The law of numbers puts a strain on what remains of market optimism. In the United States, consumption and industrial activity are at a 74-year low, at the levels of the Great Recession. Asia, for the first time in 60 years, has to deal with zero growth or worse: on Friday, the Chinese GDP data for the first quarter could register a minus sign: 2020, despite the probable recovery in the coming months, will close at most with a meager +1,2%. The attempts to turn the page and thus reawaken the "animal spirits" of the economy placed on the ropes by the epidemic are framed within this framework.
KOREA, THE VOTE REWARDS PRESIDENT MOON
Weak Asian stock exchanges this morning. Tokyo drops 1,3% as criticism of Shinzo Abe's soft handling of the emergency grows. The Korean Kospi also declined slightly: the elections decreed the triumph of President Moon, rewarded for his brilliant results in containing the epidemic, with extensive use of technology. But, thanks to the crisis of Made in Korea customers, the GDP is starting to close at -1,2%.
Chinese lists were also in the red, supported by monetary incentives: Shanghai -0,6%, Hong Kong -0,7%. China's yuan weakens in the aftermath of the new intervention by the Central Bank to support the economic system. The People's Bank of China cut its one-year lending rate by 20 basis points to 2,95%, the lowest level since it was introduced in September 2014. The move should open the door for a cut in the base rate (LPR) to be announced on April 20.
BOFA AND CITIGROUP WAVE, TODAY THE NUMBERS AT WORK
The data on industrial production and consumption in the United States in March dampened the euphoria on Wall Street, fueled by the rain of money arriving from the Fed and the Treasury. Donald Trump pushes for a very rapid recovery and takes it out on the "enemies". The World Health Organization has ended up in the crosshairs, to which it has cut contributions. "Meaningless decision" replied Melinda Gates announcing an extra contribution from the Foundation (250 million dollars) to WHO.
On Wall Street, the S&P500 index closed down by 2,2%, at 2.750 points, below the graphic threshold of 2.800 points. Dow Jones -1,86%, Nasdaq -1,44%. The future anticipates a start down by 0,5%.
Bank of America and Citigroup were down sharply, both -5% after the publication of the accounts. Better Goldman Sachs, less exposed to lending and therefore less in need of new provisions.
More negative numbers could hit markets today: New jobless claims may have hit 5,5 million, about a million less than the previous week's increase.
The $350 billion fund for small and medium-sized businesses launched earlier this month is already nearly depleted and there is an urgent need to allocate more resources to accommodate requests for assistance. But the adjustment is firm in Congress: the Democrats are asking that the program also be used to provide support to hospitals, the Republicans oppose it and the White House does not seem able to mediate.
BRENT BELOW 29 DOLLARS, RESERVES RISE
Meanwhile, the oil slide continues: -6,5% at the end of yesterday's session. This morning Brent rebounded slightly to 28,10 dollars. The drop in consumption is putting a strain on storage capacities both on land and at sea. US strategic reserves rose by 20 million barrels last week, about six million more than forecasts, as gasoline consumption dropped to a XNUMX-year low.
The prices of Oil stocks are down sharply. In Piazza Affari Saipem loses 8,58%, Eni 6,38%. Tenaris -4,49%. Double digits for Saras' descent.
EURO UNDER PRESSURE, MAJOR MANEUVERS ON THE EU SUMMIT
Second day of decline for the euro, to 1,087 against the dollar. Tension is growing on the Eurozone markets in anticipation of the summit on the 23rd, concentrated on the debt issue of Southern Europe, with Italy in the lead. The president of the EU Commission Ursula Von der Leyen focuses on the use of the 2021-2027 community budget as an instrument to support the investments necessary for the restart of the European economy.
Lombardy has asked the government to reopen production activities starting from 4 May.
PIAZZA AFFARI (-4,8%) THE WORST STOCK EXCHANGE
Yesterday the European stock exchanges experienced a bearish session to then receive the coup de grace with the dramatic start of Wall Street. Piazza Affari suffers the most, the most fragile price list. The ban on short selling is of little use: the index (-4,78%) slipped to 16.719 points.
