The first session of the year on the financial markets of Asia turns red. The positive effect of the New Year's Eve phone call between Xi Jingping and Donald Trump, "very cordial" according to the US president, was extinguished with the arrival of the first macro data of 2019: for the first time in 19 months, the indices of manufacturing activity slips below the 50-point frontier separating growth and recession. Both the official data and those surveyed by the Caixin index are down, sending out a sinister signal: for the first time in two and a half years, despite the discounts on the sales lists, new orders are also down, both those internal industry and those linked to exports.
THE WORST SQUARE IS HONG KONG, THE YEN RISES
Confirmation of the difficult economic situation that Chinese industry is experiencing has pushed down all active price lists (Tokyo will reopen its doors only tomorrow). The worst stock exchange is Hong Kong, down by 2,3%. The CSI 300 index of Shanghai and Shenzhen, down 1%, hits a three-year low. The Korean Kospi was also down.
Futures on London (-0,8%) and on the S&P 500 index (-0,8%) anticipate a mixed start also for the European and US markets. The "grey" climate is confirmed by the rising prices of gold, which has risen to 1.283 dollars an ounce, the highest in six months, and by the currency market: the yen strengthens, the traditional safe haven in times of tension (109,37, 0,7 on the US currency), the Australian dollar loses -XNUMX%, which usually anticipates the trend of the Chinese yuan.
The scenario "confirms that the economy is weak and that the stimulus must arrive quickly" say the ING economists who point to an intervention by the Chinese government. According to rumors, Xi Jingping himself had to admit that he underestimated the US determination on the tariff front.
Weak start also for oil: Brent at 53,22 dollars (-58 cents compared to the last prices of 2018, a black year with a drop of 25%), wti below 45 dollars.
EURO AT 1,4445, THE SPREAD STARTS AGAIN AT 250 POINTS
The euro celebrates its twentieth birthday at 1,4445 against the dollar.
This is the scenario that precedes the start of trade in Europe, conditioned in the morning by the release of the PMI indices on the main manufacturing of the Old Continent. The stock exchanges opened on December 31st (in addition to Milan, Frankfurt did not work) took their leave with a plus sign, under the pressure of Donald Trump's optimism: Paris +1,11%, Madrid +0,54%, little movement in London -0,09%.
On the Italian front, once the Maneuver dossier has been archived, attention shifts to the decree which will include the 100 quota and the citizen's income, the financing of which - albeit reduced to the last minute - is in any case ensured by specific funds provided for in the Maneuver.
The spread restarts from 250. But from today government bonds will be able to count only in part on the safety net of the European Central Bank which, having exhausted the purchases of QE, will limit itself to reinvesting the amount collected by the maturing bonds.
EU WARNING ON 5G: BEWARE OF CYBERSPIONAGE IN BEIJING
A warning comes from the EU against Chinese cyber-espionage which also affects Italy closely. Brussels intends to proceed with the mapping of the Chinese presence in network infrastructures, with an eye to investments in 5G. "In 2018 - reads a note - Italy, Spain and Finland carried out auctions for the assignment of frequencies which led to significant inflows of money into public coffers: however, assignments that we could bitterly regret in the near future must be avoided". The US and Japan have banned the use of equipment from Huawei.
TRUMP CALLS FOR A BUDGET MEETING
The US markets also rose: Dow Jones +1,15%, S&P 500 +0,85, Nasdaq +0,77%. But the optimism of the price lists will be put to the test by the confrontation between the White House and Congress which is preparing to present a budget proposal which, while providing for a federal spending budget of 265 billion, does not include a single dollar for the Wall on the border with Mexico (5 billion dollars) dear to Trump. The president, isolated and furious, made a few hours ago a request for a meeting with Democratic leaders, who are preparing to take over the leadership of the Chamber in a couple of weeks.
WALL STREET HOPES FOR A “DOOVE” FED
Another hot topic: the relationship between the Fed and the White House. The markets seem convinced that, perhaps due to signs of a slowdown in the economy, perhaps due to pressure from Trump, the central bank is revising its intentions: two-year yields, the most sensitive indicator for short-term rates, have dropped at 2,49%, just above the cash yield, against the 2,977% recorded in November. There is a growing feeling that the Fed will have to settle for just one rate hike for 2019.
More precise indications will come on Friday, when President Jerome Powell will participate in a debate with the two exes, Ben Bernanke and Janet Yellen.
