The Trump show today aired directly from the World Economic Forum in Davos, Switzerland, where the US president he toned it down a bit on Greenland, excluding military intervention, without however giving up on needling the European Union and reiterating the imperialistic intentions of his country. The result is that the mood on the financial markets is improving a bit, especially on Wall Street where the Dow Jones gained 1% and the Nasdaq even more, led upward by some tech stocks such as Nvidia +3% and Tesla +2,1%. Europe remains more apprehensive, with Frankfurt and Milan closing in the red again today, while Paris, London, and Madrid, among the major stock exchanges, rebounded after Trump's comments.
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Davos is the battleground between Trump and the EU: the repercussions on the markets
In recent days, Davos has effectively become the ring of the clash between the EU and the US, which materialised with the decision of the European Parliament, in response to Trump's hostility, to suspend the trade agreement approval processThe committee vote had been scheduled for January 26-27, but this date has now been postponed: this signals that the major political groups in the EU Parliament intend to align themselves with a more decisive stance toward the US administration's choices, even as the trade agreement continues to be implemented in practice.
Again today and again from the European Parliament came the the EU-Mercosur agreement was also stopped, just signed by Ursula von der Leyen last Saturday in Paraguay. The assembly's ratification was scheduled for this spring, but a motion by the Left, Greens, and Patriots (which also includes the governing League party) passed by 10 votes, sending the matter back to the EU court. Farmers are rejoicing (including Italian ones, despite the protection clauses and the Italian government's vote in favor), while the supporters of the agreement speak of an "own goal", in the words of Bernd Lange, chairman of the European Parliament's Trade Committee. German Chancellor Friedrich Merz is also irritated, calling for the treaty to be applied provisionally, given that the judges could rule on the matter several months later. Germany is the country pushing hardest for a trade alliance with South America, and perhaps that's why the Frankfurt Stock Exchange is among the worst.
But looking at our own home market, the Italian stock market isn't doing any better: the FTSE MIB index is falling exactly half a percentage point, below 45.000 basis points. It may be a coincidence, but the easing of military tensions is penalizing two major players in recent weeks: Fincantieri is even the worst performer on the list with -3,8%.Leonardo also fell 1,5%. Hera also fell 3,3%, despite its financial statements showing significant new investments and a 27% dividend growth. In complete contrast, Tenaris rose 3,4% and Stm rose 3,3%. Stellantis is resurgent, gaining almost 2% after losing 17% in the last month.
Commodities, the Euro-Dollar Exchange Rate, and the Spread
The update on raw materials is a must, especially on gold, which was also discussed today. the governor of the Bank of Italy Fabio Panetta, who noted that the most precious metal is racing toward $5.000 an ounce. And in fact, in today's session Gold is worth $73 an ounce more than yesterday, thus exceeding the 4.800 mark. Silver, on the other hand, is taking a breather, losing about 1% but is largely defending the 90 dollar threshold, in the 93 dollar area. Natural gas has been in full rally these days and today marks another +22% to 4,7 dollars per cubic meter.
Oil moved littleBrent crude in London loses a bit and falls below $65, while WTI crude in New York holds the $60 a barrel mark. Amid EU-US tensions, our currency is losing ground today, but is holding its exchange rate at 1,17. Watch out for the rising BTP-Bund spread: nothing alarming, but after hovering below 60 basis points for a few days, we're now at 67, with the 10-year BTP yield above 3,5%.
