The clear spell comes from Beijing, bringing some calm after a week dominated by the weakness of the bond markets. Talks between Chinese Deputy Prime Minister Liu He, US Treasury Secretary Steven Mnuchin and the White House representative for trade relations Robert Lightizer resumed with a working lunch. “It will still take a lot of work,” a Chinese diplomat holds back, but progress, especially on intellectual property, bodes well.
HUAWEI PROFIT BOOM. TOKYO, UNEMPLOYED TOWARDS ZERO
Meanwhile, the balance sheet data reveal the explosive growth of Huawei: +25% profits (8,8 billion) driven by the boom in sales of mobile devices (+45%). Positive record accounts and outlook for trades, plus the forthcoming inclusion (from Monday) of Chinese equities in Morgan Stanley's global indices, helped Asian stocks rally from Shanghai.
The Csi index recorded a rise of 3,2%. The first quarter of the Chinese markets closed with a leap of 27,8%. Positive Hong Kong (+1%).
The increase in Tokyo was more modest, held back by the rise of the yen to 110,7 against the dollar. The Nikkei index gains 0,6%. Unemployment fell to historic lows: just 2,3%, even lower than forecasts, down from 2,5% in January. Consumption recovers but does not take off: +0,2% in February, from -3% in January, against the +1% expected.
Seoul's Kospi also rose by 0,4%, Mumbai's BSE Sensex by 0,3%.
US GDP +2,2%. THE FED: THERE WILL BE NO RECESSION
The pressing of the central bankers, engaged both in the USA and in the Old Continent, helped to calm the tensions on the markets, explaining that the slowdown in the economic situation, both in Europe and in the USA (the growth of the gross domestic product was revised downwards to 2,2%) does not anticipate the arrival of the recession.
The governor of the New York Fed, John Williams, said yesterday that the risks of a recession in the United States are very low: the economy is growing well. A few hours later, another central bank executive, the governor of the Fed of Saint Louis, James Bullard, was even more explicit: already in the spring there will be a strong acceleration.
Also thanks to these signals, the yields on ten-year T bonds rose again, to 2,40%. The interest rate curve, on three-month and ten-year maturities, remains inverted, but the differential drops to -2 basis points, from -6 the day before.
S&P, NEVER SO GOOD SINCE 2009
The US markets are on the rise: the S&P 500 index +0,36% is about to archive the best quarter since the 2009 crisis. Dow Jones +0,36%, Nasdaq +0,34%.
The resignation of Tom Sloan, CEO of Wells Fargo (+2,7%), the latest victim of the scandal on the fraudulent accounts of the San Francisco institute, has been announced.
Brent oil climbed to $68,1 a barrel, up 0,4%, after two days of slight changes.
The gold rush has subsided, on the lows of the last three weeks at 1.290 dollars an ounce.
The euro-dollar rebounds, +0,1% to 1,123, after three days of decline.
ITALY AND GERMANY IN BRAKING. TURKISH THINGS ABOUT FOREIGN EXCHANGE
Uncertainty was the keynote of the European financial day. The deep fog weighs on the risk of a no-deal Brexit, a risk that according to Mario Draghi is not fully priced into by the markets. Today could be the decisive day for the approval of the May plan, but the divisions among the Conservatives seem incurable.
The new signs of a slowdown in the Euroland economy, starting from Germany and Italy, are also weighing, as S&P points out. Against this backdrop, another critical front is looming: the Turkish lira skids (-4% against the single currency at 6,3) the single currency is up sharply (+4%) against the Turkish lira at 6,3 after the declarations of the Turkish Premier Recep Tayyip Erdogan, according to which it is necessary to cut the interest rate to bring down inflation. Statement in open contrast to common sense but in line with sovereignist ideas.
Milan, the worst market in Europe, closed down by 0,53% at 21.080 points. Similar decrease for Madrid -0,54%.
