Will a rate cut or two be enough to avert the onset of a recession? An absurd question, at first glance, on a day when statistics show that American consumer confidence is skyrocketing, well above analysts' estimates. But the data arriving from the markets warn that the race for money towards safe havens has now picked up speed: the US 2,24-year, traded at 0,16%, is at its lowest for two and a half years, while the German bund slipped yesterday to -2016%, lowest since September 1,48. The search for safe-haven assets pushes the yield on the 1,68-year bond of Australia (XNUMX%) and New Zealand (XNUMX%) to record lows this morning. In short, bonds rise and shares fall under the pressure of a geopolitical framework that does not bode well.
BEIJING THREATENS TO BLOCK RARE-EARTH EXPORTS
Beijing yesterday threatened to block exports to the US of "rare earths", minerals that are almost irreplaceable for the electronics industry. "Woe to underestimate our will to fight," warned the Army newspaper after Xi's visit to a plant in the sector.
In Europe we look with concern to June 5, the day of publication of the report of the European Commission on individual member countries. Italy should get away with it, for the moment, with a request for clarification, without fines worth billions. But it will only be the first act of a process that promises to be painful.
THE SHADOW OF WEIDMANN'S RISE TO THE ECB
In this scenario, the hopes of the markets are entrusted to the decisions of the central banks. But the ECB's room for maneuver is limited by the relay at the top of the EU leadership. For the succession to Jean Claude Juncker Manfred Weber, the parliamentarian of the Cdu indicated by Angela Merkel, loses share. The shares of the liberal Margrethe Vestager and the former chief negotiator with Great Britain, Michel Barnier, rose. But if Germany has to give up the most important seat, it will most likely be Berlin's turn to preside over the ECB. In this case, Mario Draghi will be replaced by the superhawk Jens Weidmann, who has always been hostile to Qe.
TOKYO AND SHANGHAI DOWN
Market performance reflects concerns this morning. The Japanese Stock Exchange loses 1,1%, while the yen strengthens against the dollar. Hong Kong's Hang Seng and Shanghai Shenzhen's CSI 300 are down 0,5%. The yuan weakens again, even if Washington has not included China among the countries that manipulate the exchange rate.
Same script in South Korea: Seoul Stock Exchange -1%, the Korean won weakens to 1.193. Since Donald Trump's visit to Tokyo, nothing new has emerged in the confrontation with Kim.
Weak close yesterday on Wall Street: Dow Jones -093%, S&P 500 -0,85%, Nasdaq +039%.
FEDEX LOSES HUAWEI CUSTOMER. A NEW CHIP FOR AMD
The tug of war on Huawei affects FedEx (-1%). The Chinese giant has canceled contracts with the US shipper after the failure to deliver documents addressed to China but still in the US.
Fly AMD (+9,3%) after the launch of a new chip in competition with Intel (-2,24%).
Against this uneasy backdrop, the dollar and oil are rising. The US currency advanced to 1,116 against the dollar. Analysts do not rule out a jump to 1,10. Brent is once again below 70 dollars a barrel, this morning crude oil from the North Sea loses 0,4% to 99,7 dollars a barrel.
Saipem rises in Piazza Affari (+1%) following S&P's decision to improve its outlook.
MOSCOVICI HOLDS BACK ON SANCTIONS TO ITALY
"Enough letters", thundered Matteo Salvini in the face of the prospect of EU sanctions on Italy. But a note of relaxation came from the staff of Commissioner Pierre Moscovici: "Commissioner Moscovici has always been in principle more in favor of dialogue than sanctions, since he believes that if the process reaches the stage of sanctions it is always and in any case a failure" . The spread, however, remains the special observation: in addition to Moscovici, another Frenchman spoke reassuring words yesterday about our shaky public finances. The governor of the Bank of France, Villeroy de Galhau, in fact declared: "Maintaining a context of low rates is necessary in the light of the economic situation in the euro area".
MILAN AGAIN BLACK JERSEY, SPREAD CLOSES AT 285
In this context, Piazza Affari confirms its worst price list for the second day in a row: -0,50% to 20.260 points.
The other European Stock Exchanges were weak: Frankfurt -0,43%; Paris -0,44%; Madrid -0,34%. Outside the single currency area, London (-0,27%) and Zurich (-0,4%) lost share.
At the close, the spread settled at 285 basis points, after having reached a maximum of 290.
The ten-year rate closed in the 2,69% area, up from 2,66% in the previous session.
The tension eased after the positive outcome of the auction on 3,75 billion between Ctz and Btpei, which in any case saw an increase in rates to 0,745%, an increase compared to the 0,697% of the previous placement.
Tomorrow it will be the turn of the offer of medium-long term securities. The Ministry of the Economy will make available to investors between 4,75 and 6 billion euros on four 5- and 10-year bonds.
SAIKAWA: “FCA-RENAULT CAN BE AN OPPORTUNITY”
Nissan's first reaction to theFCA-Renault operation: "It could present opportunities, but I want to evaluate it more closely from our point of view," said the CEO of the Japanese company, Hiroto Saikawa, this morning. Given the terrible state of the latest relations between Renault and Nissan, this is a good start.
A day of ups and downs yesterday in Piazza Affari for Fiat Chrysler (-0,89% at the end), which is consolidating after the sharp rises on the eve. Numerous comments from analysts:
Banca Imi estimates a potential value creation from the merger of 2,4 euros in addition to the target of 15,1.
Mediobanca Securities brings the target to 17,5 from 13,7 euros, considering "the cost cutting resulting from the merger".
For Banca Akros the ev/ebitda multiple implicit in the transaction is approximately 0,5 times, when FCA trades at approximately 1,3 times and on average the European automotive industry at approximately 2,5 times.
For Equita Sim, the deal is "certainly accretive, with good geographical and product integration and synergies that are at first glance superior to the classic ones: 3% of the combined cost base compared to our idea of 2%" has a good chance of being approved .
BANKS STILL UNDER PRESSURE, TIM SPOTLIGHT
The Moscovici effect was also a tonic for the banking sector, already a victim of the tensions on the spread. The titles of the Big names have recovered from the lows: Unicredit -1,44% under ten euros, Intesa Sanpaolo -1,11%.
Fineco Bank suffers (-2%). Ubi Banca -0,22%. Patto dei Mille, a group of 95 investors, announced that it had doubled its stake in the bank, rising to 6,94%.
In great evidence Tim (+2,04%) thanks to a technical rebound after having touched the all-time low. The title is worse than the European sector Eurostoxx Tlc +1% and the Ftse Mib +11%.
Tim's rebound (+2%) should be noted. There is no agreement on the value of Open Fiber, so the negotiations with Enel and Cassa Depositi e Prestiti are not going ahead.
Cementir (+1%) has decided to transfer its registered office to the Netherlands. Salini Impregilo goes down (-2,3%). The agreement on the balance of power in Progetto Italia, the future Italian construction champion, is ready: Salini will appoint the managing director and the general manager, the president will be an expression of the CDP.
