Concerns about tensions between Israel and Iran they inflame the prices of Petroleum, while fears return for the gigantic US debt set to rise if the bill under discussion in Congress were to pass. This translates into new sales of US Treasuries and dollars against the main currencies, while on Wall Street the positive streak of the S&P500 was interrupted yesterday after six sessions. Instead, Asian stock markets are more buoyant and European ones are seen opening cautiously around parity.
Wall Street closes lower, Treasuries under pressure
Yesterday the main ones stock indices declined and the S&P 500 Index snapped a six-day streak of gains, while yields on US Treasury securities longer-term they rose slightly, due to concerns about theincrease in debt and deficit of the U.S. government, a situation made even more precarious by the tax cut bill being debated in Congress. Trump has pushed his Republican colleagues in Congress to rally behind the bill, but has struggled to convince a handful of opponents of the package, which would also extend the 2017 tax cuts envisioned in his first term. Moody's Investors Service downgraded the U.S. credit rating late Friday, fueling concerns about the country's debt load.
Il Dow Jones Industrial Average fell 0,27% to 42.677,24.'S&P 500 fell by 0,39% to 5.940,46 and the Nasdaq Composite slipped 0,38% to 19.142,71.
Il return of the U.S. government bond benchmark at 10 years old rose 0,2 basis points to 4,477%. The yield on government bonds 30 years rose 2,3 basis points to 4,965%. It hit 5,037% in intraday trading on Monday, its highest level since November 2023. But more worrying is that Wall Street strategists from Goldman Sachs Group Inc. to JPMorgan Chase & Co. are raising their earnings forecasts. Among the biggest positions are those that see the 5-year yield testing XNUMX%, Bloomberg says.
China Stocks Rise, Yen Punishes Tokyo's Nikkei
In China, stock markets are not caring about the weakness of the US markets and are instead moving upwards. The Hang Seng Index of Hong Kong earn 0,5%, Shenzhen +0,8%. Taiex of Taipei +1,1%. The Catl race, the Chinese giant, world leader in e-car batteries, which recorded a rise of 8,43%. Yesterday, May 20, at its debut on the stock exchange of the former British colony as part of its secondary IPO, the group from Ningde, in the province of Fujian, recorded a leap of 16,43%, after intraday highs of almost 20 percent. Also in Hong Kong, the BYD shares Co. rose to a record high, widening their premium over mainland shares to the highest level ever. Shares gained as much as 4,4%, buoyed by positive sentiment surrounding the successful debut of contemporary Amperex Technology Co. The stock now commands a premium of more than 5% over Shenzhen-listed shares, after adjusting for currency translation, according to data compiled by Bloomberg.
Morgan Stanley strategists say low interest rates and a likely weakening dollar support their forecast of a 6% gain in Tokyo's Topix index, 5% for the MSCI Asia-Pacific ex-Japan index and 3% for the MSCI EM. The investment bank recommends positioning in companies that benefit most from domestic demand and reforms. Shares of pharmaceutical companies Chinese extend rally triggered by deal Pfizer will pay 3SBio $1,25 billion up front to buy the license outside China for an experimental cancer drug. U.S. hedge funds trimmed positions in Wall Street's "Magnificent Seven" and increased exposure to Chinese ADRs in the first quarter, according to Goldman Sachs strategists.
In Japan, however, the Nikkei index Tokyo loses 0,3%that yen strengthens to 143,8 against the dollar and the yield of the ten-year government bond rises to seven-week highs of 1,51%. The growth of Japanese exports slowed as the United States tightened tariffs. Outbound shipments rose 2 percent in April from a year earlier, slowing from 4 percent in March, the Finance Ministry said on Tuesday. That was just below analysts' median estimate. Imports fell 2,2 percent, led by coal and crude oil. Japan's trade deficit hit a 115,8 billion yen ($797 million) deficit after two months of surplus. In particular, Japanese exports towards the United States fell 1,8%, as automobiles and construction machinery fell. The yen averaged 147,7 against the U.S. dollar in April, 2,6% stronger than a year earlier.
