Dollar and oil sharply down in today's session which sees Asia with reduced ranks due to the holidays and starts an intense week of decisions by the central banks and key economic data. The White House's belief that it can conclude trade agreements, In particular the China, although nothing concrete has emerged at the moment. In the meantime Trump announced a 100% tariff on films produced outside the United States and ordered the reopening of the infamous prison Alcatraz in San Francisco Bay, while on the Ukrainian front he said that “It may not be possible to achieve peace.” Over the weekend Warren Buffett announced his exit from the top of Berkshire Hathaway.
The floor now turns to tariff talks
U.S. President Donald Trump's tariffs are jamming the wheels of a global economy that for decades has been oiled by predictable and relatively free trade. Last week, major multinationals, down to niche e-commerce players, cut sales targets, sounded the alarm about job cuts and revised their business plans, while major economies downgraded their growth prospects following the release of less than encouraging data. All eyes are now on the ability of states to hold talks to try to rebalance the situation. While financial markets are betting that the United States and China will withdraw from an all-out trade war and that Trump will strike deals to avoid higher tariffs on others, the sheer uncertainty of how this will play out has become a major dampener in itself. On Friday Beijing said it was considering an offer from Washington for talks on 145% U.S. tariffs, which it responded to with 125% duties. The Trump administration has also hinted it is close to a deal with countries such as India, South Korea and Japan to avoid further duties in the coming weeks, to which has also been added Australia.
But what remains to be seen is whether Trump’s attempt to rebalance the trading system in favor of the United States will finally push others to revive their economies: for example, whether China will move to increase stimulus for its domestic economy, or whether eurozone countries will remove the barriers that still hinder their single market.
OPEC+ increases production and oil price drops by more than $2 a barrel
OPEC+ surprised markets by announcing over the weekend a production increase greater than expected. In Saturday's virtual meeting, cartel members agreed to an increase of 411.000 barrels per day, almost three times the volume originally planned. The decision shows even more clearly that the organization, or at least the two leading countries, Saudi Arabia and Russia, have abandoned the strategy of defending oil prices to the bitter end. Instead, Riyadh seems to want to focus on internal discipline. The message is aimed at members that have long been exceeding their quotas, such as Kazakhstan and Iraq. Astana exceeded its limit by 440.000 thousand barrels per day in March.
I oil prices they went down over 2 dollars a barrel in Asian trade. Brent crude futures fell $2,21, or 3,61%, to $59,08 a barrel by 06 GMT, while U.S. West Texas Intermediate crude was at $53 a barrel, down $56,00, or 2,29%. Both contracts hit their lowest level since April 3,93 at the open today. According to calculations by Reuters, the new increase after eight previous ones will bring the total of the combined increases for April, May and June to 960.000 barrels per day, or a 44% reduction of the 2,2 million barrels per day of various cuts agreed from 2022. OPEC+ sources told Reuters that the group could completely reverse voluntary cuts by the end of October if members fail to improve compliance with production quotas.
Week of monetary decisions
The week that opens today will be marked by monetary policy decisions by central banks. Attention is above all for the Fed which will announce its decision on Wednesday: expectations are still for unchanged rates after Friday's solid US labor market data for March. Markets now see only a 37% chance of a Fed rate cut at June, down from 64% a month ago. Goldman Sachs and Barclays both postponed their cut forecasts from June to JulyIn a television interview aired Sunday, Trump said he would not seek to remove Federal Reserve Chairman Jerome Powell, but repeated calls for lower interest rates and called the president “rigid.”
La Bank of England will meet on Thursday, the only one that could decide on an interest rate cut of another 25 basis points to 4,25% and could pave the way for further easing in June. Instead, central banks of Norway e Sweden should keep rates stable.
Currencies as a negotiating tool in the trade war
Il dollar lost ground again today, after its counterpart's meteoric rise Taiwanese has also affected other currencies and fueled speculation that some Asian countries were ready to plan revaluations to obtain commercial concessions from the United States.
Il Taiwan dollar rose more than 3% to 29,618 per U.S. dollar, after Friday’s record jump of 4,5% to a two-year high. The Taiwan dollar has no official exchange rate, but the central bank intervenes when necessary to ensure the currency’s “dynamic stability.” Its two-day gain of more than 6% is the biggest on record, according to LSEG data. Although Taiwan’s central bank denied that the White House was pushing for a hike in some Asian currencies as part of a trade deal, markets were still sensing a shift.
Lo Chinese yuan hit a six-month high of 7,1980 per dollar as investors bet that Beijing might let its currency strengthen amid Sino-U.S. trade talks, even though negotiations still appeared far off.
Although the Chinese Ministry of Commerce has stated that Beijing is considering an offer from Washington to hold talks on Trump's 145 percent tariffs, the two sides still appear far apart. In a television interview aired Sunday, President Donald Trump He reiterated that he believed China wanted to reach an agreement, but did not provide details or a timeframe.
