Stock markets in the red and government bonds on the rise on the markets today, shaken by the concerns expressed by Elon Musk on the future of the economy and by the growth beyond expectations of jobs and wages in the US, which is read from a Fed perspective and raises fears of a greater squeeze than hoped for. Investors fear that the change in monetary policy could trigger a recession, even if the US president, Joe Biden, try to send a reassuring message: we will lower inflation – he says – without affecting growth, indeed we will run faster than the Chinese. However, the services PMI for May is below estimates.
In any case, the macroeconomic scenario supports the dollar. The euro is trading slightly lower against the greenback around 1,071. Oil travels sustained without worrying about the increase in production decided yesterday by OPEC+. Brent appreciates by about 1% around 119 dollars a barrel.
Milan in black jersey; fly the spread
Piazza Affari closes in the dark in Europe and loses 1,06%, falling to 24.166 basis points, with the banks weighing down the list, while the spread flies and widens to 213 points basis, +4,09% compared to yesterday's close. The 3,4-year BTP yield hits a four-year high and closes at +1,27%, while the Bund rises to +XNUMX%.
In the words of former minister Pier Carlo Padoan "the Italian debt is seen as a critical factor as unfortunately happened a few years ago. So it is a further theme to be included in a context of recovery of growth but also of debt reduction".
In equities, the declines are more contained in Amsterdam -0,39%, Paris -0,23%, Frankfurt -0,16%, Madrid -0,16%, in a context of reduced trading due to the absence of London, always celebrating the 70th anniversary of the reign of Elizabeth II.
Wall Street down with Tesla
Wall Street opened lower and is continuing on the path of losses thanks to the crash of Tesla (-8%), after the CEO Musk, in an email, said he had "a very bad feeling about the economy" and invited executives to cut 10% of jobs. Musk's concerns add up to those seen in recent days by other leading players in the American economic and financial scene.
Coinbase Global Loses 8,7% after the cryptocurrency platform announced an indefinite hiring freeze. Apple is the worst stock on the Dow Jones, -4,41%, perhaps concerned by the news that EU parliamentarians and states are close to an agreement for the single loader, a prospect that the Cupertino-based company does not like. Among the big techs Meta still falls back (-3,7%).
Jobs are growing in the US
Last month in the United States were 390.000 jobs gained (excluding the agricultural sector), well beyond expectations. The April figure was revised from +428.000 to +436.000, while the March figure was reduced from +428.000 to +398.000. Unemployment remained at 3,6%, the best figure since the start of the pandemic, with expectations for a drop to 3,5%. Average hourly wages have increased by 10 cents, 0,31%, to $31,95; compared to a year earlier, they increased by 5,24%. The average working week remained unchanged at 34,6 hours. Labor force participation increased from 62,2% to 62,3%.
The predictions of one central bank increasingly hawkish, weigh on T-Bonds, which show falling prices and rising rates. The ten-year mark marks +2,946%.
The service sector in the euro area slows down
With central banks under pressure for a monumental change in monetary policy and investors worried that this could curb economic growth, the slowdown in the service sector in the euro area.
According to the PMI indices, defined with interviews with purchasing managers, in the area of the single currency, the services sector in May fell to a minimum for two months, i.e. to 56,1 points, remaining in any case well above the 50 separating contraction from expansion. In Italy the decline is 53,7 points.
Not only Europe and the USA are grappling with inflation and growth risks, even if not all central banks react in the same way. Turkey, for example, goes against the trend, even if inflation on an annual level has touched shows an impressive increase, +73,5%, to the highest levels of the last 20 years. On a monthly basis, the price run slowed down to 2,98% from 7,25% in April against market expectations of 4,8%.
Leonardo shines in Piazza Affari
On a rather dark day for the main Milanese price list, brlla Leonardo +1,96%. The public company, active in the defense, aerospace and security sectors, is favored by sales expectations of Oto Melara, of which he is the main shareholder. With war underway in Eastern Europe and the continent's defense industry in turmoil, Reuters reports that Germany's Rheinmetall has formalized a non-binding offer for 49% of the historical Italian manufacturer of artillery and armored vehicles, with the possibility in the future to take over a further 2% and become the majority shareholder. Thus it is inevitable that analysts wonder about the possible assessments and timing of the potential agreement, but also about the choices of the Italian government which could resort to golden power.
Among the few positive blue chips of the day there are also Eni +1,32%, Terna +0,67% and Iveco +0,16%.
The markdowns concern above all financial securities and the car, after recent gains. At the bottom of the list are Finecobank -4,1%, Bper -3,4%, Stellantis -3,31%, Banca Generali -2,89%.
They also go down health titles, Diasorin -2,94% and Recordati -2,9%.
Tenaris limits the damages to 0,32%, after having come to lose more than 2% following the agreement with the US Sec, for a payment of over 78 million dollars, to close the investigation into alleged bribes to obtain orders from Petrobras.