Dollar down on major counterparts. G7 summit awaited
Meanwhile the dollar sales as traders watch the G7 summit for signs that the Trump administration is targeting a weakening U.S. dollar. The Bloomberg Dollar Spot Index also fell 0,4%, marking its third consecutive day of decline. The main beneficiaries were once again the yen, safe haven currency, and the Swiss franc, as well aseuro, which hit its highest levels in two weeks, even as U.S. Treasury yields also rose in Asian trading hours. Rising Treasury yields typically support the dollar, especially against the yen, but that correlation has weakened over the past month as U.S. President Donald Trump's erratic trade moves have roiled global markets and shaken investor confidence in U.S. assets, strategists say.
Oil Rises on New Israel-Iran Tensions
Oil prices jumped more than 1% after reports that Israel is preparing an attack on Iranian nuclear facilities, fueling fears that a conflict could jeopardize supply availability in the Middle East's main producing region. Among other things, according to the Times, the UK is set to impose sanctions on Israeli government officials after suspending negotiations on a free trade deal with Israel over its blockade of aid to the Gaza Strip and the expansion of military operations in the Palestinian enclave.
Brent crude futures for July rose 97 cents, or 1,5%, to $66,35 a barrel by 03 GMT. U.S. West Texas Intermediate crude futures for July rose 30 cents, or 96%, to $1,6. The June WTI contract expired Tuesday at $62,99.
New intelligence obtained by the United States suggests that Israel is preparing to strike Iranian nuclear facilities, the CNN, citing several U.S. officials familiar with the matter. It is unclear whether Israeli leaders have made a final decision, the CNN, citing officials.
European stocks seen opening cautiously on parity. At Piazza Affari, keep an eye on Unicredit and Eni
European stocks are expected to open cautiously on par based on -0,09% in eurostoxx50 futures. European stocks closed near nine-week highs yesterday, with utilities and telecoms leading the gains. The pan-European STOXX 600 index rose 0,73%.
UK. Inflation rose more than expected to its highest rate in more than a year as households were hit by a series of price hikes in what was described as “a terrible April” by the British media. Price hikes in energy, water and other administered prices pushed inflation to 3,5% from 2,6%, the Office for National Statistics said on Monday. That was higher than the 3,4% forecast by the Bank of England and the 3,3% forecast by economists. Services inflation, which the Bank of England closely watches for signs of underlying price pressures, accelerated to 4,7% from 5,4%. The central bank had expected a rate of 5%.
Marks & Spence, which was hit by a costly cyber attack a month ago, will release its financial results. Analysts say the attack on 141-year-old M&S is likely to have already cost it more than £60 million ($81 million) in lost profits. Wednesday's report will detail the attack, which prompted the retailer to suspend online orders.
Mediobanca. Mediobanca CEO Alberto Nagel will present the plan to buy Banca Generali to shareholders who have signed up to the 11,9% consultation agreement on June 4, ahead of the shareholders' meeting on June 16 called to vote on the deal, a source familiar with the situation said.
BPER. The 4% of the 9% that JP Morgan has in Bper could go to UniCredit, he writes Il Sole 24 Ore citing financial sources and the no comment of the bank led by Andrea Orcel.
Banco BPM. Morgan Stanley raises target price to 11,8 euros.
EniMalaysian oil company Petronas intends to include oil and gas projects in Indonesia’s Kutai Basin in its planned joint venture with Eni.
Snam aims to invest in existing regasification and liquefied natural gas (LNG) import facilities outside Italy as part of its expansion plans, Elio Ruggeri, executive director of LNG, said at the World Gas Conference in Beijing. The company has successfully placed its first US dollar-denominated bond, a multi-tranche Sustainability-Linked bond, for a total of US$2 billion
TIM. HSBC raises target price.
Unicredit. Morgan Stanley raises target price to 62 euros. Clients of UniCredit's Russian branch will no longer be able to send U.S. dollars out of Russia after June 6, the bank said in a note to clients.
