The soft escalation of the trade war has kicked off in a somewhat surreal climate. At 6 this morning, Italian time, the increase to 25% of US tariffs on 200 billion dollars of Chinese goods took effect. Beijing has taken note of this, anticipating that retaliation is on the way. But the acts of war have been accompanied by more than conciliatory declarations. Donald Trump has revealed that he has received "a beautiful letter" from President Xi. Meanwhile, talks between White House staff and Chinese Deputy Prime Minister Liu He continue today in Washington. And war, although declared, has not yet broken out: the new duties apply to goods about to leave the ports of China, but not to those already at sea: they are not retroactive. This means that the measure will be effective in about three weeks, the time it takes for merchant ships to cross the Pacific. There is therefore more time to negotiate and reach an agreement: if we do, the increase introduced today would be cancelled.
UBER ENTERS WALL STREET AT $82 BILLION
Faced with such a complicated situation, the markets are starting to end the worst week of the year on a note of optimism.
The US markets, albeit in the red for the fourth session in a row, have more than halved their losses. The S&P 500 index closed at -0,3%, recovering from the lows of the session at -1,5%. Dow Jones -0,5% (from -1,7%), Nasdaq -0,4% closing against a low of -1,9%.
Uber pays a price for the weakness of the price lists: the offer of the securities on the market will take place at 45 dollars for a total value of 82 billion dollars, at the lows of the range. At the beginning of the week there was a bet on a total price of around billions of dollars.
China's stock markets are up. The Csi index of the Shanghai and Shenzhen stock markets gains 1,7%, after having reached a maximum of +3%. Hong Kong also rose (+0,8%). On the other hand, the Tokyo and Seoul stock markets fell slightly, on the Mumbai parity.
TAX WAR AFFECTS T-BOND AUCTION
The yuan against the dollar improved, albeit slightly, to 6,8191, after the sharp declines experienced in a week which saw, among other things, the partial flop of the ten-year US Treasury bond auction. The $27 billion offering had the lowest supply coverage rate in a decade. Overseas demand, an indicator of Chinese participation, was subdued.
China cannot completely abandon the US Treasury auctions, but it could replace part of its hard currency reserves with gold, stable this morning at 1,283,50 dollars an ounce.
Oil prices are also improving, linked more than ever to the trend in relations between the two big companies which together account for 34% of world consumption. Brent trades at 70,41 dollars a barrel after reaching a maximum of 71,23 dollars.
Down yesterday in Piazza Affari Eni -0,8% and Saipem -3,6%.
BUSINESS PLACE LANDSLIDE BELOW 21 THOUSAND POINTS
In short, the stock exchanges have chosen to look at the glass as half full, but the general situation remains at high risk. Futures, however, signal an increase in the lists, both in the US and, above all, in the European markets which closed yesterday before the easing signals launched by President Trump.
Piazza Affari on the fourth day of decline yesterday pierced the wall of 21 thousand points, closing the day at 20.81, down by 1,82%, after trading for 2,69 billion, with an increase of 290 million euros, equal to 12,58%, compared to the previous 2,3 billion.
Frankfurt did little better (-1,69%). But the black jersey belongs to Paris (-1,93%), dragged down by the thud of Kering (-2,73%, the subsidiary Gucci yesterday closed a dispute with the tax authorities for 1,25 billion) and of the another luxury battleship, Lvmh (-2,23%). But the record drop, worthy of the Guinness Book of Records, belongs to Ajax: -20% in Amsterdam after elimination from the Champions League. Juventus (+1,53%) are better than in Milan, a meager consolation, they are among the few stocks to close in positive territory dragged by the rumors about the possible return of Antonio Conte to the bench.
The black day is completed by Zurich (-1,93%), Madrid (-1,43%) and London, the least worst, down by 0,92%.