Frankfurt closes slightly up +0,08% despite the collapse of Deutsche Bank -3,2%. The Financial Times (debunked) wrote that the bank is evaluating a 10 billion euro capital increase, to be launched before starting negotiations with Commerzbank.
DEL VECCHIO ROMPE: ESSILORLUXOTTICA -2,6%
Paris -0,09% Paris -0,09%, was affected by the drop in EssilorLuxottica -2,64% after Delfin requested an arbitration which, according to Les Echos, will last between 18 and 24 months,
London +0,58% on the wave of the fall in the pound, -0,7% against the euro.
Rating agency S&P Global cut its growth forecast for the euro zone to 1,1% for 2019 from 1,6%.
S&P said the downward revision of the estimates comes after slowdowns in Germany and Italy towards the end of last year and that it expects both countries to do "significantly worse" than the euro-zone average.
Among the most disturbing signs, the slowdown in German inflation stands out which, for the fourth consecutive month, remains below the ECB's targets: in March, consumer prices harmonized so as to be comparable with those of the other countries in the euro area, mark a year-on-year increase of 1,5%, from +1,7% in February: the consensus expected +1,6%
THE SPREAD IS WIDENING. LESS QUESTION FOR TEN YEARS.
The yield on the German Bund dropped to its lowest since October 2018, at -0,08%.
The spread widens, to 255 basis points, from 250 yesterday. 2,46-year yield XNUMX%.
The BTP auction showed that the markets, perhaps because we are at the end of a quarter full of issues, are no longer so ready to absorb Italian paper. In the 20-year auction, the overbid, with respect to the price indicated by the issuer, was equal to zero, against +XNUMX% in the previous auction.
However, the Treasury has placed 6,5 billion euros of fixed coupon bonds, plus a billion at variable income. Specifically, 3,75 billion euro of the new five-year BTP were issued, with an application rate of 1,31, down from 1,46 in February. 2,75 billion ten-year BTPs were also issued, with an application rate of 1,40, plus one billion floating-rate bonds.
In the 20-year auction, the overbid, with respect to the price indicated by the issuer, was equal to zero, against +XNUMX% in the previous auction.
BANKITALIA, YES TO PANETTA. NO OF MATTARELLA TO THE INVESTIGATION
La appointment of Fabio Panetta as general manager of the Bank of Italy it has the approval of the Lega and M5s, a government source told Reuters. Panetta is currently deputy general manager and is the most accredited candidate to succeed Salvatore Rossi, who has recently made it official that he will leave at the early May deadline.
The President of the Republic said no to the commission of inquiry into the banks.
WEAK BANKS, FCA HOLDS DOWN
Negative banking yesterday dragged by the sector in Europe. National index -0,5%, from -1,3% of the sector Stoxx. UniCredit -1,8%. Bench Bpm -1,7%. Intesa Sanpaolo -0,1%. The shareholder foundations have presented the list of candidates for the new board of directors, there are Carlo Messina and Gian Maria Gros Pietro.
Fiat Chrysler -1,7% retraces after the race triggered by rumors of a possible merger operation, this time with Renault and Nissan. Volkswagen CEO Herbert Diess said he is not interested in FCA.
TIM ASSEMBLY: WILL IT BE PEACE OR WAR?
Tim +0,9% on the eve of the meeting between Elliott and Vivendi. The market is betting on an agreement in extremis.
New decrease for Stm (-3,5%) in the wake of Infineon's profit warning.
Mediaset also fell (-0,9%) penalized by the Berenberg report which cut the target price to 3,5 euros from 3,8.
Leonardo +1,48%: UBS confirmed the neutral recommendation by raising the target price to 11 euros from 9,6.
Technogym -3%. In 2018, the net result was 93 million euros, 32 million euros more than 2017. Kepler Chevreux lowered the judgment to hold from buy, target price at 11,4 euros from 11.
Digital 360 +12%. It closed 2018 with consolidated revenues of 22,5 million euros, +57%. Ebitda +57%.
