The virus is immune to zero rates and Fed stimulus. But, after the Apocalypse, the markets try to react with the therapy of massive doses of fiscal stimuli. The day after the worst session of the US Stock Exchange since the crash of 1987, the measures to support families and businesses arrive today in the US Senate. Wall Street futures rose 4% this morning as Donald Trump returned to earth, admitting for the first time that recession is possible due to what he calls the “China virus”.
The whole world has thus taken note, with the partial exception of sovereign England, of the seriousness of the challenge of the coronavirus which continues to strike at every latitude. The foreign ministers of China, Japan and South Korea held a telephone conference tonight, at the end of which the three countries agreed to start forms of collaboration in the fight against the epidemic.
IT'S RAINING IN TOKYO FOR BOJ PURCHASES
In this "day after" climate, the price lists are trying to pick up the pieces, but it will take time to recover. Trump went so far as to talk about a recovery "in July or maybe August". But it is more a wish in view of the November elections than a credible prediction.
The Asian stock exchanges are very volatile, Japan's opened 3% down, then went on to gain 3% and at the end of the session it recorded +0,5% thanks to the efforts of the Bank of Japan, which announced purchases of ETFs for 12 trillion yen. In the meantime, Prime Minister Abe insists: the Olympics will take place. The yen weakens against the dollar to 106,6.
The Shanghai Stock Exchange is flat, while the yuan is back below 7 following yesterday's appreciation.
HONG KONG AND SYDNEY GO UP
Hong Kong's Hang Seng Index is up 1%. City officials have warned that not all schools are likely to reopen on April 20 after the quarantine ends. Tonight, the administrator Carrie Lam presented new restrictive measures on the movement of people: all those arriving from abroad must be in self-isolation for 15 days.
Seoul's Kospi index loses 2%, while the local currency, the won, falls against the dollar to levels last seen in 2010. Meanwhile, the world is trying to understand the secrets of the Seoul model which, thanks to a massive use of technology, has managed to promptly carry out an extraordinary number of tests, limiting the spread of the coronavirus.
Sidney rebounds (+5%). During the night, New Zealand announced a maxi stimulus plan for the economy.
The financial markets of the Philippines, both the stock and the bond market, are closed.
Coronavirus cases worldwide have surpassed those within China for the first time: 87 versus 81. In Italy there are 23.073 patients: 2.470 new cases registered yesterday, a lower increase than the previous day; 349 new victims of the epidemic, against 368 on Sunday.
THE DOW JOINES BURN 3 THOUSAND POINTS
Wall Street, now dominated by the Bear, will try to raise its head again after yesterday's nightmare which obscured the memory of Black Monday in October 1987. Not at all stimulated by rates that fell to zero and by the Fed's monetary stimulus for 700 billion dollars, the lists have slipped into the abyss: Dow Jones -12,93%, leaving 3 points on the ground; S&P 500 -11,98%, Nasdaq -12,32%.
According to a study by the Center for Aviation, most airlines are facing bankruptcy by the end of May due to the collapse of flights. US companies have asked the White House for $50 billion in aid. Taking advantage of all the hustle and bustle, Alitalia will go public again.
OIL "DEFENDS" 30 DOLLARS, GOLD WEAK
Brent oil gained 2% this morning, to 30,5 dollars a barrel, from -11% yesterday.
Gold down 0,7% to $1.502. Euro at 1,17 against the dollar, little moved.
THE PUSH FOR TAX STIMULUS IS GROWING IN THE EU
The Milan Stock Exchange closed sharply lower, but above the lows. The partial recovery of prices was allowed by an indiscretion from Reuters on the possible use of capital from the European Stability Mechanism to provide a fiscal stimulus to the Eurozone. More concrete, for now, are the purchases of Italian government bonds by the ECB, an (insufficient) way to remedy Madame Lagarde's gaffe.
PLACE DEAL HALF THE INITIAL LOSSES
Piazza Affari, which fell to -11,3% in the early afternoon, recovered part of the fall in the final stages. In closing, the index marked a fall of 6,1%, at 14.980 points. For today's session, Consob has renewed the daily ban on short selling on 20 shares.
Paris -5,75%. The government, met at the Elysée by President Emmanuel Macron, approved a curfew from 18 pm today with permits only for the police, doctors and authorized work. In a decree also the provisions for the population for which restrictive measures are expected such as in Italy of quarantine.