The euro rose 0,3% to $1,1333, backing away from last week's low of $1,1266, whiledollar index fell 0,2% to 99,717. The dollar lost 0,4% to settle at 144,21 yen, moving away from Friday's high around 145,91. Many investors continue to bet on a further weakening of the dollar, with speculative short positions increasing further in the last week. The next hurdle for the dollar will be the poll ISM on services, due today, with the risk that a weak reading could revive fears of an economic recession
Asia Reduced Ranks for Holidays. Australia Down
In Asia, markets in Hong Kong, China, Japan and South Korea are closed today for holidays.
Mumbai stocks rise: BSE Sensex up 0,4%. Foreign institutional investors bought Indian stocks for the 5th consecutive session on Friday. Among the Sensex stocks, noteworthy gains were HDFC Bank, Reliance Industries, ICICI Bank, Infosys and TCS. Kotak Mahindra Bank, on the other hand, fell 125% after the lender said it reported a bigger-than-expected decline in quarterly profits, weighed down by a sharp increase in provisions. Indian bonds could strengthen on the back of a sharp fall in oil, with State Bank of India economists including Soumya Kanti Ghosh writing that local inflation is declining and the Reserve Bank of India may cut rates “aggressively”. “In a best-case scenario, we estimate rate cuts of 150-1 bps on a cumulative basis in the current financial year, which began April 6,” they said. Bond yields could move toward 6,25%, from XNUMX% today.
The S&P ASX200 index of Sidney is down 0,7%. US President Donald Trump described his relations with the Australian Prime Minister as “excellent” Anthony Albanese, emerged victorious from the elections of the weekend: the loser, by a historic margin, is the conservative Peter Dutton. Asked about the election results, Trump said he was “very friendly with Albanese,” a statement that makes a rapprochement between the United States and Australia on trade more likely. The Australians renewed their confidence in the Labor Party, penalizing the conservatives as rarely seen in history, who stopped at 44% of the vote: Albanese’s party should have about 85 seats out of 150.
In Japan, does backtrack Japanese Finance Minister Katsunobu Kato on bond sale just days after making statements on a television program in which he expressed growing concern over the Trump administration's tariff policies, considered aggressive, and dissatisfaction with the de facto stalemate in negotiations between the two shores. "Japan does not intend to use U.S. government bonds as a bargaining tool in trade talks with Washington," he said.
European stock markets seen opening at parity. At Piazza Affari eyes on risk, Leonardo, Saipem
Le stock exchanges of Europe should open at parity based on the indications of the Euro Stoxx 50 future at -0,1%.
Leonardo. Moody's has confirmed the 'Baa3' rating, improving the outlook to 'positive' from 'stable'. The European Commission has invested 910 million euros in the 2024 edition of the European Defense Fund to create a strong and innovative defence industry in Europe. For the first time, defence industries Ukrainian can be associated with the Fund's projects.
Saipem: Subsea7 has received a mega order worth $1,25 billion from Petrobras.
Eni. Blomberg reports that Shell is working on a merger with BP, for now these are just preparations and it is not certain that an offer will be made.
GeneraliThe company's board of directors on Wednesday will set up internal committees, including the one for related party transactions, which will examine Mediobanca's offer for Banca Generali, they wrote on Saturday. Corriere della Sera e The print. According to the latter, the committee in question should in principle follow the previous one with four members and the presidency entrusted to one of the councilors elected from the Caltagirone group list. Milano Finanza Saturday cited sources close to the Delfin-Caltagirone front according to which, based on the first legal investigations, the vote in the assembly on the Banca Generali operation would require two thirds and not a simple majority. According to the newspaper, the axis with Andrea Orcel could reappear in the vote on June 16 and have as its counterpart Banca Generali that UniCredit would have tried unsuccessfully to acquire and then sided with Caltagirone-Delfin. The Republic wrote on Sunday that Mediobanca will meet with Prime Minister Giorgia Meloni's chief of staff, Gaetano Caputi, to illustrate the operation on Banca Generali. According to the Corriere della Sera today's meeting with the government could be as early as today. Nagel will meet Caputi at Palazzo Chigi, while later there could also be an appointment with the undersecretary to the presidency of the Council Giovanbattista Fazzolari. A meeting with the Minister of Economy Giancarlo Giorgetti is not currently planned even if the dialogue appears to be already open, the newspaper adds.
Snam: HSBC raises target price.
Stellantis recorded a fractional drop (-0,12%) in registrations in Italy in April, compared to a market growth of 2,71%. The market share stood at 30,61% from 30,26% in March.
Unicredit. The European Union's antitrust authority will decide by June 4 on UniCredit's exchange offer for Banco Bpm, according to a document on the European Commission's website. According to Il Newspaper on Sunday, CEO Andrea Orcel is more inclined to throw in the towel on the takeover bid than to move forward, even if a final decision will be taken following the discussion with the authorities on the stringent requirements regarding golden power. A possible renunciation by UniCredit could open the doors to a marriage between Banco Bpm and Banca Mps, destined to expand to Mediobanca-Banca Generali, the newspaper adds. Even the Print today he writes that UniCredit has not yet made any official decision but, while waiting for the Board of Directors called for May 11, the belief is growing that there are too many obstacles and too many uncertainties along the road that leads to Banco Bpm.
WebuildA court has ordered Argentina to pay more than $147 million to Webuild in a decade-long arbitration over the construction of a bridge and a highway.