"We are not planning to hike rates another 0,75%”. These words by Fed Chairman Jerome Powell sparked Wall Street's euphoria last night, hitherto almost flat after the announcement, expected, of the increase of 0,50 (the strongest since 2002) and since the start next month of cuts to the bank's balance sheet. Tough measures, but necessary to curb inflation and perhaps avoid a recession. But the market feared that the Fed's ax would not stop there. And so the relief for the narrow escape provoked an effervescent, even explosive finale, in the hope of a soft exit from the phase of hyperinflation.
The indexes fly: Dow Jones +2,8%, best performance since November 2020; S & P 500 +3%, record increase since May 2020; Nasdaq + 3,2%.
The fever on T-bonds falls: the 3-year Treasury Note moves away from dangerous levels around 2,93% yield, this morning we are at XNUMX%.
The dollar also slows down: the Eu/Usd cross rises to 1,061 from 1,051 yesterday evening.
The boost from American stock markets promises a brilliant start for the stock exchanges of the Old Continent as well. The EuroStoxx 50 index futures scores +2%.
The bullish shock hit Asian markets overnight
China's stock exchanges, which remained closed in the first three sessions of the week due to holidays, rose after a declining start to the session. CSI 300 of the Shanghai and Shenzen price lists +0,5%. The prefecture of Shanghai has announced that 70% of industrial companies have resumed operations. The non-manufacturing PMI index elaborated by Caixin was disappointing, falling in April to its lowest level in the last two years.
The Hong Kong rate hike arrived on time, in defense of the "for" with the US currency. The monetary authority of the former British colony raised the reference rate by fifty basis points to 1,25% tonight. The cross between the US dollar and the Hong Kong dollar is little moved, at its highest level since 2018.
The Hang Seng index rises by 0,7%. Hang Seng Tech, which fell 3,3% the day before, is up 1,7%.
India does good business with Putin's crude oil
Mumbai stocks opened up 0,9%, from -2,3% the day before. Yesterday, surprisingly, the Central Bank of India raised the interest rate by forty basis points to 4,4%. The Indian rupee appreciates, the yield on the Indian ten-year bond is at its highest level in the last three years at 7,40%. On the political level, Modi's decision to buy Russian oil, without adhering to the sanctions, is significant. But, writes Bloomberg, the bad news for Moscow is that India is asking for further steep discounts.
Tonight, the Central Bank of Brazil also raised the cost of money: the Selic rate was increased by the monetary authority by one hundred basis points, to 12,75%.
Oil, because the embargo on Moscow is postponed.
Oil remained stable at around 108 dollars after yesterday's rise, pending EU sanctions on Moscow, postponed for now because member states need more time to launch the sixth plan of sanctions against Russia. The package announced by Ursula von der Leyen at the Strasbourg assembly ("We will eliminate all supplies of crude oil within six months") met with the opposition of Hungary and Slovakia who are not satisfied with the derogation at the end of 2023. Bulgaria and the Czech Republic also they ask for more time.
From Prague to Athens, states are asking for more money for the stoppage
However, it is not only the temporal derogation that is under discussion. In fact, the Member States that most depend on Russian oil, in addition to appealing for a longer transition, are also asking for an "economic compensation". Money in exchange for the embargo to face the difficulties. In addition, Greece (together with other Mediterranean partners) has gotten in the way: it does not accept the ban on European ships transporting Russian crude oil in the next six months. Athens considers it a damage: it only means that the companies will turn to non-European boats, starting with Turkey. A rather intricate situation. From which, however, the Union will still have to exit.
The EU plan also provides for the exclusion of Sberbank, the first Russian bank, from the Swift international payment system.
Btp: yields and spreads fly. Even the ECB towards the squeeze
Two alarm bells are ringing for the Italian debt even before the Fed's decisions. The yield on the ten-year BTP stops at the 3% threshold, at 2,98%, the highest since March 2020. Meanwhile, despite the Bund of equal duration is confirmed above 1%, the spread comes within a whisker of 200 points. It is the consequence of the pressure (rising rates, slow growth) triggered by the US increase to contain inflation. A move that could already be imitated by the ECB in July, as suggested by Isabel Schnabel, a German member of the Bank. The measure, you explained, will be preceded by the end of the Central Bank's purchases.
The season of subzero titles is over: less than 100 in circulation
On the primary, meanwhile, Germany yesterday assigned 1,464 billion euros in the 2031 green bond with the average rate rising to 0,93% from -0,20% in the previous auction.
There are now no more than 100 stocks with a negative rate on the markets. In December 2020 there were around 4.500 for a value of 18 trillion.
In Europe, the black jersey in the price lists goes to Milan (-1,4%), again under 24. The day was negative for everyone: Paris -1,2%; Madrid -1,05%; Amsterdam -1,03%; Frankfurt -0,49%; London -0,9%.
Del Vecchio-Zuckerberg face-off on smart glasses.
Milan was the scene of a meeting between two big names. Mark Zuckerberg, number one at Meta, met with the king of eyewear, Leonardo Del Vecchio, the first shareholder of Essilor Luxottica, who has been collaborating with the Silicon Valley giant in the development of smart glasses since September 2020.
“It was nice to go back to Milan to discuss the plans for the new smart glasses,” Zuckerberg wrote, posting a photo next to the Luxottica founder, who is wearing the prototype of a bracelet with an interface that will have to control glasses and other devices.
Yesterday, the competitor Safilo (-10%) was the worst stock in Piazza Affari.
Ferrari swerves (-5,57%), but profits rise
Ferrari swerves (-5,57% on the Milanese circuit) after the publication of the quarterly which was also in line with analysts' expectations. Yesterday CEO Benedetto Vigna also unveiled the engine of the Purosangue, the first Ferrari with a higher than usual center of gravity to be launched this year: it will be powered by a classic naturally aspirated V12-cylinder. For the news from the Reds, we will have to wait for the Capital Markets day to be held in Maranello on 16 June. In the first quarter the company recorded a net profit of 239 million euros (against 206 million).
The slowdown in the stock affected both the four-wheel sector (Cnh Industrial -2,67%, Stellantis -1,29%) and the luxury sector (Moncler -1,46%). Ferragamo and Brunello Cucinelli are also in red.
The worst stock was Campari (-3,79%) on which Kepler Cheuvreux reduced the rating to hold.
Unicredit towards devaluation in Russia
Difficult day also for credit: Banco Bpm loses 3,74%. Unicredit also fell: -2,82% on the eve of the accounts. The write-down of assets in Russia is expected, in the amount of between 600-700 million euros. Fineco -2,63%, Bper Banca -2,45%. Understanding -1,8%.
Worth noting is the slide of Edison Savings: -5,4% after the collapse of net profit in the first quarter due to the price cut decree. Government interventions have brought Edison's profits down to 27 million, compared with 98 in the same period a year ago.
Enel (-0,88%) yesterday declared a net profit in the first quarter of 1,23 billion (up 21,6%) above analysts' expectations. At the top of the list stands A2a (+ 2,57%).