Frankfurt -5,26%. Germany announced on Friday that the health emergency justifies an easing of balanced budget rules. The public bank Kfw takes the field by making available at least 550 billion euros of resources for companies and families.
Madrid -7,94%; London -4,13%.
The markets, despite the devastating losses, must carry on. This was said by the managing director of Borsa Italiana, Raffaele Jerusalmi, who declared that “the markets must remain as open as possible, function regularly and be as liquid as possible”. Despite the tsunami that hit and continues to hit, without distinction, the various price lists.
THE ECB BUYS BTP, THE SPREAD RISES TO 262
The real battle took place on the spread front: with volatility doubled in the last two weeks, the Italy-Germany yield differential on the 17,30-year segment at 262 Italian time was worth 240 points, from 271 at Friday's close, after a peak at XNUMX, the level reached last Thursday (after Lagarde's words) and the highest since the beginning of June.
At the same time, the 2,16-year reference rate was trading at 1,81%, from 2,18% at the end of Friday's session, after a peak of XNUMX%, the highest since the end of June.
THE GOVERNMENT INVESTS 25 BILLION, POSSIBLE FLOWS FOR 350
The decree of the Italian government has entered into force, which includes extraordinary measures to deal with the epidemic, up to a maximum of 25 billion euros. The provision, which will activate flows for 350 billion, includes a sharp increase in health care costs, layoffs of up to nine weeks, suspension of mortgage payments (for some categories of people), allowances for families to cover the costs of caring for minors, extraordinary funds for airlines, state guarantees on loans to small and medium-sized enterprises. Meanwhile, the Lombardy Region has appointed Guido Bertolaso extraordinary commissioner.
MORE THAN HALF OF THE SECURITIES SUSPENDED. UNICREDIT -12%
More than half of the stocks on Piazza Affari were suspended due to excessive downtrend during the day. There are no blue chips with a plus sign.
The bankers are under fire. Unicredit sells 12%, Mediobanca 11,59%. Mps (-10,46%), Ubi (-10,65%) and Intesa (-9,75%) follow. Finecobank contains the drop to -1%.
FCA THE WORST, KEEPS FERRARI THANKS TO THE BUY BACK
FCA (-14,46%) was the worst blue chip after the news that production in most of the manufacturing plants in Europe will be stopped until March 27.
Leonardo follows (-12,13% to 5,34 euro), on which Mediobanca Securities and Banca Akors have reduced the target price respectively to 11 euro (-24%) and 11,7 euro (from 15,5 euro). For the first the rating is confirmed as outperform, while for the second it is buy.
Stm was also down (-9,37%), which released its quarterly coupon yesterday. Pirelli -8,9%. Ferrari defends itself (-1%): as part of the treasury share buyback plan, the company bought 132.424 shares, coming to hold 3,66% of the capital.
STILL DOWN ATLANTIA, AUTOGRILL COLLAPSES
Atlantia closes in line with the market after several sessions in which it did worse on the uncertainties about the future of the subsidiary Autostrade per l'Italia, after the collapse of the Morandi bridge, as well as on fears about the impact of the virus on the company's accounts. New collapse of Autogrill -14,3%. Mediobanca Securities reduced its rating to neutral from outperform, with a target of 7 euros from 11 euros.
POSITIVE SIGN FOR SNAM AND JUVENTUS. BOUNCE FERRAGAMO
In the afternoon, when the Milan stock exchange index raises its head, defensive purchases emerge. Snam closed at +0,4%, well below the lows of the session. Enel, Italgas, A3A and Terna show declines of less than 2%.
There is no shortage of other plus signs. Juventus +1,97%, Buzzi +0,68%, Prysmian +0,26%. Salvatore Ferragamo +3,6%. Moncler sells 7,8%.
US FUNDS FOR DIASORIN (-1,6%)
Diasorin -1,6% after the go-ahead for funding from the US government for the development of the rapid test for the coronavirus.
Several medium caps are also on the rise: De Longhi +9,28%, Credem +2,45%, Interpump +2,76%, Ascopiave +3,65%. Kepler Cheuvreux has raised the rating on the latter to buy from hold, with the target falling to 4,2 from 4,6 euros.
Positive session also for Salini (+0,9% to 0,72 euros): Kepler Cheuvreux raised the recommendation on the stock from hold to buy, with the target price being revised to 1,05 from 1,65 euros.
