Stock market: Milan soars above 52,500. Europe welcomes the US-Iran agreement
On the Milan Stock Exchange, the banking crisis is the focus of attention on the day of Banco BPM’s board meeting. Oil prices remain low as the Fed meeting gets underway, chaired for the first time by Warsh
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(Il Sole 24 Ore Radiocor) - It’s risk-on on the European stock markets, which are continuing in the wake of yesterday’s surge and Wall Street’s rally, with the Dow Jones setting a new record and the Nasdaq up 3%, whilst futures are still pointing upwards. Milan is the best performer on the Old Continent, once again driven by the banking sector: the FTSE MIB is setting new records above the 52,500-point mark. The climate of international détente, following the agreement reached on Sunday night between the US and Iran, is fostering greater optimism among traders, who are beginning to bet on reopening of the Strait of Hormuz, leading to a further fall in crude oil prices and a cooling of inflation.
The Fed meeting in Warsaw is underway
A scenario that could mean central banks do not have to raise interest rates. And on the central bank front, today marks the start of the two-day FOMC meeting, the operational arm of the Federal Reserve, which will be chaired for the first time by Kevin Warsh. Economists believe that the US central bank will confirm the current level of interest rates. The Bank of Japan, on the other hand, has raised rates by 25 basis points, bringing them to 1%, in line with expectations.
Turning to the international scene, anticipation is growing for the signing of the agreement between the United States and Iran, scheduled for Friday in Geneva, following the broad outline of an agreement reached on Sunday night. The agreement, however, is not yet final: in fact, a 60-day window of intense negotiations is opening to reach a comprehensive deal, particularly on the nuclear dossier, which can guarantee effective peace in the Middle East. Against this backdrop, oil prices are falling sharply: WTI has dropped to around $78, whilst North Sea Brent is trading just above $81.
We are now seeing the tenth consecutive session of decline for the general commodities index, “the most significant losing streak of 2020”, according to Mps. Brent crude has lost around 10% since last Tuesday: following the memorandum, “there is great confidence that the actual US-Iran agreement will be signed this coming Friday in Geneva”, they note.
The recovery of precious metals continues, as they benefit from a return to a more moderate inflation outlook: gold has risen by around 7% since its low a few days ago.
