Financial Markets Daily Report21 July 2022
Italian politics and European natural gas developments centered the stage in yesterday’s session. On the one hand, Draghi’s coalition government failed to pass the confidence vote, increasing the odds of snap elections this autumn.
- Italian politics and European natural gas developments centered the stage in yesterday’s session. On the one hand, Draghi’s coalition government failed to pass the confidence vote, increasing the odds of snap elections this autumn.
- On the other hand, the European Commission proposed to cut gas consumption by 15% until March 2023 while Vladimir Putin said that gas is expected to continue flowing through the Nord Stream 1 pipeline today after the end of maintenance works. Nevertheless, he warned that supplies will be curbed if sanctions are not resolved.
- In this context, stock indices declined in Europe while rising in the US, fueled by better-than-expected earnings’ releases. Elsewhere, euro area peripheral spreads widened, particularly so in Italy, and the euro weakened.
- Today the focus will be in Frankfurt, where we expect the ECB to hike interest rates by 25bp (although financial markets’ pricing suggests that a 50bp hike is possible) and to unveil the details of the new anti-fragmentation tool.