Two lightning bolts in the night cross the financial markets after the US holiday of Memorial Day: the European Union, albeit with difficulty, has reached Moscow's agreement on the oil embargo which, if respected, will reduce purchases by 90%. But what pushed crude oil prices up, up to 123 dollars, was above all the awakening of the Dragos on Monday: tomorrow, with a 50-point protocol, Shanghai reopens its doors. In the meantime, the second news of the night, the PMI indices confirmed that the second largest economy on the planet is ready to come out of hibernation. Bad news for Europe, grappling with the inflation generated by the boom in energy costs. But fashion and technology await customers of the Celestial Empire.
- Shanghai and Shenzhen stocks rose 1% after the release of the latest data on economic activity in China. May closes in positive (+1,3%). Hong Kong's Hang Seng +0,5% (+0,6% per month). Tokyo's Nikkei (+1,9% per month) is on par. Kospi of Seoul +0,3% (-0,7% per month). Mumbai's BSE Sensex -0,7% (-2,7% a month).
- The PMI on manufacturing purchasing managers' expectations rose to 49,6 from 47,4 in May. The non-manufacturing index also beat expectations, rising to 47,8 from 41,9. The two indicators remain below the threshold separating contraction from expansion, but show that the worst could be behind us.
- Futures on European stock exchanges are down slightly.
- Wall Street reopens today, futures are up slightly.
- The record inflation data in Germany is also felt on the 2,83-year Treasury Note, the yield rises to XNUMX%, ten basis points more than the day before.
Moscow's oil embargo kicks off. A derogation for Hungary
The European Union has finally reached agreement on the sixth package of sanctions against Russia, the one relating to oil. Hungary obtained the waiver it was looking for: In summary:
- The EU will block the crude transported by ship but not the one flowing in the Druzhba pipeline, which serves 65 percent of Budapest's needs. At the same time, Germany and Poland undertake not to use the Russian "pipe" which ends in German territory. It would be a substantial competitive advantage otherwise.
90% of imports blocked within the year
- The blockade will cut oil imports from Russia by two-thirds, according to European Council President Charles Michel. That is 90% if, as Ursula Von der Leyen did, we consider the commitment of Germany and Poland to do without Russian oil within the year.
Crude oil climbed to a ten-year high on Monday
The hypothesis of a ceiling on the price of oil (and gas) for purchases by EU countries in the event of an emergency did not stop crude oil's run on the financial markets yesterday. Both Brent and WTI rose on the reopening of the stock exchanges, returning to the highs of the last ten years, already reached last March: the first closing at 121,72 dollars (+1,91%), the second reaching 116,14 dollars per barrel (+0,93%).
Gazprom punishes Holland. No gas to Denmark
From today Gazprom suspends more than a third of supplies destined for the Netherlands. The GasTerra group - the main Dutch operator with 50% of the shares under public control - has decided not to accept the Kremlin's "blackmail" (the obligation to pay in tubles) and thus loses 2 billion cubic meters of Russian supplies (on 6 billion total destined for the country). Holland thus joins Finland, Poland and Bulgaria, already affected by the stop to supplies by Moscow. A list to which Denmark could be added: the blockage in this case could concern the Orsted group which in turn refused to pay with the ruble "system".
German inflation at 8,7%, hasn't happened since 73/74
German inflation rose more-than-expected in May, boosted by steadily rising energy prices since the start of the war Consumer prices rose 8,7% annually, up from 7,8% in April , said the Federal Statistical Office. A Reuters poll had estimated an overall annual reading for the German HCP of 8,0% in May. The cost of living at the EU level is also rising, anticipates Antonio Cesarano of Intermonte: “With the data from Germany, Spain and Belgium and those soon to be released for Italy and France, the preliminary inflation in the Euro area for May could reach 8% in place of the expected 7,8%.
Lane (ECB): two increases from 0,25% by September
Given these numbers, the rate increase is accelerating. Even the chief economist of the ECB, the dove par excellence Philip Lane, anticipated in an interview with the Spanish Cinco Dias that the ECB should raise interest rates with increases of 25 basis points in July and September. The risk of financial fragmentation within the EU is also increasing, admits Lane, but, he says, "we are aware of it and we will know how to contain it".
Euro superstar, the BTP exceeds 3% again
The tension on interest rates translates into a strengthening of the euro, to a five-week high at 1,075 (+0,3%).
The yield on the ten-year BTP crossed the 3% threshold again before closing at 2,98% (+9 basis points). The Bund with the same duration also rose to 1,05%. The spread is around 195 points.
The expectation of today's medium- and long-term placement also weighs on the Italian secondary, in which the Treasury makes up to 6,75 billion euros available to investors in the reopening of the 5- and 10-year BTPs, together with the CCTEU October 2030 .
The Bundesbank instead reopens the Bobl April 2027 for 3 billion.
Goldman Sachs: Italy at risk with the 2023 vote
According to Goldman Sachs, the risk of a new debt crisis is remote, but there are some elements of concern. Italy is in fact approaching the "yield limit", ie the threshold beyond which the yield on sovereign bonds causes an increase in the debt/GDP ratio, triggering a negative spiral. the yield on the 7-year BTP stands at 2,3%, not far from the sustainability limit, set by the American bank at 2,75%. A possible breakthrough, according to analysts, would require "significant reforms" to bring the debt-to-GDP ratio under control.
Stock markets on the rise, Beijing pushes luxury
Without the compass of Wall Street, closed for Memorial Day, continental stocks hit three-week highs today relying on good news from China.
- Piazza Affari appreciates by 0,7% to 24.808 basis points.
- Amsterdam leads the race +0,86%, driven by technology.
- Frankfurt +0,79%, Paris +0,72%. Little movement in London, +0,22%, flat Madrid, -0,06%.
- The luxury stocks are exuberant: the best is Kering +3,51%. Reny Cointreau also on the rise +5%
Like the unique operator, Tim takes flight
Brilliant performance by Tim +3,1%) after the signing of the memorandum of understanding which aims to set up a single fixed network operator, not vertically integrated, controlled by Cdp and participated by Kkr and Macquarie. For Equita, the agreement with the Cassa and Open Fiber will be worth 12 billion euros.
Interpump, the order portfolio likes it. Saipem enters the wind farms
Interpump's revenge +4,5% which recovers the lost ground on the momentum of Intesa Sanpaolo's upgrade from hold to add, even if the target has been reduced from 51 to 48 euros. The order book already covers 75% of 2022 sales and price management and production efficiencies are able to protect margins, Intesa analysts write in the note.
Significant purchases then on Saipem +2% which signed an agreement with Havfram Holding and Hvas Invest Kappa (a holding company controlled by HitecVision) to evaluate potential cooperation in the sector of development and construction of offshore wind farms.
Luxury shines: Moncler and Ferragamo +4%
Moncler and Ferragamo stand out at the top of the list with increases of more than 4% ahead of the luxury patrol: Aeffe +5%, Tod's and Cucinelli also rise. The anti-Covid restrictions in Shanghai fall from Wednesday.
Weak Generals, utilities in the red.
Little movement in banking sector stocks, essentially all above par. Goldman Sachs promoted buy Unicredit +0,8% and Intesa San Paolo +0,6%. Among the financials, a slight decrease by Generali -0,2%. Unipol also held back -0,8%.
The black shirt goes to utilities, down in the face of rate hikes. Losses below the percentage point for Itlgas, Hera, Terna and Snam. Enel-0,4%.
