President, will you meet with Xi before March 2? “No,” was Donald Trump's response to reporters. Thus, hopes of an agreement between the Big Ones to avert the increase in duties scheduled for next month are reduced to a flicker.
This completes the streak of negative news that caused all the markets to fall. Italy stands out negatively, at the center of the severe downward revision of the European Commission's estimates which, together with the recall of the French ambassador in Italy, translated into a sharp rise in the spread to 282 points. In the draft of the 2019 Country Report sent in recent days by the Commission services to the Ministry of Economy, Brussels warns that with such a high debt, "there is the risk of repercussions on the banking system, on the financing of businesses and households and, considering the size of the Italian economy, across the entire euro area”.
THE BIS MANEUVER CLOSER
At this point, despite the opposite reassurances from the government, the correction maneuver on the Italian public finances is no longer a possibility, but a certainty. The only doubt concerns the timing: it is very probable that the new intervention will arrive after the European elections.
GREATER CHINA REOPENS IN RED
It is with this note of concern that the markets are heading into the weekend. Tokyo fell sharply (-2%), despite Sony's rebound after the buyback announcement. Sydney also down (-0,2%).
Stock exchanges closed for the Chinese New Year holidays reopened in red: Hong Kong -0,5%, Seoul -1,5%, Singapore -0,2%. Shanghai will resume business on Monday. The Japanese yen, Asia's safe haven currency, strengthened to 109,7.
Larry Kudlow, chief of economic advisers to the White House, confirmed that "the distances between us and China remain very large". Wall Street adjusted to pessimism: Dow Jones -0,87%, S&P 500 -0,94%, Nasdaq -1,18%.
MEGA BANK MERGER IN USA
The main news comes from the banks. After ten years there is a merger in the world of credit: BB&T+4% has announced the purchase of Sun Trust +10,2%. The sixth US institution will be born with a 66 billion dollar operation.
Thump of Twitter (-9,8%) after the accounts: costs increase, revenues disappoint.
Jeff Bezos, who recently announced his divorce, has revealed that he was the subject of a blackmail attempt by the newspaper
OIL DOWN, SAIPEM LANDSLIDE
Energy stocks also fell (-2,1%). Brent oil lost 1,6%, the decline continued overnight, trading at $61,2 this morning, down 0,7%.
Heavy yesterday in Piazza Affari the fall of Saipem (-6%)
MILAN -2,59%, FRANKFURT IS WORSE
But what a bad day yesterday for Piazza Affari. Shortly after the opening came the confirmation of the drastic downward revision of the EU estimates on the growth of the Italian GDP in 2019. Then the Fiat Chrysler profit alarm rained down on the price list, another feared but partly expected news. The same cannot be said for the recall of the French ambassador to Italy, the last factor that brought the Italian financial market to its knees, both the bond and the stock market.
Piazza Affari (-2,59%) thus experienced a session in deep red since the morning: the index, which yesterday reached the threshold of 20 points, fell back to 19.478 points.
Things went even worse in Frankfurt, the most sensitive to export problems which left 2,67% on the ground. Paris (-1,84%) and Madrid (-1,79%) are also bad.
London -1,11%. European Council President Donald Tusk said British Prime Minister Theresa May's visit to Brussels did not produce a breakthrough on Brexit, but talks were continuing. The Bank of England has not adjusted tariffs.
THE SPREAD THIS MORNING SPREADS TO 286 POINTS
Geopolitical tensions have reversed the mood of the bond market. The race by investors (73,6% foreign) for 30-year bonds has given way to sales in all segments: the 3,79-year yield rises to 0,60% and the two-year bond offers a rate of 0,47% from yesterday's close at XNUMX%.
The spread between the Italian and German ten-year benchmarks went as high as 287 basis points, the highest since last December 12 and 20 basis points above yesterday's close at 267 basis points. In the final, the movement marginally returned and the spread stopped at 283. But this morning the rise resumed: 286 points at the opening.
The Italian ten-year rate returned to the 3% threshold, reaching a maximum of 2,976%, the highest level since the first half of December, before settling at 2,943%.
CDS AT HIGHEST SINCE DECEMBER, 6,5 BILLION BOTS ON TUESDAY
The cost of insuring Italian debt against default risk also jumped to its highest level since 12 December, with 5-year CDS up 12 bps since the previous closure.
The yield on the Bund, under the combined pressure of lower growth and falling inflation, dropped to 0,11% – one step closer to returning to the negative territory it slipped into in 2016.
On the occasion of the placement of twelve-month Treasuries next Tuesday, the Treasury will make securities worth 6,5 billion euro available to investors.
BPM IS SAVED AMONG THE BANKS
It promised to be another positive session for Piazza Affari, given the positive premises of the Unicredit accounts e Bpm bank. But, accomplice FCA's crush and a Moody's report on the negative impact of the technical recession on the credit world, the mood has changed.
Among the banks, Banco Bpm is saved, finishing up by 0,84% after it had reached +6% following the evaluation of Mediobanca Securities, which comments positively on the progress in the de-risking process.
Unicredit drops 1,92% despite better-than-expected results. Understanding also down, leaving 2,75% on the ground.
After the accounts, Mediobanca was also in the red -0,34%: the bank closed the first half-year with a net profit of 450,5 million euro, higher than the estimates (428 million). Mps -1,45% after the accounts (255 million profit).
DISAPPOINT THE ESTIMATIONS, FCA SHOULDER
Fiat Chrysler, which collapsed by 12,2%, dragged down also the holding company of the Agnelli family Exor -4,7% after the results of the fourth quarter. The weak 2019 Ebit estimate weighed on the stock, below the expectations of the market which snubbed the return of the dividend. Industrial cash flow will be 1,5 billion euros, lower than in 2018 due to higher investments and disbursements for penalties and other costs related to diesel pending in the US.
FERRARI DOWN TOO, CNH SAFE
Down the rest of the sector: Ferrari -2,55%. Banca Imi reduced the recommendation from buy to add, with the target price falling to 128,2 euros from 135. Pirelli -4,07%, Brembo -2,78%.
In contrast, Cnh Industrial (+1,21%) after solid 2018 results and with good growth in the dividend.
The sub-fund index in Europe lost 4,6%.
The other industrialists were also weak: Prysmian -5,78%, Stm -4,58%. Leonardo -3,4% is also in the red. CEO Alessandro Profumo said yesterday that a potential union between the defense sectors of Leonardo and Fincantieri-3,6% "would make sense". A broker defines the possibility that Fincantieri divests the cruise sector "improbable, considering the clear synergies between the two company branches".
Negative Enel (-1%) despite the results in line with the guidance.
Bad media, also sold throughout Europe. Mediaset loses 4,7%, while RCS loses 5,66%.
Amplifon also suffers -4,1% which discounts a downgrade of Kepler Cheuvreux to "hold" from "buy", with a consequent cut in the target price to 17,7 euros from 18.
