“Making America great again doesn't mean doing '29 again”. This is how Republican Senator Ben Sasse interpreted the state of mind of a significant part of Wall Street and industry last night after the unprecedented initiative taken by Donald Trump which motivated tariffs against the European Union with the "defence of the national interest".
Brussels has already announced a proportional reaction to the damage (the first measures are worth 2,8 billion euros). Harley Davidson (-2,17%) and bourbon producers will undoubtedly be affected. Mexico targeted Campbell soups (-2,5% on the stock market) and McCormick sauces (-3%).
But Wall Street believes the challenge is just beginning. The Dow Jones dropped 1%. S&P 500 0,66%. Nasdq -0,27%.
The big names in the industry suffered: Boeing -1,7%, Caterpillar -2,2%.
The weakness of crude oil penalized Saipem (-0,33%); Eni unchanged and Tenaris -3,25%, the latter sunk above all by duties in Mexico, where the group led by Paolo Rocca has plants.
Italy, perhaps, today no longer occupies the headline on the agenda of market concerns. You risk, on the day of presentation of the new Italian government, the opening of a delicate political crisis in Spain, which intertwines with the knot of autonomy, Catalonia and the Basque Country in the lead.
No less hot, as we have already seen, is the topic of the trade war between the US and the rest of the world including China, its great rival, at the center of negotiations next weekend which will be weighed down by the imminent summit in Singapore between Kim and the US president.
TODAY FIRST TEST FOR THE CONTE GOVERNMENT
But the most urgent and demanding test for Europe still concerns Italy, awaiting the test of trust in the new government.
In the end, after the longest and most uncertain conclave in republican history, the white smoke has indeed arrived for Prime Minister Giuseppe Conte. It is legitimate to have doubts about the solidity of the formula and the duration of the executive. Or on how much this government with a narrow majority will be able to achieve, welcomed by deliberately insulting phrases from Jean-Claude Juncker ("Italians work more and are less corrupt").
But the markets, which as Alessandro Fugnoli warns us "do not always have a single soul", will probably today celebrate the interruption (if not the end) of a nightmare that has cost more than 200 billion in terms of market capitalization (from January there is a drop of 0,316% against a gain of about 10% around 4 March) and about 150 billion higher yields on government bonds.
MADRID IS IN THE SPOTLIGHT TODAY
The fever in Italy descends, albeit only slightly. The spotlights of the Eurozone shift to Madrid, the scene today of a dramatic parliamentary session which could lead to the resignation of Mariano Rajoy with a subsequent, probable, new early vote. Meanwhile, the increase in US duties on steel and aluminum imports from the European Union, in force from today, has not been averted, as was hoped until the end. In short, the geopolitical front presents quite a few problems for the Eurozone, just a few weeks before the ECB's management which will have to face both the slowdown in the economy and the faster-than-expected recovery in prices.
MILAN EQUAL, DEUTSCHE BANK SINKS
The Milan Stock Exchange closed an almost "normal" session almost flat, awaiting the unblocking of the political crisis. In the end, the Ftse Mib index closed with a very slight drop of 0,06% to 21.784 points with a trading volume at the highest level for the week at 5,8 billion euro, consolidating the slight rise after having touched its lowest two days ago July 11, 2017. In the month of May, the price list dropped 9,154%
The worst stock exchange was that of Frankfurt -1,4%. In addition to the decline in automotive stocks, affected by US tariffs, the landslide of Deutsche Bank (-6,93%) weighed heavily, punished by the Federal Reserve because its US division presents "critical issues capable of jeopardizing its stability".
Madrid was also in the red (-1,05%) awaiting the verdict of the Cortes on the government. Despite the no to trust announced by the Basque party, the prime minister will not resign. Paris -0,53%, London -0,15%.
SPREAD TO 253. JAPANESE BUY STOCKS SHORT
There were also large swings on the secondary yesterday, with the main benchmarks recording significant increases after the turbulence that characterized the last few sessions.
The ten-year yield closed at 2,88% and the spread with the Bund is 253.70 basis points (-7,48%).
In addition to CDP and other Italian investors, large Japanese investors also operated on the market. Japan Post Insurance's chief investment officer told Reuters the firm, also known as Kampo, moved to buy short-term Italian government bonds after recent declines made them more attractive.
The ten-year Btp futures leap was strong, earning 428 basis points, rising to 129,12 after closing yesterday at 124,84. A phenomenon conditioned by low liquidity that has not been repeated on cash.
After hitting a low of 2%, the 0,89-year yield jumped to the session highs of 1,40% and around the close of 1,26%. At the same time, the differential on the 2-year segment stands at 198 basis points after a fluctuation between 157 and 218.
FCA, WAIT FOR THE SHOW IS GROWING
On the equity front, fears about Trump's willingness to deny access to the American market for high-end German brands weighed on the sector in Europe (the basket lost 0,84%), but Fiat Chrysler +2,05% able to take advantage of the waiting effect for today's presentation of the industrial plan. In Exor's wake +1,81%. Brembo also did well: +0,33%. Cnh Industrial (-0,84%) and Ferrari (-0,46%) are detached.
Leonardo (+1,94%) and Prysmian (+1,23%) also rose among industrialists.
THE SECURITISATIONS GIVE BPM A CHARM
Among the banks, Banco Bpm (+2,4%) stood out. The company announced the sale, via securitization, of a portfolio of bad loans for a gross nominal value of 5,1 billion.
Deutsche Bank's woes also dampened the rebound of the banks recorded in the morning: the basket ended trading with a drop of 0,13%. Unicredit -0,2%, Intesa Sanpaolo -1%, Mediobanca -1,5%.
RECOVER THE MANAGED, GENERAL ROOMS
The recovery of managed savings continues, hit by massive sales following the collapse of Piazza Affari. Banca Mediolanum +1,1%, FinecoBank +1%, Poste Italiane +0,22%. Sharp fall of UnipolSai (-4,42%) and Ugf (-2,52%). Generali increased (+2,32%).
OK LUXURY, THE BRICK IS STURDY
In a context of generalized sales of Italian assets, investors show a tendency to reward exporters, especially luxury: Salvatore Ferragamo +2,02%, Moncler +1,87% and, among the mid caps, Brunello Cucinelli (+4,74 .XNUMX%).
The wave of sales of utilities and regulated businesses continues unabated: Enel -1,03%, Snam -1,87%, Terna -1,29%. Sale A2A (+1,18).
Out of the main basket, the rediscovery of the real estate sector is striking: Risanamento +13,96%, Nova Re +9,86%, Bastogi +4,04%.
