Stock markets are cautious ahead of Warsh’s remarks. SpaceX’s rally comes to a halt

(Il Sole 24 Ore Radiocor) - European stock markets are trading cautiously following the gains of recent sessions. All eyes are on the United States, where this evening the Federal Reserve is set to announce its monetary policy decisions. According to economists, the central bank will leave interest rates unchanged, but the remarks by Chairman Kevin Warsh at his debut will be closely watched to gauge the direction for the coming months. The banker is expected to adopt an expansionary stance, particularly as inflation is likely to ease following the agreement between the US and Iran, which will lead to the opening of the Strait of Hormuz. However, the conditional is a must, given that Friday’s signing will lead to a 60-day period of negotiations. Market participants are also keeping an eye on the situation in Ukraine, following the statements issued at the G7 summit in Evian urging Russian President Vladimir Putin to reach an agreement that would bring the conflict to an end.

In this context, the FTSE MIB in Milan is moving cautiously, driven by the banking sector. The other European stock markets are also trading at similar levels.

Wall Street is edging higher cautiously ahead of the Federal Reserve’s latest monetary policy decision, whilst SpaceX’s rally has stalled. The Federal Reserve will announce its latest monetary policy decision at 8.00 pm (Italian time): this will be the first under the chairmanship of Kevin Warsh, who will also hold a press conference at 8.30 pm. Investors largely expect the Fed to keep interest rates unchanged at 3.5%–3.75%. However, most Wall Street analysts predict that Warsh will not include, in the FOMC’s quarterly update, the individual members’ forecasts for future interest rates (the so-called ‘dot plot’). Turning to SpaceX, the share price has reversed course after shares rose by around 50% since its initial public offering last week, pushing the company’s market capitalisation above that of Amazon. Buying interest is boosting not only the space sector but also shares in the semiconductor sector.

Retail sales in the United States rose by 0.9% month-on-month in May to $763.7 billion, following a 0.4% increase in April (revised down from the initial 0.5%); forecasts had predicted a 0.5% rise. Compared with a year earlier, the figure was up 6.9%. Excluding vehicle sales, the figure rose by 0.8%; excluding vehicles and fuel, it rose by 0.5%. The figure comes just ahead of the Fed’s monetary policy decisions, and definitively rules out any possibility of a short-term rate cut, as the Washington-based bank is in a position where it is in no hurry to ease its grip.

On the Milan Stock Exchange, attention remains focused on the banking sector, with consolidation on the horizon. In particular, the spotlight is on Banco Bpm following yesterday’s lengthy board meeting. The bank’s senior management has decided to await a response from Banca Monte Paschi Siena regarding the proposal for a merger on equal terms put forward by Piazza Meda. Meanwhile, rumours have also emerged that the bank led by Giuseppe Castagna is considering the acquisition of Bff Bank together with Amco. Unicredit is rising again, following yesterday’s rally, as investors await the next moves by the chief executive, Andrea Orcel. In Germany, the bank has strengthened its stake in Commerzbank to around 42.5% of the voting capital, a stake that exceeds 55% when derivatives are also taken into account. The German authorities, however, have closed ranks in defence of the German bank, a stance that could prompt Orcel to consider new transactions on the Italian market. Meanwhile, Stellantis is down following BMW’s guidance cut, whilst STMicroelectronics remains stable following the decline recorded in the previous session.