"She's a true American icon." Thus, in the gardens of the White House, less than a year ago Donald Trump spoke on the saddle of a monumental Harley-Davidson. But yesterday the house, down 6% on Wall Street, announced that will move factories out of the US to escape the European tariffs applied to Harleys in retaliation for the increase in US tariffs on EU goods.
XI'S WRATH: WE WILL NOT TURN THE OTHER CHEEK
Meanwhile, reports the Wall Street Journal, receiving an authoritative delegation of European CEOs, Chinese President Xi Jingping said that “in the West we have the idea that if someone hits you on the left cheek, you turn the other cheek. In our culture, we hit back." In particular, in addition to retaliation on tariffs, China is preparing to block M&A operations involving American companies, delay licenses, carry out inspections or push its one billion consumers to abandon American products, such as the iPhone: China it is the first market of Apple but also of GM, which sells more cars in the country of the Dragon than in the USA.
Two examples among many that serve to explain the dramatic slowdown in Black Monday price lists, i.e. the rain of sales that hit all markets in the face of the prospect of new US initiatives towards Europe and, above all, China. A predictable reaction but one which nonetheless surprised the Washington hawks with its violence.
In the evening, the White House adviser on trade, Peter Navarro, the most hostile to China, said in a television interview that the Treasury directive that has been talked about for days in the newspapers does not contain any indiscriminate restriction on investment in US high-tech companies: Much of what has been reported is false. Himself reassurances from the head of the Treasury, Stephen Mnuchin. Words that helped limit the damage, but the market sentiment is now turning to ugly stable: the New York Times devotes a long article to the flattening of the interest rate curve, an almost infallible symptom of the recession to come, once the push from the White House fiscal stimulus. In this context, the lists are struggling to recover after yesterday's dramatic fall.
THE YEN FLIES, THE EURO AGAIN ABOVE 1,17
China's stocks are lower this morning, while the yuan depreciates against the dollar for the fourth consecutive day to 6,55. Yesterday's intervention by Beijing's central bank provides Chinese companies with extra support in the event of an open trade war with the United States. The Hong Kong Stock Exchange lost 0,2%, the CSI 300 index of the Shanghai and Shenzhen stock exchanges fell by 1%.
Also down were Japan (-0,1%) and the Korean Kospi (-0,45%). Lists linked to tech lose the most, such as Taiwan (-0,55%). On parity the Indian Stock Exchange.
The yen, Asia's safe haven currency, appreciated against the dollar for the fourth consecutive day to 109,4.
The rebound of the euro to 1,1722 also continued this morning.
WALL STREET RECOVERS FROM THE LOWS
Turbulent session also on Wall Street. Coming to lose 500 points, the Dow Jones, thanks to the rise in the last hour, closed with a drop of 330 points, or 1,3%. S&P500 -1,4%. NASDAQ -2,1%. Netflix posted the largest daily negative change in the last two years (-6,3%).
The VIX, the volatility indicator, rose 25% to 17,3.
TECHNOLOGY SUFFERS, SOUPS ARE SAVED
Tech stocks are down sharply. The heaviest drop was attributed to Netflix (-6,5%), followed by Amazon (-3,1%). Also heavy were Facebook (-2,7%) and Alphabet (-2,6%). Better Apple (-1,56%).
Campbell's soups (+9,4%), already immortalized by Andy Warhol, go against the trend: the New York Post has revealed an interest from the giant Heinz.
This morning, Brent oil is up slightly, +0,2% to 74,9 dollars a barrel. WTI trades at $68,3. Oil companies down yesterday in Piazza Affari: Saipem lost 3,79%, Tenaris 4,27%, Eni 2,26%.
EUROPE IN RED, TOWARDS A POSITIVE OPENING
Futures signal a probable rebound at the opening of the European stock exchanges: London and Paris should rebound by a quarter of a point, Frankfurt +0,35%.
The clash over trade between the two iron pots, China and the United States, yesterday shattered European price lists like so many earthenware pots. The reductions, between 1,5 and 2,5%, have not spared any square. At first glance, the good performance of the euro, rising against the dollar to 1,169 (+0,3%), is surprising, but, explains Giuseppe Sersale of Anthilia, "the prospect of negative rates for another 15 months makes the currency unique among best candidates to finance carry trades”, i.e. downward transactions in market phases in which risk aversion prevails, such as the current one: the Ifo, the German business confidence index, yesterday showed a drop to 101,8, the sixth decline in the last said months.
MILAN -2,44, TRADES DOWN
In Milan, the session closed with a drop of 2,44% to 21.355 points on trades in sharp decline: 1,97 billion against an average of 2,4 billion in the last few sessions. The performance of the FtseMib since the beginning of 2018 has returned below zero (-1,5%).
Even worse was the closure in Frankfurt (-2,46%), the place most sensitive to trade tensions. Paris leaves 1,92% on the ground, Madrid -1,78%
London celebrates (so to speak) the second birthday of the Brexit vote with a drop of 2,26%. The pan-European STOXX 600 index marks -2,02%.
