and bond yields rose by 20 basis points, with the yield on the US ten-year Treasury reaching 4.55%, the highest since November. Stock indices on Wall Street fell by around 1%, and futures are indicating a muted start today.
The inflation data has nearly eliminated the probability of a rate cut in June in the United States. Now, a rate cut is more likely to occur in September, with a probability higher than 50%, according to projections from the FedWatch Tool by CME Group based on bond prices. In contrast, the probability of a rate cut in June remains high in the Eurozone. Today, the ECB is meeting for a monetary policy meeting, with analysts expecting no reduction but seeking clues about future moves from President Lagarde’s statements.
European stock markets had a more limited reaction to the American inflation data, with the FTSE MIB in Milan closing up 0.27% yesterday, fueled by the rise in bank stocks. Today, it opened down 0.07%. Similarly, Frankfurt saw a slight decline of 0.01%, while London was up 0.03%. Within the FTSE MIB basket, energy stocks rebounded, with Saipem (+2.12%), Eni (+1.08%), and Erg (+1.03%) leading the gains. However, Iveco (-2.86%) and Recordati (-1.80%) experienced the largest declines.
In Amsterdam, Exor (+0.70%), the Agnelli family holding company, saw gains following financial results showing a consolidated profit of €4.19 billion in 2023, a decrease of €33 million compared to 2022’s €4.27 billion. In Milan, Stellantis (-0.16%), Ferrari, and Juventus (-4.02%), the latter experiencing the greatest decline among medium caps, were also under the spotlight. The CEO of Exor, John Elkann, commented that 2023 was a transitional year for Juventus, focusing on resolving legal issues both in Italy and Europe under new leadership, with the 2023/24 season being viewed as a rebuilding phase.
In the Asia Pacific region overnight, stock markets were mixed, and bond yields rose. Despite the contrasting performances of the markets, the implications of the inflation data in the United States continue to reverberate globally, affecting currencies, bond yields, and stock markets. The Federal Reserve’s potential rate cuts and the European Central Bank’s monetary policy decisions are closely watched by investors for clues on future market movements and economic trends. The performance of key companies and their financial results, like those of the Agnelli family’s Exor, provide insights into the broader market sentiment and investor confidence in the face of economic uncertainties tied to inflation and monetary policy decisions.
