The stock exchanges fly driven by a great euphoria
Yet another session in strong rise for the European stock exchanges. The German Dax index posted a 3.3% jump. The Ftse Mib index (INDEX-FTSEMIB) in Piazza Affari closed with a rise of 2.8%. London rose 2.2% and Paris gained 3.7%. The euphoria that is pervading the stock markets can only be explained in one way: operators are betting on a strong recovery in the economy. Are they right or wrong? Let’s see some data.
US macro data fuel hope for a quick exit from the recession
Let’s start with the most anticipated macroeconomic data of the day and probably of the week. The unemployment rate in the United States in May dropped to 13.3% from 14.7% the previous month. The partial reopenings created 2.5 million new jobs. At the news, all European stock exchanges jumped upwards and the American stock market opened sharply.
The second figure concerns Germany. The German parliament has approved a new aid plan for the economy that will bring total spending to 1,500 billion. This is also a news that has pushed up not only the German stock exchange but also the rest of the European squares, including our list.
Italian macro data feed depression
Finally, the third figure regarding Italy. In April, retail sales in our country fell by 10.5% compared to the month of March. But they have fallen by 26% compared to the same month of 2019. There have been dramatic collapses for footwear (90%), for furniture (83%), for clothing (83%), for games (82%) . Only the food was saved. E-commerce instead flew by 27% on an annual basis.
The Milan stock exchange responded to these dramatic news with a 2.8% rise on the day’s highs.
Real economy and finance follow different logics, those who invest should always keep this in mind
This is the classic day when plastic demonstration of how financial markets and the real economy travel on two different tracks. Financial markets look forward to at least six months. They are already betting on the economic rebound, on a quick exit from the recession. Attention, of the US economy, because that’s what the markets look at.
In the meantime, the real economy is struggling in a crisis that has probably not yet reached its bottom and which will become dramatic for Italy in September.