The stock exchanges seem to believe in a “different” 2023 (but they could be disappointed)

Listen to the audio version of the article

Will 2023 of the stock exchanges be really different from the disastrous year they just left behind us? To believe it, at least judging from the first two days of the year, it seems to be those who invest in European lists, ready to ring a brace upwards in as many sessions. The progress of Tuesday 3 January (in Piazza Affari on FTSEMIB closed at +1.15%, ahead of Frankfurt and Paris, respectively stopped at +0.93% and +0.61%) which in fact found the comfort of better-than-expected data on German inflation, which fell to 8, 6% per annum in December.

The fact that bodes well

Price dynamics are, moreover, one of the key variables for those who want to understand how central banks will behave on rates and what effects their decisions will have on shares themselves, as well as on bonds. It is therefore completely understandable how the signs of cooling are welcomed on the markets and this is also demonstrated by the step backwards recorded by the yields of government bonds, with the Italian 10-year BTP at 4.5% and the Bund at 2.39%.

The prudence of economists

Quite understandable, however, also the caution with which economists and market experts look at the figure for Germany and, consequently, the wave of optimism of investors. «The subsidies granted by the German government to households for gas and district heating have subtracted more than a percentage point from inflation, but the effect will reverse completely in January and rates could return to double digits in early 2023», warns Christian Fuertjes , HSBC economist.

“December could turn out to be the first month to see a real decline in European inflation after some stabilization in October and November,” adds Algebris’ global credit strategies team. Here the field is extended to include the entire euro area, but at the same time he warns that “the tensions on basic prices will remain high” because “the secondary effects are more difficult to manage, as the disinflation of energy it takes some time to spill over to the data core». Therefore, one does not have many illusions about the work of the ECB, which according to Fuertjes “would not derive much relief from a possible downward surprise” arriving from the Eurozone data scheduled for Friday and would keep the bar to starboard on rates with two further increases 50 basis points in February and March.

Mixed signals from New York

The downward trend of Wall Street also contributed to partially calming the waters yesterday afternoon (debuting in 2023) where Tesla left more than 10% on the ground e Apple saw the market capitalization fall below two trillion dollars. The divergence between the stock exchanges on the two sides of the Atlantic (and the prevalence of the European indices) would in itself represent another new feature compared to the last 12 months and also to previous times.