THE SCISS WITH BUNDS AT 273. AT AUCTION 6,75 BILLION BTPs
Complicating the situation on the Italian market is the new worrying increase in the spread to 273 basis points compared to yesterday's 267, while the 2,68-year rate has moved into the 2,62% area, from yesterday's 0.06%, in contrast with the the rest of Euroland hit by purchases on the euro following the closure of operations on emerging currencies, confirming that, thanks to sub-zero rates, the common currency is now used for carry trades, on a par with the yen. The XNUMX-year Bund closed up XNUMX%.
In the evening, the Economy Ministry announced that on Tuesday it will offer the market between 5,25 and 6,75 billion euros in 3, 7 and 30-year BTPs during the mid-month medium and long-term auction.
Meanwhile, Ireland has placed an issue for 4 billion maturing May 15, 2050: requests from operators have exceeded 18 billion euros.
WEIGH THE UNKNOWN CARIGE. RAIN OF SALES ON BANCA BPM
However, Treasury concerns yesterday focused on Carige, after Blackrock decided to withdraw from the bailout plan. At this point, it seems difficult to avoid systemic intervention, but Prime Minister Giuseppe Conte takes it philosophically: "one door closes, another opens" he said, underlining that the institute is "in a condition of financial sustainability , therefore there are all the extremes to pursue a market solution with complete tranquility". Minister Giovanni Tria is less Olympian who, however, does not despair of a solution in extremis.
Much more worried is the reaction of the credit sector, which sees a new emergency materialize in an already very delicate moment on the debt front in full political tussle just a few weeks after the European vote on 26 May.
Banco Bpm-6% pays a high price in the face of braking data. In the first quarter, total revenues amounted to 1,06 billion euros, -9% year on year. The two most important items, the interest margin and commissions, fell more than expected. Common Equity Tier 1 improved to 11,8%, from 11,54% in December. Kepler Cheuvreux cut the judgment to Reduce. Equita Sim, for its part, lowered the target price from 3 to 2,8 euro, confirming the buy rating.
Monte Paschi loses 4,4%: the bank controlled by the Treasury closed the quarter with a profit of 28 million but with a sharp contraction in revenues. -8,5% to 803 million after the decline in net commissions and interest margin.
Even the big names suffer. Unicredit leaves 2,1% on the ground. In the first quarter total revenues fell by 3% year on year to 4,92 billion euros, better than forecasts thanks to the good result of trading activities. Costs decreased by 4%, to 2,61 billion. Common Equity Tier 1 at 12,25%. The incidence of non-performing loans is the lowest among Italian banks, equal to 7,6% of the total.
Intesa Sanpaolo (-1,8%) pays for being considered the system bank, an inevitable partner for any restructuring operation on the credit market.
MANAGED SAVINGS ALSO HOLDS BACK
Asset management companies are down, targeted when the appetite for risk falls. Azimuth -7% after the quarterly. Both profit, which rose to 91 million euros, and revenues (247 million euros), beat consensus estimates. Anima Holding was also heavy (-4,55%). Banca Generali -1,9%: KeplerCheuvreux cuts rating to Hold. Banca Mediolanum-2%.
LEONARDO SHINES, MILAN FLOWS
Among the (few) positive voices Leonardo (+3%). L'first quarter profit rises by 54% to 77 million euros, better than forecasts. The company confirmed the achievement of the 2019 objectives.
Terna is also advancing (+1%) which closed the first quarter with an Ebitda of 420 million euros, in line with expectations. Debt at 7,9 billion.
The best title was Fiera Milano (+8%). Equita raises the judgment to Buy. Amplifon +3% and Piaggio +4% also did very well.
Given the difficult day, Enel also defends itself (-1%). The first three months of 2019 they close with an Ebitda of 4,5 billion euros, up 14% year on year, better than expected, also due to the effect of a positive extraordinary item of 160 million. Net ordinary income at 1,16 billion euro: +11% year on year. Debt up by 4 billion euros, compared to the end of December, to 45,1 billion euros.
Ferrari (-1%) interrupted the positive streak. Morgan Stanley ups the ante on Overweight. Fiat Chrysler (-4%) pays the tensions on the duties as well as Stm (-5,04%), Prysmian (-4,52%) and Cnh (-3,84%).
