Stock markets: Assiom Forex traders are optimistic. 43 per cent believe there is scope for further gains

(Il Sole 24 Ore Radiocor) - Market participants remain optimistic about the performance of the financial markets in the coming months, but are divided on the Fed’s next moves. According to a survey carried out in June by Assiom Forex amongst its members, in collaboration with Il Sole 24 Ore Radiocor, 87 per cent of respondents believe that stock markets will not fall from current levels until December. This figure is in line with the previous survey in May (86%). More specifically, in June too, the proportion of traders expecting stable stock markets remains high (at 44%), although this has fallen marginally from 46% in the previous survey. Furthermore, the proportion of those expecting a further rise has increased to 43 per cent, up from 40 per cent, whilst those forecasting a downturn remain a clear minority (13 per cent, down from 14 per cent in May). “The June Assiom Forex survey confirms the gradual recovery in investor confidence, following the signs of improvement that had already emerged in recent months, thanks to the positive performance of European equity markets, driven in particular by the banking and insurance sectors,” comments Massimo Mocio, president of Assiom Forex.

Most market participants expect the euro/dollar exchange rate to stabilise between now and December. “In the foreign exchange market, the euro weakened against the US dollar in June. From an opening rate of 1.165 at the start of the month, the half-year closed at 1.142, having touched lows in the 1.132 region,” explains the president of Assiom Forex. For the second half of the year, 42 per cent of respondents – in line with the 43 per cent recorded in the previous survey in May – believe that the euro/dollar exchange rate will remain stable. At the same time, expectations of a further weakening of the single currency have jumped to 32 per cent, compared with 9 per cent in May. Consequently, the proportion of traders predicting a strengthening of the euro has fallen from 48 per cent to 26 per cent.

The more hawkish-than-expected tone adopted by Federal Reserve Chairman Kevin Warsh at the first meeting under his leadership has led the majority of financial market participants to expect an increase in the cost of borrowing by the end of 2026. With regard to the US central bank’s forthcoming decisions, 53 per cent of those surveyed indicate at least one 25-basis-point rise in interest rates. There is also a very high proportion (44%) of those who expect rates to remain unchanged throughout the period, whilst only 3% believe the Fed may cut rates this year.

A stable BTP-Bund spread until December 2026. This is the prevailing view amongst Assiom Forex traders. In fact, 82 per cent expect the spread between Italian and German government bonds to be between 50 and 100 basis points over the next six months, compared with 76 per cent recorded in the previous survey in May. The proportion of traders forecasting a spread of between 100 and 150 points has fallen further, from 21% in May to 13% in June. The percentage of those expecting an increase of more than 50 points has risen slightly to 5% (from 3%).