The trade agreement between USA and China, signed yesterday, it's much more than an agreement. It is not just a question of numbers, with significant reciprocal percentage reductions: investors make it a question of mood that has become more conciliatory through that agreement, putting aside that muscle tone triggered starting from that famous Liberation Day of April 2, followed by the break announced on April 9. Now, even with the caution of those who have been badly burned, one looks with more optimism to the future which has a exact date: that of July, when the pause on tariffs will end and in the meantime they will go and look for the wounds left in the economy by Trump. Now however the recurring dictat in the trading rooms: if you see a minimum it's time to buy it, favoring riskier assets and moving away from more defensive bets. Yesterday Wall Street closed very effervescent, bringing the values back to the levels of early March. It was followed by asian bags and European stock exchanges are seen to open on parity. The dollar has recovered ground against major currencies, but the single currency continues to remain at solid levels.
Wall Street effervescent returns to early March levels
Monday United States and China announced they would drastically reduce tariffs on each other for 90 days. The United States said it would reduce tariffs on Chinese imports from 145% to 30%, while China announced it would reduce tariffs on U.S. imports from 125% to 10%.
U.S. stocks had suffered sharp losses and unusually high volatility after Trump announced on April 2 that he would impose tariffs on several U.S. trading partners. Since then, the April 9 announcement of a 90-day pause for countries other than China, strong earnings reports and last week's limited U.S.-U.K. trade deal have helped both the S&P 500 and the Nasdaq recover lost ground.
But yesterday saw a real surge. The S&P 500, Nasdaq, and Dow all posted their biggest daily percentage gains since April 9, but the S&P in particular broke above its 200-day moving average for the first time since late March and hit its highest level since early March.
Il Dow Jones Industrial Average rose 1.160,72 points, or 2,81%, to 42.410,10, its highest close since March 26. The index S & P 500 gained 184,28 points, or 3,26%, to close at 5.844,19, its highest close since March 3, while the Nasdaq The Composite gained 779,43 points, or 4,35%, to 18.708,34, its highest level since February 28. Apple rose 6,3% after news that it was considering raising prices on its fall iPhone lineup. The Nasdaq has rallied more than 22% from its April tariff-selling session low, but is still nearly 8% below its record close on Dec. 16.
Wall Street's "fear gauge," the CBOE Volatility Index, which peaked at 60 in April on tariff fears, fell below 20 yesterday for the first time since late March, while thegold, considered a safe haven, fell by around 2,6%.
La earnings season is coming to an end, with more than 90% of companies in the S&P 500 index having already reported results. Data from the retail giant Walmart are expected by the end of this week. Attention now turns to the Fed decisions, of which several officials, including Chairman Jerome Powell, will make public statements later this week. According to data compiled by LSEG, traders expect the Fed to make two 25-basis-point rate cuts by the end of 2025; the first cut is scheduled for September.
Asia Mostly Positive, China Removes Boeing Veto
Most Asian stock markets moved higher following the rally in US stocks on optimism that the trade truce between the US and China marks the end of a global tariff war. A first concrete sign of thaw came from China which removed the ban that prevented airlines from receiving aircraft Boeing, as reported by Bloomberg
Japanese stocks led gains in the region, with the index Nikkei which gained 1,7% and benefited from the yen's 2% fall in yesterday's session: the cross went from 145,8 yesterday to 147,9. The Bank of Japan signaled its intention to proceed with further rate hikes, while citing the need to be cautious regarding trade relations with the United States, according to the minutes of the monetary policy board meeting of April 30-May 1. To monitor is the pharmaceutical sectorWhile a Trump social media post on Sunday about high drug prices in the United States caused a massive sell-off in Japanese pharmaceutical stocks on Monday, the executive order appeared to be aimed more at cheaper drugs abroad, sending healthcare stocks on the Nikkei rallying.
