European Stock Markets Cautious with Focus on Quarterly Reports

Caution returns to the European stock markets after the momentum on the eve triggered by a series of positive corporate profits, while overseas the optimism regarding the rate cut by the Fed, favored last week by the weaker-than-expected labor market data.

Investors continue to wonder about the next moves of central banks, given the uncertainty over the start of monetary easing on both sides of the Atlantic, not only in the European stock markets. In this sense, some indications could come from the speech by Pierre Wunsch, member of the Governing Council of the ECB, expected today, May 8th, in Frankfurt.

Meanwhile, the spotlight on the European stock markets is on the quarterly reporting season which has come into full swing: today, May8th, among others, Bper, Terna and Puma are at the test of accounts. On the macro front, in Germany industrial production fell by 0.4% in March compared to the previous month (-3.3% on an annual basis), while in Italy the data on retail sales is awaited.

In this scenario, the main European stock markets move cautiously starting from the FTSE MIB+0.11%of Milan, where Leonardo immediately jumped to the top of the list, in the wake of the positive accounts.

Sweden’s central bank cuts rates after eight years

The Swedish central bank has decided to cut the cost of money by 0.25 basis points for the first time in eight years, bringing the reference rate to 3.75%. Inflation is approaching the target, while economic activity is weak. If the inflation outlook is confirmed, rates could be further cut twice in the second half of the year, in line with what was forecast in March.

European stock markets: In Milan Leonardo rebounds, Stellantis down

At Piazza Affari Leonardo+2.79%bounces back to the top of the list, following the presentation of the quarterly report which saw doubled profits and a record order book. The banks ( Banca Monte Paschi Siena+0.96%, Bpm Bank+0.78%and Unicredit+0.67%) after a well-planned start they weaken, while Bca Pop Sondrio-0.36%it has been trending downwards since the first trading, despite the record profit of 145 million euros.

At the bottom of the list are Stellantis, but also Campari-0.69%after the earnings of the day before in the wake of the good results of the quarter.

Outside the main basket, Maire Tecnimont leaves around 4% on the ground, after the placement of around 0.7% of the total number of ordinary shares at a price of 7.28 euros per share, for a total gross value of around 16, 9 million.

US stock markets: The dollar strengthens, oil falls

On the currency, the euro fell to 1.074 dollars (from 1.077 the day before), while the weakness of the yen continued with the euro/yen exchange rate at 166.75 (from 166.44) and the dollar/yen cross at 155.22 (from 154.42).

BoJ governor Kazuo Ueda has sent a warning to the financial markets by speaking of the possibility of corrective intervention on the exchange rate. Bitcoin also drops (-1.41%) to 62,650 dollars. The price of oil is falling, with July Brent just above 82 dollars a barrel and June WTI at around 77.5 dollars, both down by around one percentage point. Natural gas in Amsterdam also fell to 30.45 euros per MWh.

European stock markets are not the only one in the focus. Asian Stock Market was mixed

Asian shares were mixed after US stocks remained relatively stable on Wall Street. Tokyo’s Nikkei 225 lost 1.5%, but most other markets saw little change. The yen weakened further against the US dollar.

Elsewhere in Asia, Hong Kong’s Hang Seng index gave up 0.4% to 18,410.20 and the Shanghai Composite index also gave up 0.4% to 3,134.75. Australia’s S&P/ASX 200 index was unchanged at 7,795.70, while the Kospi in South Korea rose 0.1% to 2,736.20. Taiwan’s Taiex rose 0.1%.

The weakness of the yen

The dollar rose to 155.14 Japanese yen from 154.50 yen. Japanese officials expressed concern after the value of the yen slipped to 160.25 per dollar in recent days, pushing theMinistry of Finance to intervene. “ Exchange rate moves could have a strong impact on the economy and prices, so it may be necessary to respond with monetary policy,” Kazuo Ueda, governor of the Bank of Japan, said on Wednesday .

A weak yen helps the profits of Japanese companies that get much of their revenue overseas, but rate fluctuations can upset planning, and the yen’s weakness has severely eroded the purchasing power of both households and businesses, making rising costs of food and energy imports, among other things.

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(Featured image by  sergeitokmakov via Pixabay)

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First published in Il Sole 24 Ore. A third-party contributor translated and adapted the articles from the originals. In case of discrepancy, the originals will prevail.

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