Is the FTSE MIB index a good buy as it hits its all-time high?

By:
on Mar 8, 2024
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  • The FTSE MIB index has surged to its highest point on record.
  • The European Central Bank pointed to interest rate cut in June.
  • The Fed also expects to start cutting rates later this year.

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Italian stocks are thriving. The FTSE MIB index continued its strong rally this week as it surged to its highest level on record. The Xtrackers FTSE MIB ETF that tracks the index surged to an all-time high of €32.50, meaning that it has risen by 64% from its lowest point in 2023.

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Italian stocks are booming

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The FTSE MIB index has joined other European indices like the DAX and Euro Stoxx 600 in a strong rally.

The surge continued after the latest European Central Bank (ECB) decision. In it, the bank decided to leave interest rates unchanged at 4%. 

The ECB also hinted that it will likely start cutting interest rates in June now that inflation is moving towards its 2% target. 

Other central banks are also expected to start cutting interest rates in the coming months. In his testimony to Congress, Jerome Powell, the head of the Federal Reserve, said that the bank was getting confident about the need for rate cuts.

Italian and other global stocks tend to do well in a period when investors are optimistic about rate cuts. 

The FTSE MIB index has also surged because of increased inflows from global investors to European equities. These investors believe that Italian stocks are inherently undervalued. The FTSE MIB has a PE ratio of 18, lower than the S&P 500 index’s 25. 

Most companies in the index have continued rising this year. Iveco stock price has surged by more than 46.7% in 2024 as demand for trucks rose. This is a similar price action to Daimler Trucks, which is one of the top performers in Germany.

Unipol, the fourth-biggest Italian insurer shares have risen by 46.1% as premiums rose. The other top performers in the index are the likes of Leonardo, Saipem, BCA MPS, Unicredit, and Ferrari.

Unicredit has become one of the best-performing bank stocks in the world, helped by high-interest rates and its profitability. 

Only 12 companies in the FTSE MIB have dropped this year. The worst performer is Telecom Italia whose stock is down by over 26% this year. The other top laggards in the index are Nexi, ERG, Enel, and Campari.

FTSE MIB index forecast

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FTSE MIB

FTSE MIB chart by TradingView

Turning to the daily chart, we see that the FTSE MIB index has been in a strong uptrend in the past few months.

The index has remained above the 100-day and 50-day moving averages. Further, the Average Directional Index (ADX) has soared to 43, its highest point in months. This is a sign that the trend is strengthening.

The Percentage Price Oscillator (PPO) index has continued soaring and is its highest point since December 18th. Therefore, the outlook for the index is extremely bullish, with the next point to watch being at €40.

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