Stock market, Europe down with Brent crude targeting $100. Sharp drop for Ferrari

Gold prices are falling, in the $4,500 an ounce area, despite the uncertain situation. several factors contribute to explain this apparent anomaly, which does not see a return of purchases on gold traditionally considered a safe haven asset. "Mixed signals regarding the progress of talks between the United States and Iran have somewhat dampened optimism about the possibility of a short-term resolution of the conflict and the normalisation of maritime traffic through the Strait of Hormuz. This has strengthened the attractiveness of the US dollar as a safe haven asset, weighing on the precious metal," comments Ricardo Evangelista of ActivTrades. A further 'headwind for gold, which offers no yield' comes from rising oil prices, which increase inflationary fears and reinforce expectations of a restrictive Fed, which offers no yield. Watch out for Pce inflation data coming out of the US on Thursday, which 'could influence expectations on the Fed's monetary policy, potentially affecting gold prices,' the analyst concludes.

Instead, the one acting as a safe haven asset is the dollar, which by strengthening holds the euro in the 1.16 area. If the hope of an agreement in these sessions has translated into a weakening of the dollar against the main currencies, it has to be said that "the euro/dollar exchange rate, however, remains almost stable in the 1.16 area, which remains a level to be monitored with particular attention", Mps analysts point out. Among the other currencies, the weakness of the yen is confirmed, "on which rumours of possible interventions by the authorities continue as the 160 area against the dollar approaches, around which the late April intervention took place".

The ECB is expected to raise interest rates in June, even if the ongoing peace talks with Iran lead to an agreement, as the conflict has lasted much longer than expected and high energy prices are being passed on to the economy as a whole, said Isabel Schnabel, a member of the Governing Council. "Given the magnitude and persistence of the current shock, ignoring it is no longer an option in my view," Schnabel told Reuters in an interview. "From today's perspective, I think a rate hike in June will be necessary." Although the US has signalled progress in peace talks with Iran, for Schnabel "even if the war ended today, a lot of damage has already been done to global energy infrastructure and supply chains". "So even then, I think a monetary policy reaction would be necessary." "We have now moved beyond the adverse scenario," he added, "which assumed a rapid normalisation of oil prices.

Moving up slightly the spread between the BTp and the Bund: the yield differential between the benchmark ten-year BTp and the German Bund of the same maturity moved up slightly from 71 points at the previous day's close. The yield on the benchmark ten-year BTp also rose from 3.66 per cent at the previous benchmark. "The predicted ECB rises for the end of the year fell to just over two on the eve of the meeting (52 basis points) and are only slightly up today (57 basis points); a rise at the meeting in just over two weeks' time continues to be a near-certainty, all the more so after Isabel Schnabel's words," note analysts at Mps. The 10-year Treasury is moving in the 4.5% area, about 20 basis points below the peak reached in the middle of last week. On the macro front, the first important days will be Thursday 28 with the US Pce and inflation in the four big eurozone countries on Friday.

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