The rest of the Eurozone is also in red. Frankfurt reverses (-3,91%); similar losses in Paris (-3,76%); Madrid -3,79%. Things are not better in London (-3,40%).
THE SPREAD WIDES TO 247
The yield of the BTP spikes to 1,86% after a maximum of 1,99%, that of the Bund drops to -0,46% (-7 basis points).
Thus, the spread between Italian and German ten-year bonds continues to grow: 238 basis points but during the session it widened to 247, the maximum of 19 March (compared to 217 on the eve of the session).
On Monday evening, the Ministry of Economy and Finance released the guidelines for new debt issues. The launch of a new BTP Italia and a new non-indexed BTP aimed at small savers is planned.
ALSO THE CDP BOND ARRIVES
Activate yesterday also the CDP with a social bond in two tranches over 3 and 7 years, of 500 million each, with applications for around 1,9 billion.
Greece joined the list of eurozone issuers that recently syndicated bonds, placing €2bn in a 7-year bond that garnered nearly €6bn in orders.
ONLY DIASORIN SHINES, MONCLER SLOWS DOWN
All down the blue chips of Piazza Affari, where however the performance of Diasorin stands out (+7%). The stock is supported by the recent presentation of the coronavirus test and by the opinion of Kepler Cheuvreux, who confirmed the hold opinion on the share, raising the target price from 104 to 130 euros.
Plus sign also for Italgas (+0,7%).
Moncler deflated during the session (-1%) after having scored +4,6% in the morning. In a study on the luxury sector, Jefferies analysts revised their expectations on 2020 revenues from -19/20% to 90 billion euros to -25% to 75 billion. On Moncler they confirm the Buy recommendation, with a target price of 38 euros.
BANKS IN FREE FALL, THE RECESSION COSTS AT LEAST 80 BILLION
The positive notes of the main basket end there. Together with oil, the banking sector led the decline. The recession threatens to jeopardize the fiscal consolidation of recent years. Morgan Stanley now estimates that up to €60-80 billion of net non-performing loans (NPLs) will accumulate in Italy over the next 2-3 years, marking a 40-50% increase on the current stock.
The most penalized stock was Monte Paschi (-7,55%), ahead of Bper (-7,36%), and Ubi (-6,91%). Also suffering are Unicredit (-6,73%) and Mediobanca (-6,55%), the securities of the sector preferred by Morgan Stanley which promotes Piazzetta Cuccia to Overweight.
Bad day for managed savings. In deep red Banca Generali (-8,96%). Also below are Banca Mediolanum (-8,32%) and Finecobank (-7,6%). Poste Italiane also fell (-8,8%). But no one was saved, not even Nexi (-8,01%).
GOLDMAN SACHS SEES -78% FOR CAR SALES
There was also a clear decline in industrialists, starting with Cnh (-8,5%) and Stm (-7,65%). Fiat-Chrysler -5,08%. Goldman Sachs has lowered its estimates for auto sales in Western Europe. In particular, the auto sector remains "under intense pressure from Covid-19" and sales in Western Europe are now seen at -27% in the first quarter of 2020, while in the second quarter a 78% drop is expected.
Atlantia is also down (-9,2%): Kepler Cheuvreux has reduced its target price from 19,5 to 15,5 euros (rating buy), following the drop in estimates on motorway and airport traffic volumes in 2020.
In the midst of so many disasters, the exception is a patrol of mid caps: RCS (+3,13%), Inwit (+2,66%), Astaldi (+1,79%) and Ima (+1,67%) are resisting the declines %).
NOTORIOUS (+20%) BANKS ON NETFLIX
However, the Oscar of the day belongs to an Aim title: Notorious Pictures (+ 20,47%) has announced that the film "Love, Wedding Repeat", whose rights have been exclusively granted worldwide to Netflix, it debuted on April 10 worldwide on the streaming giant's platform and is currently in first place among the most watched films globally.
Bad Amplifon (-6,62% to 18,35 euros), on which Kepler Cheuvreux reduced the target price from 18,5 to 17,8 euros, confirming the hold recommendation, after having again cut the revenue estimates.
