“We have reached the peak of growth, but also that of inflation and government stimulus to economies”. Therefore, says Jim Caron, one who guides the portfolio choices of Morgan Stanley, the time has come to review the strategies on the markets in the face of slowing growth, just as the pandemic that imposes the humiliation of a 'Olympics without an audience. Hence the race for bonds (the US 1,3-year bond below 1.800%) and gold (above XNUMX) and the pressure from sales on the Stock Exchanges. Inflation? It seems to no longer scare, given that, between increases in wages and raw materials, there are so many obstacles that hold back the euphoria of businesses, large and small. The result? The general slump in the markets, which began yesterday in Asia where it continues today. The dam of Wall Street has given way but it was Europe that paid the highest price, Italy in the lead, that is the country most courted in the bull phases, the weakest in corrections. But there is no need to wrap your head: given the developments of the situation, the central banks will not change their policies. And the forthcoming launch of the US quarterly campaign will restore some verve to the tired Bull.
- Stock exchanges in Asia Pacific are mostly down, penalized among other things by the spread of variants of the virus almost everywhere on the planet.
- The MSCI Asia Pacific index is down 1,5%. Tokyo Nikkei -1,7%. Kospi of Seoul -1,5%.
On the other hand, Hong Kong's Hang Seng, one of the worst stock market indexes this week, rose by 0,5%, with a drop of almost 5%.
The CSI 300 of the Shanghai and Shenzen lists loses 1% after the publication of data on consumer prices (+1,1%) and production prices (+8.8%). - Reuters reports that the White House is about to add ten more names to the list of Chinese subjects subjected to restrictions due to their involvement in the government's repressive campaign in Xinjiang.
- Meanwhile, the landslide of Chinese tech listed on Wall Street continues: Didi -5.9%, Alibaba and Baidu - about 4%.
- US stock futures are down slightly this morning. Yesterday the main stocks closed in the red: Dow -0,75%, S&P 500 -0,86%, Nasdaq -0,72%,
- Overnight, Pfizer announced it will ask US health authorities for emergency authorization for the third dose of its vaccine produced with BionTech: clinical studies conducted in recent weeks have shown that an additional booster can strengthen the defenses against the coronavirus are quite a lot.
- The euro-dollar remains at its lowest level in four months, despite yesterday's rebound to 1,183.
- WTI oil is barely moving at $73 a barrel: yesterday's drop in US crude stockpiles helped push prices back up, but barring a sharp recovery today, this will be the worst week since April.
- The Bloomberg Commodity index hasn't moved much for a couple of days, this morning it was worth 92,7, settling after the declines at the start of the week.
THE ECB REVIEWS THE STRATEGIES. 2% INFLATION TARGET
The fear of a slowdown in the economic situation rather than the risk of a new wave of pandemic: The causes can be different but the result is always the same: "when we start talking about a slowdown, or even growth below expectations - writes Giuseppe Sersale di Anthilia – the USA is always preferred, due to the greater flexibility and the better coordination and proactivity of the fiscal and monetary authorities”. Yesterday, decidedly negative, confirmed the rule. Yet, after a long debate, the revision of the ECB strategy was published yesterday: the inflation target went from below 2% (but close) to 2% with the possibility of (temporarily) exceeding it upwards. A change that leaves space open for the maintenance of an ultra-accommodative monetary policy for a long time to come.
THE ANALYST: THE HAWKS HAVE BROKEN LAGARDE
Analysts are lukewarm: notes Alessandro Fugnoli, “the new elements for the formulation of monetary policy and for the calculation of inflation are vague and difficult to measure. It is clear that the ECB needs to break the shackles of its statute and look for ways to circumvent its constraints, but it is also clear that it is doing so with the German handbrake on, as evident in the new wording of the inflation target, more generous than the previous one but more limited than the American one”. Louis Harreau, Credit Agricole strategist who follows the ECB, believes today's decision is slightly more "hawkish" than expected. He would have expected, he explains, a clearer commitment, "for example an explicit compensation with respect to the prolonged trend below the target for almost ten years now". But you can also see the glass as half full. With the revision, inflation ceases to be a mortal threat, but it can be tolerated. Indeed, in some conditions it is an element to be supported.
