Week Sept. 9/Sept. 15, 2024In theweek, critical issues inherent in international crisis scenarios (long-range weapons for Ukraine and tensions with Lebanon for Israel)appear to have increased
which do not suggest that a quick solution to the existing conflicts can be expected. Scheduled for Wednesday, September 18, is themeeting at which the Federal Reserve will provide guidance on lowering rates (perhaps as much as 50 basis points in the current month), while on Thursday, September 19, it will be the turn of the Bank of England, which, however, is not expected to have an immediate effect since it has already made a reduction during the past month.
Obviously, the indications that the two institutions will provide on the medium-term outlook will also be important for the markets. Meanwhile, the euro’s reaction to the European Central Bank’s rate cut has been muted because it has largely already been priced in by the market.
Where there were no firm indications from it for the near future, a slight increase in the inflation figure towards the end of the year could be produced.
1. Markets
As for the markets, the European auto industry tends to slow down resulting in lower stock prices in the sector. In the U.S., the technology sector is the best performing sector albeit with the reflection of the fine by the U. E. Court on Google for about € 2.4 billion. In the European Credit and Banking sector, the possibility of a takeover by Unicredit of Commerzbank has also emerged (increasing its stake by 9 percent), while the possibility of a takeover of BPM is still pending.
Regarding commodities, analysts’ estimates are positive in the medium term for copper and silver while oil remains weak. There is still ample room for growth in government bond prices, in correlation with the trend of lowering rates, which can be quantified in the short term at about 3-4 percentage points.
In such a situation in the domestic market, taking into account the possible MT outlook on the Central Banks’ activity on rates, transactions in the bond sector (with below par pricing, investment grade rating and coupon close to or above 4 percent) and preferably with contained exchange rate risk (thus in euros or dollars) may be attractive, while for transactions in equities it would be important to operate selectively according to solid fundamentals and significant dividends to reduce risks.
2. Main indexes
European markets were sideways rising, U.S. markets were sideways rising near highs, Nikkei and Hang Seng sideways rising, Shanghai still falling, and Mumbai still rising. Bond indices continued to rise in the wake of positive news coming from central banks.
3. Major currencies
The dollar is slightly weakened around 1.112 however below the 1.15 barrier against the euro. Australian dollar recovering slightly, New Zealand dollar sideways, Canadian dollar decreasing. The Mexican peso is reported to be recovering in the 21.23 area from 21.92 last week as is the South African rand. The Turkish lira moved sideways around 37.52 while the Brazilian real still depreciated.
