“I am Tariff Man”. This time Donald Trump's tweet has really triggered panic on the stock market and contributed to the alarm that has swept the bond markets around the planet. "When people or countries try to plunder our nation's great wealth - wrote the President - I want them to pay for this privilege". In other words, behind the truce heralded by Washington, there is no agreement but the prospect of a tough confrontation. The markets didn't take well to the verbal games of the White House, on the eve of the US national day of mourning in memory of George Bush, a president with a different style.
Hence the spark of a violent decline that affected all the lists, saved this morning by the providential intervention of Xi Jingping, who calmed the spirits of the markets. A note from China's Ministry of Commerce lets it be known that Beijing hopes that the agreement reached during the summit between the two heads of state will be implemented quickly. The effect of these words served to stop the advance of the Bear in the Stock Exchanges.
SHANGHAI ON PARITY, THE YUAN WEAKER
The CSI 3OO index of Shanghai and Shenzhen stock exchanges are on par, from -1,3% tonight. Japan's stocks cut losses but remain down: Nikkei -0,3%.
No recovery for Hong Kong's Hang Seng: -1,4%. The South Korean Stock Exchange is also down: 0,7%.
The Chinese currency is once again weakening against the dollar, after a two-day rally: dollar-yuan cross at 6,86. The Japanese yen and the euro also depreciated, to 1,132.
THE NASDAQ COLLAPSES BUT ALSO THE PMI INDEX
But the violence of Wall Street's reaction and, above all, the rise in bonds, heralding the risk of recession, demonstrate that the markets under stress are now convinced that the season of the rise is now behind them. A strong signal on the eve of the decisions that will have to be taken by the Fed and the ECB in the coming weeks. New York Fed chairman John Williams said the Fed could revise the hikes planned for next year (no more than two).
Wall Street experienced a day of violent declines: Dow Jones -3,1%, S&P 500 -3,24%. The Nasdaq does worse (-3,8%).
The Russell 2000 drop is impressive: -4,4%, the heaviest drop in seven years that has hit the list of small and medium-sized enterprises, generally immune to export problems. It is confirmation that the malaise is not limited to duel with China.
Both Boeing -4,9% and Caterpillar -6,9% are down sharply.
THE T-BOND CURVE AT THE LOWEST SINCE 2007
What is frightening is the rate curve, increasingly flat and closer to inversion, an event that in financial history has always anticipated (with one exception) the arrival of the recession. The spread between the yields of the two-year and ten-year government bonds fell to 12 basis points, the lowest since 2007.
Oil also reversed course this morning, on the eve of the OPEC summit. Crude oil is down 2% to 61 dollars a barrel, from +0,6% yesterday.
Saudi Arabia has scaled back the expectations of those who expect an agreement on a large cut in production: oil minister Khalid al Falih said it was early to reach similar conclusions. Eni closed yesterday at -0,7%.
Gold, which reached its highest level since June yesterday, is down slightly to $1.235 this morning.
EUROPE IN REVERSE. ALLIANCE BETWEEN FORD AND VOLKSWAGEN
Even in Europe, the rally triggered by the truce between China and the United States lasted just one day. Thus the sectors most sensitive to the progress of the trade negotiations between the two superpowers have put into reverse gear, starting with the car, which was braking on the day of the mission of the Big Germans overseas, in which a sensational negotiation was confirmed: Ford and Volkswagen are ready for an operational (but not financial) alliance between manufacturers by sharing plants and investments in electric and self-driving cars.
In the meantime, however, pessimism has gained the upper hand on the market, growing gradually as the wave of sell-offs that gathered speed after the European closure was gaining strength on Wall Street. And so, despite the stagnation of the US markets, stopped today for the funeral of President George Bush, the premises for today's session are not positive. In addition to the unknown tariffs, the rise in market rates weighs heavily and, even more so, the inversion of the yield curve which began in the USA but which has infected European markets.
TRADE PLACE LIGHTING UP, BATTLE IN LONDON
Milan gave back a large part of the gains on the eve, again bringing up the rear of the Eurozone: the index closed with a loss of 1,37% at 19.353 points on trading for 1,7 billion.
The other lists of the Old Continent were weak: Frankfurt -1,14%; Paris -0,82%; Madrid -1,28%.
London -0,56%, at the mercy of the pound's fluctuations, in turn conditioned by the agitated start of the parliamentary debate on Brexit. The government went under twice yesterday on questions of method, even before the debate on the merits opens. Meanwhile, the Advocate General of the European Court of Justice, in an official opinion released this morning, declared that the British Government will be able to unilaterally reverse its decision to leave the European Union and remain in the bloc without the approval of its European counterparts, invoking Article 50 of the EU Treaty.
The government is studying "various possible options" to find an agreement with the European Commission and defuse the formal opening of an infringement procedure for excessive deficits. The Minister of Economy, Giovanni Tria said it yesterday evening, in a meeting in the Chamber, speaking of "limited times" for the solution of the negotiations. "The political priorities of the government must be safeguarded and carried forward", guaranteed the minister to the parliamentarians of the majority, but for now the agreement, which must go through the "reconfiguration of the basic income and the 100 quota on pensions" still does not exist And". And the rumors about his possible resignation are thickening.
BUND TO THE STARS, THE BTP KEEPS THE PACE
The bond markets are under great tension under the pressure of the drop in US Treasury yields, which has conditioned the performance of the debt market in Europe as well. Under buying pressure, the yield on the 0,27-year German Bund dropped to XNUMX%, a level it hasn't seen for four months.
The 10-year Btp traded at 3,15%, from 3,14% yesterday. The spread returned to 290 points, compared to 284 at yesterday's closing, to then retreat slightly and close at 289.
BENCH BPM WITHSTANDS TENSION
The turbulence on the debt markets made itself felt in the banking sector, which dropped an average of 2%. Ubi falls by 3,5%, losses exceeding 2% for Intesa and Unicredit.
The exception was Banco Bpm (+0,41%) after the consumer credit agreements with Crédit Agricole. Equita Sim raised its target price from 2,9 to 3,1 euro, confirming the buy recommendation; Mediobanca Securities raised the target price from 1,85 to 2,35 euro, with a neutral rating and JP Morgan raised the target price on Banco from 2,2 to 2,4 euro, with a neutral recommendation.
CARS AND TECH IN WITHDRAWAL, MEDIASET NEGATIVE
Industrialists are under pressure. After yesterday's leap, automotive stocks closed negatively: FCA limited the decline to 1,97%, Pirelli (-3,23%), Brembo (-3,04%) did worse. Bringing up the rear was Cnh (-3,8%).
Same script for tech stocks: Stm -3,2%, Prysmian -4,22%.
Mediaset was also negative (-1,49%): the civil case with Vivendi was postponed to March 12 next year.
CAMPARI AND UTILITIES, DEFENSIVE PAR EXCELLENCE
Campari (+0,88%) confirms its reputation as an anti-cyclical stock for the most difficult days. The utilities also hold: Snam +0,49%.
Diasorin (+0,5%) was also on positive ground at the end of its first session among the Big names of the FtseMib to replace Luxottica.
THEY KEEP PIAGGIO AND SAFILO
Holds Piaggio (+0,22%): Banca Akros confirmed the buy opinion, with a target price of 3,1 euros, judging favorably the data on two-wheeler registrations in Italy in November.
Safilo was also positive (+1,55%). However, Kepler Cheuvreux reduced the target price from 0,93 to 0,8 euros, confirming the reduced recommendation. Analysts have updated their estimates to take into account the 150 million euro capital increase.
