The honeymoon with the markets of Jerome Powell, who in a few hours will officially take office at the helm of the Federal Reserve, is over even before it begins. In the wake of the heavy losses suffered by Wall Street on Friday, Asian stocks opened the week in the deep red.
The Japanese Stock Exchange lost 2% in the final session, from -1,3% at the opening. Hong Kong is down 1,8%. The CSI300 index of the Shanghai and Shenzhen stock markets lost 0,7%. The Chinese services PMI recorded its highest value since 2011.
In Seoul, the Kospi index is down 1,4%. This morning, on the eve of the opening of the Olympic Games, Lee Jae Yong, heir to the Samsung empire, was released from jail for a year for corruption.
Mumbai -0,8%. Sydney marks a decrease of 1,6%. The MSCI Asia Pacific index is down 1,6%, the largest daily negative change in 14 months.
THE 2-YEAR TREASURY RETURNS MORE THAN THE DOW JONES
Bond market yields are rising: the 2,86-year T-bond rose this morning to 4%, a new 2,162-year high. Even more significant is the level of the two-year share: 2,13%, for the first time above the average of the dividends paid by Dow Jones shares (XNUMX%).
Confirming the violence of the storm that is shaking the bond market, Australia held an auction of 15-year government bonds tonight: demand fell 1,87 times, to levels not seen since 2016.
The dollar is flat: the euro traded this morning at 1,2457 against the US currency. Brent oil changed hands at $67,8 a barrel, down 1% from -2,7% last week.
JP MORGAN: IT'S JUST A CORRECTION
The signals leave no room for doubt: the increase in employment and the amount of payroll reported by last Friday's data confirmed the forecast of a series of rate hikes (definitely three, perhaps four) in the course of the 2018. But David Kelly, chief strategist of JP Morgan believes that these days' sales are only a course correction, not a trend reversal for fear of inflation. The S&P index dropped 2,1% on Friday.
DRAGHI SPEAKS TO THE EU PARLIAMENT, THURSDAY LA BOE
Thus the expectation rises for the indications coming from the central banks, starting from the interventions of the Fed members who will vote in March on the first of the increases announced: Bill Dudley of New York and John Williams of San Francisco will speak during the week.
But the highlight of the day is the hearing of Mario Draghi in the European Parliament, an opportunity to reaffirm the will to maintain a soft monetary policy for the Eurozone despite the choices from overseas.
Even the Japanese premier Shinzo Abe spoke this morning for the continuation of the expansive economic policy: Tokyo's rates will remain negative.
Central banks also in the foreground in the domains of Her Majesty Elizabeth II. The Bank of England will meet on Thursday: pending the decisions of the Fed, an increase in British rates seems unlikely. Same forecast for the meetings of the Royal Bank of Australia (tomorrow) and the Bank of New Zealand (Wednesday).
THE BOD OF UNICREDIT, BPM AND MONTE PASCHI TAKE THE STAGE
It is very probable that the shower of sales on the price lists will also affect the European markets this morning. The change of season hits Italy exactly one month before the next elections, an event which for now has not caused particular tensions on the BTPs or on the performance of Piazza Affari, despite the short positions of some protagonists (see Ralph Dalio's Bridgewater fund ).
In this context, the week of accounts for Italian banks begins. The most awaited appointment is for the board of Intesa San Paolo which will examine the operating accounts but, above all, will address the approval of the new business plan from which we expect a sharp cut on non-performing loans, the reorganization of the savings hub through the integration of Eurizon and Fideuram and a strong boost to international development, starting with China.
On Wednesday, however, the councils of Banco Bpm and Unicredit will meet. Consensus estimates fourth-quarter earnings at 523 million. The next day it will be the turn of Bper and Ubi. Finally, on Friday, it will be Banca Monte Paschi's turn.
The accounts of Credito Valtellinese complete the picture, the last to have to recapitalize after Carige: the increase from 700 million of the former popular Valtellinese (-2,3% to 10,69 euros on Friday for an annual drop of 78%) should taken on February 19th.
On the macro front, the publication of the PMI services indices for Italy, France, Germany and Great Britain should be noted in the morning. The statistics on retail sales in the Eurozone are also important.
On Wednesday 7 the EU growth forecasts will be released, while on Thursday it will be the ECB's economic bulletin.
BRADCOMM RAISES OFFER FOR QUALCOMM TO 145 BILLION
In the USA, the ISM index on the trend of the manufacturing economy will be released. The quarterly campaign continues on Wall Street. The accounts of 90 companies will be released this week. Among these: Bristol-Myers Squibb, Walt Disney and Aig, GM and Tesla.
Today the relaunch of Broadcomm on Qualcomm will arrive: 145 billion dollars will be offered for the US chip group.
