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Eurozone inflation on the rise: impact on markets and 2024 outlook

In the context of European markets in negative territory and the rise of EU inflation to 2.9%, the FTSE MIB in Milan records a contraction of 0.63%, dragged down by the luxury sector. The CAC 40 in Paris (-1.15%), the DAX 40 in Frankfurt (-0.80%), the IBEX 35 in Madrid (-0.99%), the AEX in Amsterdam (-1.01%), and the FTSE 100 in London (-0.93%) follow the downward trend.

Slight rise in eurozone inflation, slows in Italy

Eurozone inflation in December 2023 rises to 2.9%, while in Italy, it slows slightly. According to Istat estimates, the increase is 0.2% on a monthly basis and 0.6% on an annual basis. Investors are now awaiting US unemployment data, which could influence central bank decisions.

Piazza affari sinks: luxury down, oil up

At Piazza Affari, the situation is critical for many stocks, with the luxury sector experiencing a significant decline: Ferrari (-1.14%), Brunello Cucinelli (-2.16%), Moncler (-1.26%). In contrast, oil registers an increase, with WTI March aiming for $73 per barrel, and Brent near $78.

Eyes on US unemployment

Investors are focused on US unemployment data, which could provide crucial insights into the labor market and influence central bank decisions.

Inflation up in december, rate cut further away

Annual inflation in the Eurozone reaches 2.9% in December, dampening hopes of an early rate cut by the ECB. However, “core” inflation (excluding energy and food) falls to 3.4% in December, indicating overall improvement.

2024 prospects: Fed in the spotlight

The European stock market experiences intraday losses, the euro loses value, and attention shifts to monthly nonfarm payroll data in the USA. Analysts remain cautious about future developments but indicate that underlying inflation is still decreasing despite the increase in December.

Inflation: global economic scenario and Fed decisions

The performance of European markets and the increase in inflation in the Eurozone raise questions about global economic prospects. Investors are eagerly awaiting crucial developments, with US unemployment and Fed decisions likely shaping the financial landscape of 2024.

US unemployment is a key element in assessing the strength of the labor market and predicting the moves of the Federal Reserve. An unexpectedly high unemployment rate could prompt the Fed to reconsider the timing of interest rate cuts, further influencing global markets.

Sector analysis: luxury struggles and oil ascends

The luxury sector, represented by stocks like Ferrari, Brunello Cucinelli, and Moncler, faces challenges with significant declines. In contrast, the oil market sees an upward trend, reflecting the movement of WTI and Brent prices. This sectoral dynamic contributes to outlining a complex picture for investors.

Inflation: reflections on euro and spread, key variables

The depreciation of the euro against the dollar and the movement of the spread between BTPs and Bunds add additional variables to the financial equation. The stability of the spread below 170 points, despite rising yields, indicates widespread caution among investors, closely monitoring every development.

The increase in inflation in the Eurozone in December has raised questions about its impact on future ECB decisions. Experts emphasize that, despite the increase, “core” inflation is still decreasing, offering a positive aspect. However, uncertainties related to developments in January, such as the VAT rate on natural gas and the increase in the price of CO2 in Germany, add complexity to short-term prospects.

Conclusions: 2024 to be closely monitored

In conclusion, the economic landscape of 2024 presents itself as a terrain of challenges and opportunities. Investors are called to closely observe macroeconomic data, central bank decisions, and geopolitical developments that will influence the dynamics of global financial markets. The Fed, with its monetary policy, and developments in Europe will be key elements to monitor for predicting future trends and adjusting investment strategies accordingly.


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