Worse than in the thirties. The forecasts of the Monetary Fund strike like lightning on the global economy. No one, with the partial exception of China, will escape the recession brought on by the coronavirus outbreak. But Italy will be the hardest hit. The words of Gita Gopinath, chief economist of the IMF, fall like boulders on the markets.
The global economy slowed by 4,2%, much more than during the 2008/09 recession, when the decline was 1,8%. The combined loss for the next two years could reach $9 trillion, more than the entire GDP of Germany and Japan combined.
The GDP of 90% of the countries will end the year down compared to 2019. Between the last quarter of last year and the first half of 2020, the drop averaged 12% for advanced countries.
The Fund's analysis, even worse than the already gloomy estimates, has provoked very different reactions in the capitals of the world economy.
The Asian stock exchanges are feeling the pinch, but to cushion the shock, we were penalized by a new easing of credit decided by China. The Shanghai Stock Exchange closes at -0,2%. Weak Tokyo (-0,5%) after strong gains on the eve. The other Asian markets rose modestly, including the Korean Kospi, on the eve of the elections, the first real political test for a country hit by the Coronavirus.
In the US, polls anticipate a race for the last vote between Donald Trump and challenger Joe Biden, launched by Barack Obama. As usual, the president is attacking and contemplating, against the advice of many governors, restarting the economy at the beginning of May. And in the meantime he has cut contributions (400 million dollars) to the World Health Organization, guilty of not having raised the alarm on the epidemic in time, which he denied until the end.
AMAZON AND APPLE ARE RUNNING, TESLA FLYING BACK
Wall Street's reaction was immediate: Dow Jones +2,39%, S&P 500 +3,06%, Nasdaq +3,95% driven by Amazon (+5,3%) and Apple (+ 5,1%), which celebrates the recovery of sales in China.
The most sensational leap is that of Tesla: +28% in three sessions, price again over 700 dollars, for a market value double that of Volkswagen. The Shanghai factory is working at full capacity again.
In this context, the disappointing results of JP Morgan and Wells Fargo take a back seat, both held back by the increase in provisions in the balance sheet. Jamie Dimon, in his communication to shareholders, allowed himself an original analysis: at least 40% of the newly unemployed earn more today thanks to subsidies than they did months ago.
An agreement was reached overnight to bail out US airlines. The Treasury will make loans available and will enter the capital of the major companies in the sector. American Airlines, among the largest, should receive 5,8 billion dollars. Southwest Airlines is expected to receive $3,2 billion in aid. The resources come from the 25 billion dollar special fund launched in March.
The trend of oil is disastrous. Brent, -6,7% yesterday, rebounded slightly this morning, at 30 dollars a barrel. Demand is down by at least 20 million barrels a day, compared to pre-Covid 19 levels, while supply, even including the non-binding commitments made by the United States and Canada, could be reduced by around 13 or 14 million barrels.
In Piazza Affari Eni lost 1,51%, Tenaris and Saipem -1,33%.
IMF: ITALY WILL PAY THE HIGHEST PRICE
Piazza Affari closed in the red, as did the English stock exchange. It is no coincidence, because Italy and the United Kingdom were the two countries that came out worst of theIMF analysis. The approaching verdict of the rating agencies contributes to weigh down the Bel Paese's position. S&P (rating BBB-) will pronounce itself on the 24th, the day after the summit of the premiers of the Eurogroup, the last chance to prevail on the Eurobonds, promoted by Vitas Vasiliauskas, a Latvian member of the European Central Bank. But the BTPs are shaking.
Milan (-0,36% to 17.558 points) was thus bringing up the rear of the Eurozone.
The International Monetary Fund has drastically cut its estimates of Italian GDP for 2020 to -9,1% from the +0,5% expected at the end of January due to the violent repercussions of the coronavirus on the economy, portraying Italy as the most penalized in the euro area. There could be a rebound in 2021, but only by 4,8%.
The prospects for Italian employment are also darker due to the pandemic. In fact, the Fund estimates an increase in the unemployment rate in 2020 to 12,7% and in 2021 to 10,5%.
HOLDS FRANKFURT STOCK EXCHANGE, LONDON SUFFERS
In evidence Frankfurt, the strongest square (+1,33%), ahead of Paris (+0,38%) and Madrid (+0,51%).
Worst of all is London, -0,82%, which should extend the lockdown by three weeks.
The fallout from the pandemic is also being felt by other members of the Eurozone. The IMF estimates for German GDP this year have been cut to -7,0% (the Fund sees +5,2% for 2021), those for France to -7,2% (+4,5% next year) and those for Spain at -8,0% (+4,3% for 2021).
RAIN OF SALES ON THE ITALIAN PAPER
The effects of the not too refreshing outcome of last Thursday's meeting of the Eurogroup made themselves felt on the BTPs.
Thus the spread widened, which – also due to the lesser commitment of the ECB – closed at the maximum of the session, at 216 points (against 195 on Thursday).
The 1,77-year yield rose to 1,6%, from XNUMX% at the last closing.
FROM BTP ITALIA TO GREEN SECURITIES: THE TREASURY INCREASES THE SUPPLY
The Treasury has announced an increase in the amount of sovereign bonds offered at auction in 2020 to meet the need to finance measures to combat the coronavirus emergency.
In addition to at least one BTP Italia issue, the MEF has confirmed its intention to issue green bonds and other dollar-denominated securities.
BANKS UNDER FIRE, UNICREDIT IN WITHDRAWAL
Even the banks paid for the increase in tensions in the Eurozone over the sustainability of the Italian debt.
Unicredit (-4,53%) leads the retreat: Ubs has downgraded its rating to neutral from buy, with a target price falling to 8,5 euros from 16,2 euros. Followed by Bper (-4,47%). Mediobanca also suffers (-4,19%). In deep red Banco Bpm (-3,9%). Intesa Sanpaolo also down (-2,5%).
DIASORIN FLYING TO THE TOP, NEXI TOWARDS THE WEDDING WITH SIA
Among the best Diasorin (+4,95%), which set a new historic record. The company has an agreement with the San Matteo Polyclinic in Pavia for the development of two tests for Covid 19.
However, the palm of the best title goes to Nexi (+5,9%). Sia's IPO is approaching and could precede the merger between the two companies. The respective boards would have appointed Paolo Bertoluzzo, CEO of Nexi, and Massimo Sarmi, vice president of Sia, to lead the negotiations. Kepler Cheuvreux confirmed the buy rating and the target price of 13 euros on the stock.
ATLANTIA, TESTS OF PEACE WITH THE GOVERNMENT
Money on Atlantia (+3,51%). Equita sim (rating hold, target price at 22,3 euros) found that Aspi, according to rumors, sent a 200-page dossier to the Ministry of Infrastructure last Friday with all possible scenarios, including a 40% increase in expenses of maintenance in the period 2020-2023 and a 13 billion investment plan.
MONCLER STARTS AGAIN, ASTALDI CELEBRATES THE COMPANY
Ferrari (+0,6%) and Prysmian (+0,48%) performed well among industrialists. Buzzi (-3,72%), Cnh (-2,3%) and Pirelli (-1,84%) lose ground. Fca (-0,25%) deflates after good boot.
Moncler advances (+2,6%). Among the mid caps, Astaldi (+5,86%) and Salini (+3%) shine after the approval of the Astaldi composition with creditors, a fundamental step for the aggregation of the two companies and the birth of Progetto Italia. Tinexta +4,76%: Mediobanca Securities confirmed its outperform rating and target price of 14 euro per share.
