The Monetary Fund cuts Italian GDP estimates for 2019 and knock out the markets. European stock markets close down and Wall Street is moving in negative territory awaiting the start of the quarterly season. Piazza Affari closes the session down by 0,46%, 21.671 basis points, after having touched a new annual high of 21.900 points during the day. The banks are holding on, but it is the economic estimates of the American institute and the draft of the new Economic and Finance Document that weigh, which corrects the annual deficit/GDP ratio to 2,4%, from the 2% of the budget law. The debt will know a new peak at 132,7%.
Italy's mix of high debt with high interest rates and low growth is proving to be increasingly lethal for the country and dangerous for Europe. According to the IMF, "prolonged budgetary uncertainty and high spreads in Italy, especially if associated with a deeper recession, could have negative repercussions on the other economies of the euro area". The 2019 GDP estimates drop to +0,1% (the January forecasts indicated +0,6% and the October ones +0,9%). At the origin of the review ”Weak Domestic Demand While Yields Remain High”. Given the premises, the bond holder maintains a certain aplomb on the eve of the ECB meeting. The yield of the ten-year BTP (maturity 2029) drops to 2,58% and the spread with the Bund of the same duration is down to 258.20 basis points (-1,86%).
On the other hand, the ax of the International Monetary Fund also hits the other countries of the euro area and the world GDP, with growth compromised, among other factors, by the escalation in trade tensions between China and the United States, by the problems of the automotive industry, from the more stringent credit policies in China. They also weigh on investor sentiment US threats of new tariffs on European productsworth $11 billion in response to EU aid to Airbus. In this context, Frankfurt lost 0,92%; Paris -0,65%; Madrid -0,3%; London -0,36%. Zurich +0,2% goes against the trend.
Gold benefits from the uncertain economic climate and rises to 1305,29 dollars an ounce (+0,61%), while oil retreats partially, after yesterday's gains, driven by the Libyan situation and the tensions between Iran and the USA. Brent is down 0,7%, 70,6 dollars a barrel. Euro-dollar just moved, with the change at 1,127. The pound is losing ground, waiting for British Prime Minister Theresa May to ask for a further extension of her exit from the EU at an extraordinary summit in Brussels tomorrow. The single currency trades at 0,863.
In Piazza Affari the blue chips that recorded the greatest increases are Amplifon, +1,9%: Banco Bpm +1%; Banca Generali +0,51%; Eni +0,47%; Unicredit, +0,27%. Sales are massive on Prysmian, -4,78%, after the company announced new problems for the Westernlink submarine cable, which connects Scotland and Wales, after yesterday after the market was closed. Among oil stocks, Saipem -3,9% and Tenaris -2,67% fell. Leonardo, -2,14% pays tribute to US threats of new tariffs.
