The trade war is not over yet, but the markets are already looking ahead, convinced that the peace process between China and the US has now begun. Optimism prevails, even if there are clouds, at least in the skies of Europe. But the pound's recovery (+1,09% to 1,3063 against the dollar) confirms that traders are hopeful that Theresa May's mission to Brussels today could lead to some progress in averting a hard Brexit.
THE YUAN IS STRENGTHENING, AS TRUMP WANTS
Meteo Borsa reflects this morning's positive attitude, albeit with some reservations. Tokyo is starting to close up: the Nikkei index (+0,75%) rises to a two-month high, despite the disappointing data on the trade balance in January. Exports fell by 8,4%, from -3,8% in December 2018. Trade with China, the largest trading partner, suffered, down by 17%. The yen weakened against the dollar for the third consecutive day, at 110,8.
Instead, the Chinese yuan rose to 6,72 against the dollar. It's a good sign, observers rejoice because among the US requests to Beijing there is also that of stabilizing the currency.
The expectations of a peace on trade between Beijing and Washington, together with the conviction of a new series of aids from the central banks, thus prevail over the data which confirm the slowdown of the economy. The Hong Kong Stock Exchange gains 0,7%. Taipei +0,7%, Seoul +0,3%, Mumbai +0,5%. On parity the CSI 300 index of the Shanghai and Shenzhen stock exchanges.
WALL STREET AWARDS WAL-MART AND AMAZON
Wall Street was also positive with some reservations: Dow Jones +0,03%, S&P 500 +0,15%, Nasdaq +0,19%.
Wal-Mart shines (+2,2%) after excellent balance sheet data. Amazon also performed well (+1,2%) which is negotiating the purchase of Kaola, a large Chinese e-commerce platform.
WILLIAM (FED): RATES STILL, BUT WE WILL CUT THE BUDGET
“Before raising rates we should have robust indications on the front of growth and inflation”. While awaiting the minutes of the last meeting of the US central bank, expected for today, John Williams, president of the New York Fed, took care of updating the markets on the next moves of the institute: no hikes on the horizon but, to temper enthusiasm, Williams reiterated that he will continue to drain the liquidity poured into the markets during the crisis. “Let's say – he explained in an interview – that we could go down to one trillion dollars, more or less 600 billion less than today”.
THE GOLD MARCH CONTINUES
Worth noting is the march of gold, which reached its fifth consecutive day of upside, at 1.342 dollars, on its highest level since May 2018. The yellow metal continues to make the most of the prospect of an increasingly favorable scenario, created by a combination of low rates interest rates, dollar stabilizing and geopolitical tensions (Venezuela).
Brent oil is little moved at 66,3 dollars a barrel, since the beginning of the week the price fluctuations have been modest.
THE ITALIAN INDUSTRY DISRUPTS, THE DESIRE FOR TLTRO IS GROWING
Undersecretary Giancarlo Giorgetti was an easy prophet: the encore maneuver is approaching. But it was not easy to predict that the landslide of the Italian economy would be as deep as it emerged yesterday from the Istat data. The latest macroeconomic data in Germany and Italy confirm the ongoing deterioration of the European economic situation and pave the way for an upcoming massive intervention by the ECB to support growth (LTTRO). Euro little moved this morning at 1,134 against the dollar.
BREXIT EFFECT: HONDA LEAVES ENGLAND
The Milan Stock Exchange interrupts its long positive streak: Piazza Affari closes down by 0,5%, at 20.228 points. Frankfurt is almost flat (-0,07%). The Zew business expectations index fared better than expected at -13,4 points (versus -15 in January). Paris (-0,15%) and Madrid (-0,22%) were also down.
London -0,57%. The president of the EU Commission Jean Claude Juncker will meet the British premier Theresa May at 18.30 in Brussels today.
Meanwhile, the Honda automotive group has decided to close its production plant in Swindon, eighty kilometers from London. Justin Tomlinson, the MP elected in the area where the automotive factory is located, communicated the company's intentions, probably worried by Brexit.
ITALY, INDUSTRIAL ORDERS DOWN 5,3%
Bad data coming from the real economy of the Bel Paese. Last December the seasonally adjusted index of industrial orders it fell 1,8% month over month from a revised -0,4% in November. The seasonally adjusted turnover index fell by 3,5% in quarterly terms after a decline of 0,1% the month before.
Year-on-year, Raw Orders fell 5,3% versus a revised -2,2% the previous month, the largest negative change since July 2016. Full-year Raw Orders up by 2018% on 2. Calendar-adjusted revenue fell by 2017% – the worst figure since November 7,3 – from +2009% in November. For the whole of 0,5, the raw turnover figure marks an increase of 2018% on 3,2.
THE SPREAD RISES THEN HOLDS OFF, OFFERING 3,5 BILLION CTZ AND BTPEI
These numbers weighed on the Italian bond market causing an increase in yields and the spread, which was partially reduced in the afternoon. Having risen to 276 basis points, the differential between the yields of the Italian ten-year benchmarks stopped at 265 in the end.
The 8-year yield rises by 2,81 basis points to 273%, spread XNUMX. It had started well after the NO of the pentastellato poll on Salvini's trial for the Diciotti case.
At the auction on Friday 22 February, the Treasury will offer between 2,5 and 3,5 billion euros in the November 2020 CTZ and the May 2023 and September 2032 BTPEIs.
THE CYPRUS CARD RETURNS TO THE MARKETS
In the meantime, sovereign issuers continue to press on the accelerator to offer as much paper as possible to a market which, at this stage, seems to enjoy a gargantuan appetite.
Cyprus yesterday placed a new 15-year benchmark bond, worth 1 billion euros, with a rate of 175 cents over the midswap curve.
France placed the new OAT of 25 May 2050 for 7 billion, forfeiting orders for 31 billion.
BANKS ARE HOLDING DOWN, MANAGEMENT DOWN TOO
A mixed day also for the stock market. Banks suffered in particular despite the confirmation by the undersecretary to the prime minister, Giancarlo Giorgetti, on the renewal of the Gacs (public guarantee on the securitization of bank non-performing loans) after the early March deadline.
The sector index, up 9% from the beginning of the year, dropped 0,98% due to the sales that raged on Ubi Banca (-3,59%) and followed by Unicredit (-1,41%). Banco Bpm (-0,58%) and Intesa San Paolo (-0,46%) were weak. Unchanged Bper.
Asset management is also bad: FinecoBank (-2,22%) and Banca Generali (-2,72%) suffer in particular.
AMPLIFON FALLS, PIRELLI AND CNH DOWN
In the industrial sector, weak Pirelli (-2,06%) and Cnh Industrial (-1,36%). Ferrari leaves 0,13% on the ground. Unchanged Fca.
The day's balance was heavy for Amplifon (-3,77%): the stock has a positive balance of 11% since the beginning of the year and this drop, according to a trader, represents a new buying opportunity.
