European stock exchanges are experiencing a significant downturn in the past hours, with Milan down by 2.68%, as well as drops of over 2% in Paris, Frankfurt, and Madrid. The Milan stock exchange is being weighed down by quarterly reports, which have negatively impacted Prysmian and Tenaris, with both stocks falling by over 8%. However, the banking sector is suffering the most today, with the sector’s index at Piazza Affari down by 4.5%. Among the most traded stocks experiencing the greatest decline are Banca Mps (-6.75%), Banca Mediolanum, and Bper Banca, all down by over 5%. In Europe, the cutting of interest margin forecasts by a major bank, French Société Générale, is also having an impact. Additionally, there are rumors in Italy about potentially taxing banks’ extra profits or incomes.
The Bank of England announced a rate cut of 25 basis points today, following the Federal Reserve’s announcement of potential future cuts. Fed Chairman Jerome Powell stated that no decisions have been made yet, but cuts are not out of the question. Market projections from the FedWatch Tool by CME Group currently show a 0% chance of a pause and an 82% chance of a 25 basis point cut. New jobless claims in the US have risen from 235,000 to 249,000, exceeding expectations of 236,000. This worsening of labor market conditions makes a rate cut more likely, benefiting the bond market with Treasury yields dropping by 12 basis points to below 4%. However, this seemingly negative effect is combining with the slowdown in the US manufacturing PMI and ISM indexes, impacting stock markets.
In the US, Meta, the parent company of Facebook, Instagram, and Whatsapp, reported strong earnings, causing its stock to soar by 6% on Wall Street. In the last quarter, revenues increased by 22% and profits by 73%. Meanwhile, Nvidia’s stock continues to be volatile, with a significant increase yesterday followed by a decline of 4% today. This reversal is affecting the Nasdaq index, which is down by 1.68%, and the broader S&P500 index, which is down by 1.15%. Overall, the US stock market is experiencing mixed results, with some companies performing well and others facing challenges.
The general sentiment in European stock markets is negative, with major indexes in Milan, Paris, Frankfurt, and Madrid all experiencing significant declines. The poor performance is partly attributed to disappointing quarterly reports from companies like Prysmian and Tenaris, as well as concerns in the banking sector. The potential taxation of banks’ extra profits and the interest margin forecast cuts by Société Générale in France are also contributing to the negative atmosphere. Additionally, global central bank actions, such as the Bank of England’s rate cut and the Federal Reserve’s potential future cuts, are influencing market dynamics and investor sentiment.
The volatility in the US stock market is driven by a mix of positive and negative factors. Meta’s strong earnings report has boosted its stock, while Nvidia is experiencing fluctuations in its stock price. The announcement of potential future rate cuts by the Federal Reserve, alongside worsening labor market conditions and manufacturing indexes, is creating uncertainty among investors. Overall, the US market is facing challenges but also opportunities, with some companies showing resilience in the face of economic uncertainties. Investors will need to closely monitor developments in both the US and European markets to make informed decisions and navigate the current market conditions.
