Mixed Start Expected for European Markets on Fed Decision Day

(Alliance News) : On Wednesday, major European indices are expected to open mixed as investors await the Federal Reserve's latest policy decision, the first meeting under new Chair Kevin Warsh, while global sentiment remains generally positive.

Markets are positioned for the Federal funds rate to remain within the current corridor of 350 to 375 basis points. Regarding the Eccles Building, markets are currently pricing in a probability of just over 50% for a rate hike in 2026.

According to IG futures, the FTSE MIB is expected to open in positive territory, up 0.2% or 90.0 points, after closing Tuesday's session up 1.2% at 52,432.56 points.

Paris's CAC 40 is forecast for a fractional gain of 3.8 points, while Frankfurt's DAX 40 is expected to rise 0.3% or 79.5 points. Conversely, London's FTSE 100 is projected to open down 0.1% or 13.1 points.

Among Milan's secondary indices on Tuesday evening, the Mid-Cap finished slightly above par at 64,956.81, the Small-Cap rose 0.1% to 36,781.46, and Italy Growth climbed 0.2% to 9.155.35 points.

In macroeconomic news, Japan recorded a trade deficit of JPY378.67bn in May, approximately $2.36bn, an improvement from the JPY662.47bn deficit recorded in the same month last year.

Exports surged 17%, rising from JPY8,130bn to JPY9,512bn, exceeding the 16% growth forecast cited by FXStreet. Imports grew by 12.5%, from JPY8,792bn to JPY9,890bn, slightly below the 12.8% forecast. Notably, the volume of oil imports fell 57% in May, while their value decreased by 29%.

Furthermore, U.S. crude oil inventories fell by 8.3m barrels in the week ending June 12, surpassing expectations of a 4.5m barrel decline. This follows a 9.1m barrel decrease recorded the previous week.

Returning to Milan, UniCredit showed strong momentum from the opening bell on Tuesday, closing up 4.2% at €77.68 per share. The confrontation between the Italian banking group and Commerzbank is intensifying on the eve of the exchange offer's closing.

The Frankfurt Prosecutor's Office has launched a preliminary investigation into UniCredit's communications to BaFin regarding offer acceptances, following a complaint by the German bank's supervisory board alleging market manipulation. No formal proceedings have been opened at this time, according to press reports.

Intesa Sanpaolo gained 2.9% after Fitch Ratings affirmed its long-term rating at 'A-' with a stable outlook and its viability rating at 'a-'. The agency believes the voluntary exchange offer for Banca Monte dei Paschi di Siena does not materially alter the group's credit profile.

Telecom Italia, up 1.5%, announced Monday it completed its 1-for-10 reverse stock split, executing a resolution approved at the April 15 extraordinary shareholders' meeting. The operation, previously announced on June 10, was finalized today following the cancellation of five ordinary shares provided by Intermonte SIM to ensure the mathematical balance of the consolidation.

Banco BPM advanced 1.9%. The Milanese bank, in which Crédit Agricole holds a stake of just over 20%, is reportedly weighing its options amid the complex landscape of Italian banking consolidation and the MPS situation.

A2A, which fell 0.6%, announced Monday that it repurchased 705,000 of its own ordinary shares between June 11 and June 12. The shares were acquired at an average price of €2.2742, for a total value of €1.6m.

Saipem dropped 4.7%, weighed down by falling crude prices. The stock, which closed at €4.59, reversed course after four consecutive sessions of bullish candles.

On the secondary segment, Caltagirone gained 3.1%, marking its third consecutive session of gains.

BFF Bank closed up 4.0%. Notably, Citadel Advisors, D. E. Shaw & Co., Marshall Wace, Two Sigma Investments, and Walleye Capital have all reduced their short positions in the stock.

Banca Ifis climbed 2.1% to €22.12, recording its third straight bullish candle. The stock, which has a market capitalization of just under €1.4bn, has an average target price of €28.12 based on five analysts on the MarketScreener platform, suggesting it remains undervalued by approximately 30%.

Safilo Group, down 3.8%, announced Tuesday that it purchased 400,000 treasury shares between June 8 and June 12 at an average price of €1.7254, totaling €690,000.

On the Small-Cap index, Eurotech surged 9.4%, marking its third consecutive bullish session.

Piquadro, up 3.5%, announced Monday that its board approved consolidated financial statements for the year ending March 31, reporting a profit of €12.9m, an increase of over 11% from €11.6m the previous year. The board will propose a total dividend distribution of €7.0m.

BasicNet rose 1.2% after announcing Monday that it repurchased 62,500 shares between June 8 and June 12 at an average price of €7.205, for a total of €450,306.83. Following the buyback, the company holds approximately 7.0m treasury shares, representing 13% of its share capital.

Among SMEs, Compagnia dei Caraibi performed well, rising 5.4% to €0.36 per share.

Mare Group advanced 3.8% to €4.10. Alantra initiated coverage on the stock with a 'buy' rating and a target price of €7.60.

The board of Farmacosmo, up 4.4%, approved its 2026-2030 business plan on Tuesday. The strategy targets 2030 revenues between €75m and €77m and a positive net financial position, with estimated cash reserves between €5.2m and €7.5m.

Circle, up 1.5%, announced Tuesday it secured new contracts from a leading terminal operator and MTO active in container traffic and intermodal rail logistics, valued at approximately €110,000.

In New York on Tuesday, the Dow closed up 0.6% at 51,999.67, while the Nasdaq fell 1.2% to 26,376.34 and the S&P 500 declined 0.6% to 7,551.35.

In Asian markets, the Hang Seng is currently down 0.8%, the Shanghai Composite is down 0.1%, while the Nikkei is up 0.8%.

In currency markets, the euro is trading at $1.1610, up from $1.1605 on Tuesday evening, while the pound is at $1.3420, compared to $1.3423 on Tuesday.

Among commodities, Brent crude is trading at $78.86 per barrel, down from $79.60 on Tuesday evening, while gold is valued at $4,343.37 per ounce, up from $4,326.37 at Tuesday's close.

Wednesday's macroeconomic calendar features Eurozone inflation data at 1100 CEST.

From the U.S., the mortgage market report is due at 1300 CEST, followed by retail sales data at 1430 CEST.

The FOMC interest rate decision is scheduled for 2000 CEST, followed by a press conference at 2030 CEST.

No major corporate announcements are expected on the Piazza Affari calendar today.

By Claudia Cavaliere, Alliance News reporter

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