Another week of passion for the financial markets looms. The "Italian-style" restrictive measures are multiplying around the planet to try to stem the epidemic, but the results for now are modest. Almost all countries have activated monetary and fiscal policy interventions to counteract the effects on the economy. But the most important country, the USA, is missing. For now, the Democrats have blocked the measures developed by the Trump administration: yes to support for families, was the response from Congress, but a significant part of the 2 trillion dollars in the package is nothing more than support for friends of the president . In any case, an agreement will have to be found as soon as possible, because, as the governor of the Fed of Saint Louis, James Bullard said, "we are not discussing measures to counter the recession, but to survive". In this setting, as noted Paolo Basilico, interviewed by FIRSTonline, the Stock Exchanges, held back by the stop to production activities, risk participating in "a horse race without horses".
Hong Kong's Hang Seng dropped to session lows and lost 4,4%. The former colony is practically at a standstill, except, notes a report in the Financial Times, a rich offer of luxury goods at heavily discounted prices.
The Shanghai Composite (-2,3%) and the Kospi of Seoul (-4,5%) were also down. India's activity is also stopping, hit by the disease. The stock market loses 8,5%, while the rupee falls to levels never seen in history, after the federal government imposed quarantine in some states of the country, including areas where the capital New Delhi and the same are located mumbai.
HOLDS TOKYO, OLYMPICS TOWARDS STOP
Sydney's S&P ASX is down 5,5%. The government has ordered the closure of all pubs and restaurants. New Zealand has anticipated that in two days it will go into self-isolation from the rest of the world. The country's stock market closed down by 7,7%, the largest negative change ever.
The Tokyo Stock Exchange, which reopened its doors after three days of vacation, makes history in itself. The Topix index closes slightly higher, the Nikkei marks +1,7%. The Bank of Japan has bought ETFs for 200 billion yen. However, the weakness of the yen, at 110 against the dollar, supported the market.
Ten-year T-bonds are down again, to 0,825% (-2 points).
Brent oil loses 3%, to 26 dollars a barrel. Texan crude oil rose slightly to 22,97 dollars.
Gold is down slightly to $1.494 an ounce from -2% last week.
JP MORGAN EXPECTS US GDP at -14%
It is still early to count the damage caused by the epidemic, however epochal. Goldman Sachs anticipates that between April and June the US economy will shrink by 24%. JP Morgan expects -14%.
Futures point to a roughly 5% down start for Wall Street. Goldman Sachs intervened in support of two funds in tilt due to too many redemptions.
A sign of fragility also comes from the Scandinavian countries, traditionally the most solid. On Friday, a large part of Danish funds announced the suspension of redemptions: something is rotten in Denmark.
ECOFIN TODAY: COMPARISON ON EUROBONDS
A red start is inevitable at this point. Waiting for the finance ministers of the Eurozone to meet by teleconference this afternoon: on the table, the measures to be taken to deal with the Coronavirus emergency after the historic turning point of the weekend with the farewell to budget constraints, including the limit by 3% in the debt/GDP ratio. The discussion with partners on the resources to mobilize to avoid collapse moves between today and tomorrow at Ecofin and the Eurogroup. Angela Merkel (since yesterday in quarantine) and her trust Ursula von der Leyen do not say no to the long-awaited launch of the Eurobonds (or Coronabonds). But the game is all to be played, in a tragic situation, exposed to new, heavy falls on the stock market, while the risk is growing that, as the president of Assolombarda Bonomi claims, "there is the risk that many industries will never reopen" .
GERMANY LAUNCHES A PLAN FOR INDUSTRY
Germany, much more solid on a financial level, has decided to make the most of its resources: Finance Minister Olaf Scholz today will present a plan that includes measures for 150 billion to counter the impact of the coronavirus. Another one hundred billion will be allocated to the direct acquisition of company capital shares, while 400 will be used to provide public guarantees for the debts of the companies most affected by the economic crisis.
Meanwhile, Europe is trying to calculate the damage. Data on Eurozone manufacturing activity is due out tomorrow. Thursday will be the turn of the Bulletin of the ECB. In between, the confidence indices will come out, already "cooled down" by the forecasts made by Imperial College London. The mathematical model predicts that it will take at least five months to bring the virus under control. But, in the absence of a vaccine, there will be a relapse.
Following the Bank of England's emergency interest rate cut to 0,1% last week, the bank meets again on Thursday to discuss further possible fiscal stimulus
NEW TREASURY AUCTIONS, MEDIOLANUM ENTERS THE FTSE MIB
Discounted the ban on short selling in Piazza Affari.
The decisions of the Eurogroup will largely be the arbiters of the trend of the spread. Treasury auctions resume this week. Tomorrow the Mef will communicate the amount of the next semi-annual Bot offer.
Changing of the guard today on the main basket: Juventus leaves, Banca Mediolanum takes over.
The Stock Exchanges are returning from a week of high volatility, but recovering after the landslide (-23%) of the previous eighth. The Ftse Mib limited the damage to 1,5%. The stock exchanges of Frankfurt and Paris rose by 3% and 4% at the end of the day.
The TLC sector is in the spotlight. Telecom Italia closed the week up 27,47%, Telefonica up 19,27%, Deutsche Telekom up 10,46% (against a Dax up 2,14%), while Orange recorded an increase in 18,43%, against the +4,3% of the Cac in Paris.