MILAN BLACK JERSEY, ALL RED WITH BLUE CHIPS
- Piazza Affari has paid the highest price for fleeing the shareholding; -2,54%, below 25 thousand points (24.641) and without even a positive blue chip.
- The other markets are also heavy; cyclical stocks suffered, starting with the car (-1,92% sector index) and banking (-2,16%).
- Frankfurt loses 1,77%; Paris -2,01%; Amsterdam -1,97%; Madrid -2,32%; London -1,64%.
- Carrefour shares dropped sharply in Paris -5% after Bernstein's rejection.
- Kering has announced an agreement with Lindberg for the acquisition of 100% of the Danish luxury eyewear group.
- British Deliveroo bucked the trend by +3,21% after posting an 88% increase in orders in the second quarter.
RACE FOR BUND, SPREAD TO 109, BTP FOR 9 BILLION AT AUCTION
The minus sign definitely prevails around the end of the session on the Italian secondary, weighed down in particular on the German counterpart by the less expansive ECB tone than expected.
The rush to the Bunds picks up speed. The yield on 10-year German Bunds trades below -0,30% to -0,334% for the first time in nearly three months.
The Btp/Bund spread rises to 108.
At the July 13 auction, the Treasury will offer 3,7 and 15-year BTPs for 9 billion.
ELECTRIC STELLANTIS -3,35%. THE ITALIAN GIGAFACTORY IN TERMOLI
The bad day of the markets also struck Stellantis -3,35% on the day dedicated to the presentation of the group's electrical plans, moreover justifiably ambitious. Carlos Tavares has announced that Termoli will be the seat of the Italian gigafactory. . The plant will be one of five battery factories in the group, which plans to reach a capacity of 260 GwH to support its electrification goals. The Portuguese manager has also anticipated investments of 30 billion euros over five years. By 2030 Stellantis plans to sell 70% of electric cars in Europe and 40% in the United States.
Exor's losses were heavy -4,13%. Ferrari is partially saved -0,71%, despite Goldman Sachs and Banca Akros both confirming the stock's sell or reduce rating.
TELECOM -3,95% IN THE SIGHT OF THE ANTITRUST
Telecom Italia's retreat continues – 3,95%. The Antitrust has launched an investigation into some clauses of the agreement between Telecom Italia and Dazn for the distribution of TV rights for Serie A in the three-year period 2021-2024, believing that they could undermine competition in the pay-TV market.
BANKS IN FREE FALL. GOLDMAN RETURNS BANCA GENERALI
Banks diving with Banco Bpm, 3,59% leading the line of rebates. Unicredit -3,17%, Bper -3,25%, Intesa -2,93%, Mediobanca -3,16%.
Worth noting is Banca Monte Paschi -1,07%: "for us things are going ahead as they were expected to go", said the vice president of the EU Commission, Margrethe Vestager, answering a question on the timing of the state's exit.
Banca Generali fell 3,56% after Goldman Sachs downgraded its stock recommendation from buy to neutral. The other asset management companies limited the damage, after closing a month of June with robust inflow numbers and assets under management. Fineco loses 0,74%, Azimut 0,87%, Banca Mediolanum 1,71%.
UTILITIES DOWN TOO. FINE FOODS PROMOTED TO THE STAR
Despite the drop in the cost of money, utilities are down starting from A2a -3,88%. The losses of oil companies were more contained: Saipem -0,94%, Tenaris -1,36% and Eni -2%.
Aim money on Fine Foods +1,13%: Consob has approved the publication of the prospectus for the admission to trading of ordinary shares on the Star segment of the MTA.
