Today, European stock markets are dominated by gains, but one index, in particular, seems to stand out - Italy's FTSE MIB, which is up about 2 percent.
European indices seem to be on the rise on Wednesday, with Germany's DAX 30 rising by 0.8 percent. The optimism on the stock exchanges seems to stem from positive news from companies and hopes for recovery if COVID vaccine deliveries are accelerated. In European countries, the number of new infections and deaths is gradually declining, which may be due to the restrictions introduced earlier. Thus, if vaccination could be accelerated, with falling rates of infections, hospitalizations and deaths, economies could return to normal functioning by late summer or fall of this year. This is what the markets seem to be pricing in.
The aforementioned FTSE MIB Index gained about 2 percent on Wednesday on news that Italy's president has appointed former European Central Bank President Mario Draghi as the country's prime minister. The appointment came after two failed rounds in the lower house of parliament to form a new government. Draghi's mission would be to lead the Italian economy out of the worst slump since World War II. The market, as shown by the rise in the Italian index, reacted positively to the appointment, which is also indicated by the drop in Italy's 10-year bond yield.
Do Democrats push through a $1.9 trillion package?
In the United States, futures continued to rise for a third straight session. The Nasdaq 100 hit an all-time high when Amazon and Alphabet results, already released after the close of trading on Tuesday, came in better than investors' expectations. Amazon reported results nearly twice as high as forecast, but Jeff Bezos announced his resignation as CEO. Alphabet's results are also surprising thanks to advertising and cloud services.
The U.S. Senate voted 50:49 to begin debate on a budget resolution for the fiscal year 2021 that would allow Democrats to pass a $1.9 trillion stimulus plan without Republican votes. President Joe Biden and Treasury Secretary Janet Yellen have said a $618 billion counter-proposal from a group of 10 Senate Republicans is too small.
The price of a barrel of oil pushes through the $55 threshold
In the oil market, Wednesday seems to have brought a continuation of price increases. In addition to a larger-than-expected decline in U.S. crude oil inventories. At 4.3 million barrels last week, the sentiment was also supported by reports of progress in U.S. economic stimulus talks, as well as the news that China on Tuesday reported the lowest number of new COVID-19 cases in over a month in a single day.
On the supply side, the latest OPEC+ assessment indicated that oil inventories will fall below the five-year average by June. Saudi Arabia voluntarily cut production by 1 million barrels per day in February and March, and Russia plans to cut oil exports by nearly 20 percent this month - to a three-month low.
Markets now await the OPEC Joint Ministerial Committee meeting later in the day, as well as EIA data. On Wednesday morning, the price of a barrel of WTI crude surpassed $55 and was the highest since the second half of January 2020.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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