In China, the Hang Seng Index of Hong Kong is down 1,5%, the first decline after eight consecutive sessions of growth and after yesterday it had seen a gain of 4,4%. CSI 300 of the stock markets Shanghai Shenzhen on parity. Taiex Index of Taipei +1,1%. For Nomura strategists, Shanghai and Hong Kong stocks have been a “tactical overweight” since yesterday, as the truce on trade with the United States brings many advantages: “These developments should reduce the geopolitical risk premium associated with Chinese stocks,” the note reads. Strategist Chetan Seth raised his rating from Neutral. Valuations remain attractive and there is room for some global investors to return.
Stocks fall slightly'India: Mumbai's BSE Sensex index -0,5%, from +5,5% yesterday. The ceasefire between India and Pakistan signed over the weekend also triggered buying on the Karachi Stock Exchange, with the KSE index closing up about 10%, and the Pakistani rupee appreciating.
European stock markets seen opening at parity, at Piazza Affari keep an eye on Stellantis and A2A
European stock markets are seen opening around parity based on the EuroStoxx 50 future at +0,1%. At 11 am the ZEW index on economic expectations for Germany is released. The euro is slightly up against the dollar and down against the yen. The Eurogroup insists with Italy for the ratification of the ESM.
Stellantis. A Republican tax overhaul bill has been introduced in Congress, which would repeal the $7.500 electric vehicle tax credit and make interest deductible for cars assembled in the United States.
A2A today reports quarterly results. Analysts expect ordinary EBITDA of around €650 million, down around 7% year-on-year. Ordinary net profit of €235 million (down 20%). Net debt expected to decline slightly to €5,73 billion, from €5,84 billion at year-end. Guidance expected to be confirmed
Terna signed a memorandum of understanding with its Greek counterpart Ipto worth approximately 1,9 billion euros to build a new power line between Italy and Greece.
Unicredit. All brokers raise their post-quarterly target, in particular Hsbc raises it from 54 to 65,5 euros, BUY, Morgan Stanley to 58 euros. The government confirms the conditions imposed on UniCredit's offer for Banco Bpm, according to sources close to the dossier, while preparing to start discussions with the bank led by Andrea Orcel. The CEO said he will try to obtain clarifications regarding the government's decision on the offer for Banco Bpm for elements that were found to be "unclear and unwanted".
Eni has priced a new fixed-rate bond issue in dollars with a duration of 10 years. The bond loan – intended for institutional investors – was placed for one billion dollars, against a demand of approximately 5,7 billion. The bond was placed at a re-offer price of 99,184% and will pay an annual coupon of 5,75%. Eni has specified that the bond issue is aimed at maintaining a balanced financial structure; the proceeds will be used for the general needs of the oil giant. Romano Minozzi, founder and president of the group Iris Ceramica, has a 3,095% stake as of May 5, according to Consob's relevant shareholdings. The energy group delivered in 2024 gas from Russia to Türkiye, as shown by documents published yesterday on its website, confirming that Eni continues to process Russian gas despite the suspension of supplies to Europe.
Popular Sondrio. The European Central Bank has highlighted serious weaknesses in the governance of the Bank, which emerged during a half-yearly inspection of credit risk.
Frankfurt has asked the institution to adopt corrective measures, including strengthening management and the possible involvement of an external consultant, to avoid excessive concentration of power, the newspaper continues. The composition of the current top management is also in the crosshairs. The ECB's intervention comes shortly after the change in the presidency of BPS, with Pierluigi Molla taking over from Francesco Venosta. The Supervisory Authority's requests could be reflected in the accounts for the first quarter of 2025: the reclassification of 219 million loans from "performing" to "probable defaults" has been requested. This would bring the gross impaired loan rate from 2,9% to 3,3%. The bank has specified that the economic impact of the corrections has already been largely accounted for and that the requested measures are being implemented. The inspection concerned loans for 15,5 billion and 27 positions to be reclassified.
FinecoBank. JP Morgan raises target price to 20 euros.
