Stock exchanges, traders cautious but more confident. Alert remains on tariffs

(Il Sole 24 Ore Radiocor) - Financial market operators remain cautious about stock market trends in the coming months but confidence is growing, thanks to progressive signs of détente over the trade war triggered by the United States. According to the April survey conducted by Assiom Forex among its associates, in collaboration with Il Sole 24 Ore Radiocor, the percentage of traders who see stock markets rising over the next six months has slightly increased. This share rose from 35% in March to 39% last month, while the percentage of respondents expecting indices to remain stable remained substantially stable at 34%. At the same time, the number of respondents indicating falling indices decreased to 27% (from 32% previously).

"The announcement at the beginning of April of the introduction of tariffs that were more onerous than expected, the initial very negative reaction of the markets, and the subsequent changes to the decisions by the US administration created a climate of total uncertainty that affected the choices of consumers, savers, and investors," comments Massimo Mocio, president of Assiom Forex. "However, metabolised by the shock, April seems to have closed with a glimmer of optimism for financial market operators who, for more than a third, now seem more refreshed than the fears of March, confirming that they expect equity indices to improve over the next six months".

The impact of the Trump administration's trade policies - and the resulting responses of the countries involved - on global growth keeps financial market participants on high alert. 52% of respondents believe that tariffs could hamper investment and consumption, negatively affecting household and business confidence, exacerbating therisks of a slowdown in global economic growth. For 48%, however, once the initial phase is over, the balance will settle and markets will adjust. Thus, there could be a significant downturn in global growth but not a recession. 'Attention remains high on the potential macroeconomic consequences of the introduction of tariffs by the US,' Mocio points out.

On the currency front, the percentage of those expecting the euro to strengthen against the dollar continued to rise: from 38% in March to 52% last month. Down to 26% (from 43%) is the share of traders who expect the current balance of power between the two currencies to be maintained. Instead, 22% (from the previous 19%) indicate a weakening of the euro against the greenback. Despite expectations of further rate cuts by the ECB, "the euro," points out Mocio, "continues to benefit from the weakening of the dollar, whose role as a safe haven asset appears to be weakening.

The recent upgrade of Italy by S&P (from BBB to BBB+) helped to strengthen the government bond market. The resulting reduction in bond yields favoured a narrowing of the spread between Btp and Bund, which according to 79% of Assiom Forex traders should remain in the 100-150 basis points range over the next six months. This percentage is up from 73% in the previous survey in March. By contrast, the share of traders indicating an increase in the spread (between 150-200 points) fell to 9% (from 17%), although 5% of respondents expect the spread to increase by up to 250 points. No such response had come in the previous month.