ECB in the foreground: Philip Lane and Isabel Schnabel discuss tax policy

ECB in the foreground: Philip Lane and Isabel Schnabel discuss tax policy
Fed e Bce 

Amidst a backdrop of global economic unease, European stock exchanges weathered a stormy mid-session swayed by less than encouraging data. The trust of Germany’s business moguls, as gauged by the IFO index, took a downward turn in December, slipping to 86.4 points from November’s 87.2. This dip, falling short of the prognoses by economic experts, fueled apprehensions regarding the vitality of the European financial landscape.

The reverberations of this unsettling news were felt across the continent’s main financial arterials. Milan’s FTSE MIB saw a decline of 0.29%, echoing the movements of Paris’ CAC 40, which retreated by 0.24%, and Frankfurt’s DAX 40, which fell by 0.32%. Madrid’s IBEX 35 and Amsterdam’s AEX were not immune to the trend, dwindling by 0.09% and 0.07% respectively. London’s FTSE 100, however, bucked the trend with an upbeat surge of 0.70%, propelled by the telecommunications titan Vodafone, which soared over 6 points following a bid from French conglomerate Iliad for its Italian ventures.

The investment community has now pivoted its collective gaze towards the pronouncements from the European Central Bank (ECB). All eyes are particularly on Philip Lane, the ECB’s Chief Economist, and Isabel Schnabel, a member of the Executive Board, who shared their insights at a conference on fiscal policy. Their commentary may shed light on the trajectory of the continent’s monetary maneuvers.

In the wake of recent resolutions by the Federal Reserve and the ECB, the focus shifts to Tuesday’s anticipated announcements from the Bank of Japan on its monetary policy. Investors are on tenterhooks for any hints of tightening measures for 2024, as the central banking strategies of the world’s economic powerhouses are pivotal in shaping global market tides.

Back in the Italian marketplace, heavyweight stocks faced a mixed bag. Luxury sports car manufacturer Ferrari was subject to selling pressure, down by 2.90% after analysts from Intermonte slashed its ratings and price target. Biotech firm Diasorin also succumbed to a 1.34% drop post its strategic blueprint reveal for the upcoming decade. On the flip side, Telecom Italia basked in a 3.60% uplift, buoyed by Iliad’s integration proposal for its Italian operations to Vodafone. The energy sector witnessed gains, with Tenaris, Eni, and Saipem climbing by 2.17%, 1.29%, and 1.16% respectively. Meanwhile, fashion label Brunello Cucinelli saw a downturn of 1.28% upon its induction into the FTSE MIB, replacing CNH Industrial.

Shifting to sovereign debt, the spread between the Italian BTPs and German Bunds shrunk to 167 basis points, a modest improvement from the 171 basis points at last week’s close. The yield on Italy’s ten-year BTP inched up to 3.73% from 3.72%.