THE SPREAD RISES BEYOND 250 POINTS, 6,5 BILLION BTP ARRIVES
In a climate of risk aversion, the spread between 10-year BTPs and Bunds widened in the morning to 253 basis points, a two-week record, before closing at 249 points from 237 basis points on Friday evening.
The Italian 2,817-year rate finished the session at 2,699 from 1% on Friday night. The two-year yield of the BTP has revised the threshold of 0,89% from XNUMX% on Friday evening.
The Italy-Spain spread on the ten-year segment also widened by around ten basis points to 147 points.
The approaching month-end auctions contributed to weighing down the Italian market: the round will start today, when a total of 2-3 billion will be offered between the Ctz in March 2020 and the two Btpei in May 2023 and September 2041.
Yesterday evening the ctz in today's auction recorded a yield of 0,977, its highest since January 2014. At the end of May, the stock had been placed at 0,350%.
Tomorrow, 6,5 billion semi-annual bots will be offered. The medium-long term bond auction will take place on Thursday: the Treasury will make available to investors between 5 and 6,5 billion euros in 5- and 10-year BTPs as well as a Ccteu in the medium-long term bond auction in program Thursday 28 June.
The syndicate offer of the new ten-year Spanish benchmark dated July 30, 2028 also looms large on the primary. Paris also has possible activity, which has appointed a pool of banks to issue a 'green bond' expiring in June 2039.
PRYSMIAN SINKS (-10%) AFTER THE WARNING
The black jersey in the price list goes to Prysmian -10% which paid dearly for the profit warning linked to the Western Link (WL) project. The company has had to cut its 2018 EBITDA estimate after having to make additional provisions of 50 million euros, linked to the laying of an undersea cable between Scotland and Wales.
The technology sector is bad, the most exposed to the US-China trade war. Stm leaves 4,8% on the ground in line with the German companies Infineon (-4,6%) and Siltronic (-3,2%).
TIM, FROM GENISH "INAPROPRIATE STATEMENTS"
The storm partially spares Tim (-1,5%). The expected face to face between Amos Genish and some independent advisers closed without victims: the board of directors of Telecom Italia, reads a note, "debated about the considerations expressed publicly by the CEO in relation to some of its members and took note of the clarification he provided and of his regret for having made statements inappropriate, which were then amplified by the press”.
BANKS LEAK, UNIPOL -6,1%
Weak the banking sector that pays the increase in the spread. The sector index lost 2,6% dragged down by the Bigs: Intesa, Mediobanca and Banco Bpm left over 3% on the ground.
Better Bper Banca (-2%) which concluded the sale of 900 million euro of non-performing loans at a value of 28,1%. Exposure to non-performing loans drops to 17,8%. Unipol (-6,1%) bought other shares of the institute of which it now controls 14,2%. Banca Monte Paschi -0,9%, definitively closed the sale of a portfolio of 24 billion euro of non-performing loans.
Cattolica Assicurazioni was also in the red (-3,54%): Banca Imi reduced the target price from 10 to 9,2 euros.
Negative day also for Cerved (-3%) on the day of the presentation of the plan which envisages an increase in Ebitda which should rise between 5% and 8,5% within three years.
THE UTILITIES ARE KEEPING, ENEL AND ITALGAS GO SHOPPING
Utilities are defending themselves, starting with Snam -0,28%. The Equita analysts recall that the Energy Authority has published the first 'consultation paper' for the regulation of Gas Transport 2020-23, which they judge "positively because it is substantially in line with the current regulation".
Italgas -0,47% managed to limit losses thanks to the positive assessments by analysts after the group signed a binding agreement with Cpl Concordia to acquire 60% of European Gas Network (EGN).
Enel -1,3%, announced the purchase of 21% of Ufinet, a Latin American company active in the optical fiber business: spending 150 million euros. There is the option to go up to 100%. The company announced the purchase of 21% of Latina Ufinet international, leader in the wholesale of fiber optic networks in Latin America, plus an option to acquire 100% of Ufinet's capital. Exercise of the option provides for a valuation of 1,32% of Ufinet between 2,1 and XNUMX billion euros.
FCA SUFFERS, KEPLER PROMOTES PIAGGIO "THE NEW FIAT"
The automotive sector is under fire, another sector in Donald Trump's sights. Fiat Chrysler leaves 3,08% on the ground, Ferrari 3,2%. Brembo (-1,95%) limits the damage.
The positive surprise comes from Piaggio (+8,46%), promoted by Kepler Cheuvrex to "Buy" from "Reduce" with a target price of 2,4 euros from the previous 1,8 euros. According to the analysts of the French company, the stock could "become a second Fiat" by doubling in value.
NOTORIOUS FROM OSCAR
Among the smaller capitalization stocks, excellent performance by Notorious Pictures, at the highest for the year at 1,65 euro. +5,1%. The president and chief executive officer, Guglielmo Marchetti, declared that the company's half-year report will be able to present strong growth figures, thanks to a series of innovations that will be announced in the next few days: Collections from film rights have risen four times on an annual basis.
Leap forward for Banca Intermobiliare (+13,94%).
