“It's hard to figure out what if the Fed will get inflation under control, but one thing is for sure: investors, both in stocks and bonds, will have to suffer large losses”. Thus Bill Dudley, former president of the New York Fed, commented on the long-awaited minutes of the Fed which confirmed last night that the squeeze, already postponed due to the outbreak of war, is upon us.
In addition to revealing that the majority of the board was already pressing for a 14% rate hike on March 0,50, the minutes inform us that starting in May it will reduce the securities portfolio by 95 billion dollars a month for a total of 1.100 billion within a year (against the current 9.000). A manoeuvre, destined to impact on all financial markets, already widely anticipated in recent days, which explains the response, all in all cautious, of the markets.
Bond sales stop, oil restarts
The selling on bonds has stopped: this morning the 2,58-year Treasury Note trades at 2,63%, from 2,22% yesterday afternoon. The reaction of the Nasdaq was heavier (-0,47%). The Dow Jones is down 500%, S&P 0,97 -XNUMX%.
The dollar moved little. Euro on Tuesday evening levels, just above 1,09. The CDS shot above 70 give Russia's default very close.
WTI oil up 1,5%, to 98 dollars, yesterday -5,5% after the decision of the Energy Agency to release part of the stocks together with those already released by the USA.
Beijing studies measures for growth
Asia also lost ground: Tokyo's Nikkei -1,7%, Seoul's Kospi -1,3%, Mumbai's BSE Sensex -0,4%. The Hong Kong (-1%) and Shanghai (-1%) stock exchanges also fell, while other signs of attention to growth dynamics are coming from Beijing. The State Council chaired by Premier Li Keqiang leaves the door open to interventions capable of increasing consumption.
Hang Seng Tech is down 1,7%, from -3,8% yesterday. Meituan went against the trend, up 2% following the participation of Vice President Mao Hang at the press conference of the Chinese political and health authorities on the situation in Shanghai. His presence suggests that in Beijing they take into consideration the social importance of the home delivery company.
The US Bank also makes Europe tremble
Even in Europe, in the words of Craig Erlan, an analyst at Oanda, "the stock exchanges have taken a bit of a beating, in the belief that investors are realizing that the US central bank has little choice but to deal with inflation by chest, no matter what the cost.” The fight against inflation, but above all the unwanted effects on economic growth that monetary tightening brings with it, have conditioned the markets, yesterday more attentive to the Fed's minutes than to what is happening in Ukraine. Even if the forecast of NATO weighs on the trend of inflation: the Ukrainian conflict will not be brief.
Under pressure the spread, Btp
The upward race in government yields continued throughout the day pending the Fed's minutes. The 2019-year Treasury Note is at its highest since 2,61 at XNUMX%. Even if the ECB promises a softer and more gradual approach to interest rates, the pressure on peripheral securities continues. This increases the pressure on Italian stocks.
The Italian 2,35-year yield shot up to 2,375%, after a peak during the day at 2020%, the highest since March 168. The spread with the bund widens to 0,6333 points, which has risen to 1,22144%. The French 2015-year yield rises to XNUMX, the highest since XNUMX.
Draghi: "Do we want peace or the air conditioner on?"
Heavy day for stock lists. Milan -2,05%, at 24.447 basis points.
Secondo the draft of the Italian Def, GDP should drop in the first quarter of the year and then recover in the following three months. Growth for the full year of 2022 is seen at 3,1%, down from the 4,7% indicated last fall. The deficit/GDP target of 5,6% is instead confirmed.
The government will do “everything necessary to help families and businesses,” assures Mario Draghi. But the unknown war is enormous, also because Italy is ready to align itself with the EU on blocking gas imports from Russia. Is it worth it? The prime minister replies: "Do we want peace or peace of mind, peace or turning on the air conditioner?".
Marine Le Pen recovers: the CAC loses 2,2%
In anticipation of next Sunday's elections, the Cac 40 in Paris is more depressed, -2,21%. Four days before the first round of the presidential elections, the polls show the strong recovery of Marine Le Pen. Soc Gen drops 4,6%.
Amsterdam (-2,22%), Frankfurt (-1,93%) and Madrid (-1,58%) are strongly negative. Outside the euro area, London is better, which limits losses to 0,33%.
Milan -2,05%. From Atlantia to Generali, Benetton once again in the limelight
Piazza Affari is almost entirely red, but there are also notes of interest. The Benetton group is once again being talked about. At the top of the Milan list stands Atlantia (+2,45%, at 18,995 euros, but with peaks above 4%) at its highest for two years. Interest was reawakened by Florentino Peres, president of Real Madrid and major shareholder of Actividades de Construccion y Servicios SA, who at the request of the Spanish Consob had to specify that he was bound by an exclusive agreement with the Gip and Brookfield funds, in on the basis of which Acs itself would take over the majority of Atlantia's motorway business, even if "no official decision has been taken". Even the Blackstone fund, already in a consortium with Macquarie and Cdp for the imminent and definitive sale of Aspi, is reportedly toying with the idea of a takeover bid on Atlantia.
But the Benettons will also play an important role in the General match (-1,14%). This is what Claudio Costamagna, presidential candidate for the Caltagirone list, underlined, who yesterday said he was "confident" about the vote of Edizione Holding, one of the great shareholders of the Lion.
Amazon launches Avio into orbit (+14%)
The best stock was Avio (+13,58%), driven by the news of the maxi-contract between Amazon and the French-German Arianespace, to which it will supply the engines for the Ariane 6 launcher, which will put the broadband satellites envisaged in the project into orbit Kuiper by Jeff Bezos. This is the largest deal to date signed by the consortium that markets European launches. Amazon's project aims to "connect the unconnected" by providing high-speed broadband around the world.
Snam, Italgas and Unipol complete the short list of stocks in positive territory.
The car is heavy, but the incentives are coming
The list of non-performing securities is much longer, starting with cars and financials. Plunging Pirelli (-5,41%), Cnh (-5,03%) and Stellantis (-4,45%). But today the automotive should react to the approval of the package incentives for electric cars: 650 million for three years, from 2022 to all of 2024. For the purchase of electric cars, the 0-20 g/km CO 2 emissions range and a price of up to 35 euros plus VAT, the contribution is 3 thousand euros.
The banks suffer, starting with the most important: Intesa Sanpaolo -2,93%, Unicredit -2,15%. In a letter to shareholders, Andrea Orcel writes that the bank is "completing an urgent internal assessment of the impact of an exit from Russia".
