The nightmare recession is becoming more and more concrete and the race for safe-haven assets is unleashed: gold reaches a new record at 1.829,4 dollars per ounce, ten-year Treasury yields fall below 2% for the first time while the spread between the Btp and the bund rises to 292 (to then return slightly to 286). And the equity is sold, sending quotations to sink: thus another dramatic day is consumed on the European stock exchanges.
The Ftse Mib closed at a peak of 6,15% below the psychological threshold of 15 thousand points at 14970,42 points, with a crash that cost over 20 billion of capitalization. The Dax collapses by 5,82%, the Ftse 100 by 4,49%, the Cac by 5,48% and the Ibex by 4,70%. The pressure in Europe increased after the opening of Wall Street down: -1,5% the Dow Jones, -1% the S&P by 1%, -3% the Nasdaq. US indices then widened their losses and now the Dow Jones is down 3,54% and the Nasdaq 4,03%.
Sales hit mainly cyclical stocks, the hardest hit in the event of a recession, but sales also returned to banks, with the French Socgen returning in the sights, marking a drop of 12,34%. There are many causes that triggered the collapse. In the morning, the declines begin in the wake of the revision of Morgan Stanley's global growth estimates which states: the global economy "is dangerously close to recession". And that in the afternoon, in a report on the euro zone, he increases the dose on Italy by predicting a 2012% contraction in GDP for 0,3. The discontent for the Sarkozy-Merkel duo also held the scene, who after saying no to Eurobonds froze the European financial markets with the Tobin Tax, (which penalizes the stocks and lists most exposed to trading such as the LSE and Deutsche Borse) and put forward the proposal to link EU funds to the reduction of the deficit. Added to this are the internal squabbles within the Fed where the opposition of some central bankers continues to Ben Bernanke's line of keeping rates close to zero until 2013.
And it is from the USA that new fears about the liquidity of European banks are exploding. The Fed, wrote the Wall Street Journal, is intensifying investigations into the US branches of European banks to test their ability to refinance themselves. Then there is the long line of economic results that have disappointed expectations: unemployment benefits have grown more than expected; inflation reared its head more than expected (+0,5% in July); the Philadelphia Fed index collapsed to -30,7 in August, the worst figure since March 2009. Numbers sealed by the number one of the New York Fed, William Dudley who stated: “The risk is that to reach a point of no return to the pre-crisis situation”. Oil drops to 85 dollars a barrel at the opening in New York (-2,9%) while the euro loses ground against the dollar below 1,44.
THE INDUSTRIAL PEOPLE FALL IN PIAZZA AFFARI
SALES ON THE AGNELLI GALAXY
In Piazza Affari, the session was characterized by several suspensions and by the collapse of quotations for industrial stocks. The declines were led by the auto sector with titles from the Agnelli galaxy. Fiat Industrial left the field 13,31% while Fiat 11,88% accelerating the downward fall of the last few days weighed down not only by fears of recession but also by sales data in Brazil. Exor drops 9,08%. Stm (-9,36%) and Finmeccanica (-9,32%) also closed with heavy reductions. Construction stocks also plummeted: Buzzi Unicem closed down by 8,09% and Impregilo by 8,66%.
FINANCIAL SALES ARE BACK
UNICREDIT RETURNS BELOW 1 EURO
While the ban on short selling imposed by Consob last Friday is still in force, sales on banks are back in line with the rest of Europe. In Milan the hardest hit is Intesa Sanpaolo (-9,26%) while Unicredit loses 7,41%. Among the worst stocks also Fondiaria Sai with a drop of 12,35%.
