The Stoxx Europe 600 index rose 1.4%, with the banking index gaining 2.4%. Intesa Sanpaolo and UniCredit, two leading Italian banks, rose more than 4%. Italy’s 10-year bond yield, which affects the cost of government and consumer borrowing in the country and has skyrocketed in recent days after the ECB confirmed the end of its stimulus program, fell 0.33 percentage points to 3.85 per cent – below Tuesday’s high of around 4.2%. Bond yields fall as prices rise. On Wednesday, the central bank held an ad hoc meeting to discuss “current market conditions” with a commitment to “apply flexibility” in how to reinvest bond yields purchased under the pandemic emergency market program. He also said he had instructed staff to “speed up the completion of the design of a new anti-fragmentation tool”, citing a mechanism that could prevent eurozone governments from paying very different funding costs. Concerns about weaker nations in the eurozone had intensified since last Thursday, when the ECB confirmed, in the face of record inflation, that it was ready to raise interest rates in its first move since 2011. “There are concerns about this concept of fragmentation as you get different monetary policy outcomes in different eurozone countries,” said Edward Park, Brooks Macdonald, chief investment officer. The gap between the yields on 10-year bonds Italy and Germany – an indicator of economic pressure on the single currency bloc – stood at 2.24 percentage points after the ECB statement, from 2.41 percentage points in the previous session, a level not reached by the coronavirus – caused stretch marks in the market in early 2022.

The futures signaled that Wall Street’s S&P 500 stock index would gain 1 percent before the Federal Reserve’s meeting was set. On Monday, worries about tighter monetary policy pushed the S&P into a bearish market, typically defined as a 20 percent drop from a recent peak. Economists generally expect the Fed to raise its key capital interest rate by 0.75 percentage points, its first move of this magnitude since 1994, after annual consumer price inflation reached a four-decade high of 8.6. percent in May. Money markets drive capital interest rates to more than 3.6 percent by the end of the year, from 0.75 percent to 1 percent right now, as the central bank struggles with rising fuel and food costs due to Russian invasion of Ukraine. The yield on the 10-year bond, which supports the cost of global debt, fell by 0.1 percentage points to 3.39%, remaining close to the highest level since 2011 as interest rates and inflation outlook remained uncertain. “Bear markets tend to provoke some markets,” said Patrick Armstrong, Plurimi Group’s chief investment officer. He warned, however, that “there are many things that will get worse before they improve”, while US markets can no longer count on “the kind [monetary] a political decision that changes things. “