“Extraordinary times require extraordinary actions: there are no limits to the willingness to use all the means at our disposal to protect the euro”. So tonight Christine Lagarde announced the launch of Peep, the "emergency plan against the pandemic", approved overnight by the ECB: 750 billion euros to be spent without constraints of any kind, more than the amount allocated by the US. In short, you buy it when you need it, in the quantity you need. Purchases will be about both government-issued and private-issued securities. The bank will buy short-term commercial paper issued by firms. The ECB warns that it intends to pursue to the end what is envisaged by the mandate received, but also beyond, since, if there should be problems, posed by the statute, the opportunity will be immediately evaluated to review the rules that risk hindering action to support economies.
US FUTURES TODAY DOWN 4%. BOEING -26%
A historic decision, which overturns the uncertain policy followed up to now by the Central Bank, a choice imposed by the emergency which is worsening globally and which, after eleven years of growth, has decreed the start of the recession. In 24 hours the number of deaths in Italy increased by 475 people, an increase never recorded even in China. There are a total of 28.710 infected, but the recovered are also growing: they are 4.025.
Yesterday the markets experienced the harsh law of cash is king. The sales involved all types of assets, including traditional safe-haven assets, swept along with oil, which plunged to a 17-year low. While waiting for the ECB's capital to produce effects, the markets thus remain at the mercy of the crisis.
Wall Street's S&P500 index future is down 4%. The Dow Jones closed down 6,3% last night. S&P 500 -5,2%, Nasdaq -4,75%.
With yesterday's decline, the US markets erased all the gains of the Trump era. Boeing, the worst stock, dropped 26%.
The Asian Stock Exchanges are down this morning. Tokyo's Nikkei -1,5%, Shanghai Composite -2,5%, Hong Kong's Hang Seng -4%. Seoul's Kospi loses 7,5%: tonight the South Korean government announced the creation of a fund to be used in market stabilization: the Korean won loses 3,7%.
Brent oil rebounds this morning from the lows of the last 19 years reached yesterday: this morning the North Sea crude is trading at 25,8 dollars a barrel. Yesterday West Texas Intermediate lost about 20% to $21 a barrel, and Brent was down 10% to $27 a barrel.
Gold down 0,9% to $1.472.
ALSO IN EUROPE CASH IS KING, A TORPEDO FROM VIENNA
Before tonight's turnaround, the European markets experienced a day of high tension, conditioned by the thirst for liquidity and by the alarm for BTPs, once again the weak link in the euro chain. Yesterday European banks procured as much liquidity as possible in dollars, drawing 112 billion from the special 130 billion line made available by the Federal Reserve. The operation took place under the direction of the European Central Bank: 15,5 billion went to the British banks and the rest to the Swiss banks.
It was also a day dedicated to correcting the communication errors that favored the attacks of speculation.
Bank of Italy has sent a letter to New York Times who yesterday questioned the resilience of Italian banks in the face of a speculative attack. Via Nazionale countered by emphasizing the progress on the Npl and heritage front. Since May 2019, recalls the Bank of Italy, Italian banks have sold, net, 40 billion euros of government bonds.
The most insidious torpedo was launched by the governor of the Austrian central bank, Robert Holzmann, saying that "monetary policy is at its limits": then he backtracked. The widening of the spread "has thus become a test of credibility for the European Central Bank". And the central bank took the opportunity to make amends after Christine Lagarde's gaffe, who said that "it is not the ECB's job to reduce spreads".
CONSOB AND ECB PROTECT THE BANK OF ITALY
Piazza Affari, already protected by the ECB's purchases of government bonds and by Consob's bans on short selling for three months, has escaped a new collapse. The index, at the end of another day marked by volatility, closed with a drop of 1,27%, at 15.120 points.
The balance of the other markets is much heavier: Frankfurt -5,47%; Paris -5,94%; Madrid -3,14%; London -3,97%.
The spread, which in the late morning broke through the ceiling of 300 points for the first time since 2018 (maximum at 326), then returned to 260, for a yield on the BTP that rises to 2,24, after having in the morning 3%.
Monetary policy is moving, some countries are changing on the fiscal policy front. For the German Finance Minister, Olaf Scholz, an excessively rigid interpretation of the European budgetary rules must be avoided, with countries like Italy having to spend billions in support of an economy heavily affected by the epidemic.
THE CAR CLOSES ITS DOORS, FCA -11
The automotive industry went down. Fiat Chrysler leaves 10,85% on the ground. After the halt to production in Europe, yesterday it was the turn of the shutdown, agreed with the other producers, of the plants in North America. The market looks with some apprehension at the collapse of prices and wonders if it could create problems for the merger with PSA (-3,65%).
Sales pressure also continues on Cnh Industrial (-13,13%).
But there are positive notes: Ferrari +1,07%, Brembo +9,69% (in less than 4 months the company's capitalization has almost halved). Pirelli is also progressing (+5,8%).
Among the industrialists, Stm goes down, following on from US semiconductors. Morgan Stanley reduced the target price from 30,5 to 26 euros, confirming the overweight recommendation. Leonard -9,5%.
BUT CAMPARI AND TIM TAKE OFF THE FLIGHT
The pink jersey in the price list goes to Campari (+10,66%): the plans to transfer the headquarters to the Netherlands have jeopardized by the declines in the Stock Exchange. A bis meeting has been convened to review the terms of the withdrawal rights.
A breath lower closes Tim (+9,94%), on the second day of recovery in forced stages. Equita Sim confirmed the buy recommendation, with the target price going from 0,64 to 0,5 euro, a level that remains well above the current Stock Exchange prices of the stock.
TLCs are the liveliest sector in Europe; the Eurostoxx index recovers 1,8%.
Utilities follow: Snam +5,26% to 3,9 euros, promoted by Banca Akros from accumulated to buy (Target at 4,9 euros) on the eve of today's accounts. Terna +4%, Enel +2,97%.
STILL UNDER FIRE AGREEMENT, NEXI BELOW THE IP PRICE
Negative banks at the mercy of the spread. Banks are also down, at the mercy of the spread. Among the big names Unicredit holds (-0,14%), sales are concentrated on Intesa (-2,95%, after having suffered a decline of more than 5%). Mediobanca closes at -5,8%, with Kepler Cheuvreux confirming the buy rating, with Tp reduced to 9 euros from 11,6 euros.
In the poorly managed Azimuth (-3,9%). Fineco +1,81%, to 7,52 euros, after Kepler Cheuvreux raised the stock recommendation from hold to buy, with the target price dropping from 10,8 to 9,7 euros.
Nexi (-8,4% to 8,8 euros) slipped below the price of the recent placement.
Under the lens of Technogym analysts (-1,17% to 5,93 euros), after the 2019 accounts. Kepler Cheuvreux reduced the target price on the stock from 9,4 to 5,8 euros, confirming the hold recommendation. Rebound tests in luxury. Moncler +1,85%, Tod's recovers (+12,9%).
