Milan Stock Exchange Posts Stellar Q1, Its 3rd Best in 30 Years

Milan's stock exchange delivered an outstanding performance in the first quarter of 2024, achieving its third-best quarterly gain in three decades and outpacing other major European markets.

What Fuelled the Rally?

Optimism surrounding several key factors drove the bullish sentiment:

• Favourable Economic Outlook: Markets are encouraged by signs of economic resilience in the US and Europe, coupled with easing inflation that could trigger interest rate cuts by both the Fed and ECB.
• Improved Liquidity: A renewed increase in global liquidity since October 2023 has injected fresh capital into stock markets.
• Attractive Valuations: European stocks, unlike those on Wall Street, remain attractively valued, drawing investor interest.

Sustainability and Risks

While the impressive Q1 results offer hope, sustained market growth is not guaranteed. Positive momentum could continue if the economy remains strong and central banks follow through with expected rate cuts. Additionally, surpassing earnings expectations would further boost investor confidence.

However, potential risks could undermine the positive trend:

• Resurgence of Inflation: If inflation unexpectedly flares up again, markets could react negatively in anticipation of further interest rate hikes.
• Geopolitical Tensions: Escalating geopolitical instability poses a significant threat to market confidence.