Stock markets: ECB tightening already priced in. Trump is causing concern once again

“The key figure – according to MPS analysts – is the estimate for core inflation in 2027, which encapsulates the view on the knock-on effects of the energy shock.” Experts are betting that Christine Lagarde “will leave the door open to a second rate hike in July (priced at 38%), all the more so given the extremely opaque outlook regarding the conflict and oil prices”. Across the Atlantic, the FOMC, the operational arm of the Federal Reserve, will meet on 17 and 18 June and this will be the first test for the new chairman Kevin Warsh, who will have to take into account US inflation in May, which rose to 4.2%. According to Luigi Nardella of Ceresio Investors, in a complex environment, in the second half of the year “banks will maintain a cautious stance, as the rise in inflation is expected to be temporary whilst economic growth remains stable or slows down”.

We are therefore facing a complex market environment due to a number of concurrent factors. Luigi Nedella of Ceresio Investors summarises them as follows: ‘The ever-looming reopening of the Strait of Hormuz, rising inflation and the response from central banks, the enthusiasm surrounding artificial intelligence and the pipeline of high-profile IPOs (SpaceX, OpenAI, Anthropic) risks draining liquidity, fuelling potential downward pressure”. However, for Nardella, the outlook remains positive: “The visibility on the huge investments linked to AI is high, and earnings growth is sustained. Some resolution to the Middle East crisis could lead (in the second half of the year, ed.) to a widening of the rally which, since the start of the year, has affected only a few sectors – semiconductors and memory chips in particular». 

On the Milan Stock Exchange, STMicroelectronics shares are performing strongly, still buoyed by the report published yesterday by Bank of America, which recommends buying the stock as it considers it to be undervalued by the market. Fincantieri and Saipem are also performing well. Banks are mixed, ahead of the new structure of the Italian banking system. Luxury stocks are also in the spotlight: Moncler and Brunello Cucinelli , benefiting from the news of the bid launched by the British firm Frasers for Hugo Boss .

Outside the main index, S.S. Lazio is soaring, following the open letter from president Claudio Lotito to the fans, published in Il Messaggero to reopen dialogue and usher in a new phase for the club. The club has also denied rumours regarding an imminent sale.

Oil prices have taken a sharp U-turn following Trump’s latest threats against Iran and the country’s energy infrastructure. Both Brent and WTI are both rising, with the latter back above the $91 per barrel mark. Gas prices in Amsterdam are also rising, exceeding €50 per MWh.

On the precious metals front, gold is losing the momentum it had in the morning, after hitting six-month lows the previous day. “The risk-off phase has significantly penalised gold during Wednesday’s session (-4.4%) – note MPS analysts – which is often used as a source of liquidity during times of market tension. Added to this, at present, is a lower contribution from Indian demand, due to temporary restrictions on imports and trading via ETFs, introduced to stem the depreciation of the rupee. From a technical perspective, the support level to watch stands at around $4,040 per troy ounce spot, and represents a crucial threshold for the sustainability of the medium-term trend.

Euro down slightly against the dollar, around 1.153, following GDP and inflation figures released by the ECB. It remains above 160 against the dollar the yen remains above 160 against the dollar, whilst next week’s Bank of Japan meeting is awaited. MPS analysts believe a further rate hike is likely in order to combat inflation that is above the central bank’s target.

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