On Wall Street, the shouting salon, closed since March due to the risk of contagion, has reopened, albeit with only a quarter of the 460 authorized traders. But the party stopped halfway through, because the leap beyond the 3 mark was not achieved. The S&P index retreated in the final to 2.991,77, just below the average of the last 200 days, what technical analysis considers a watershed between the bull market and the bear market, because China spoiled the party. Trump's economic adviser, Larry Kudlow, has anticipated harsh sanctions against Beijing if the Hong Kong security law under discussion today in the former British colony's parliament is approved. The news reports that, for now, the situation is calm, but a new day of clashes is looming. For the first time, the Chinese army could be employed.
However, geopolitical tensions do not stop the market's desire for recovery, supported by the search for one (or more) vaccines against the epidemic and by the unprecedented use of capital (debt) to remedy the hole as soon as possible (17 trillion dollars) created by the contagion.
TOKYO RISES FOR THE THIRD DAY. NISSAN US SIZE
The Tokyo Stock Exchange rose again today, for the third consecutive day: Nikkei +0,8%. The government aims to double the economic stimulus already launched: Reuters writes that a new package of measures worth 117 trillion yen (1.100 billion dollars) would be ready to be made available to companies and citizens. Adding the two aid programs together, we arrive at 234 trillion yen, about 40% of GDP. The government plans to raise resources by increasing debts: the plan includes new government bonds for 31.900 billion yen.
Meanwhile, Nissan's economy plan is taking shape: the group will close one of the two plants in the USA. Today the negotiations with Renault come to life.
Hong Kong fell, but not by much (-0,46%). Li Ka Shing, the billionaire who promoted the birth of "3" sided with the city authorities in favor of introducing a law that "guarantees the safety of all citizens".
DOW LEASH FORWARD, JP MORGAN +7%
Yesterday evening, on Wall Street, the Dow Jones closed up 2,1%, at 24.995 points, after exceeding 25 points during the session. The Nasdaq was without strength (+0,17%), on a day that saw the recovery of the sectors most linked to the economic cycle.
JP Morgan flies (+7%) after Jamie Dimon said that the bank will not need to increase reserves in the second half of the year.
RACE TO THE VACCINE: NOVAVAX BIOTECH ADVANCES
The biotech Novavax is up (+4,5%), which yesterday joined the large group of companies that have started tests for the anti Covid-19 vaccine.
The future of the S&P500 is up this morning by 0,7%, still on the expectations of new maneuvers by the Central Bank. Bank of America Merrill Lynch anticipates new large-scale purchases (without constraints of any kind) of corporate debt and ETFs: to date the Fed has purchased 1.800 trillion dollars of corporate bonds.
RECOVERY FUND: THERE IS, BUT MODEST RESOURCES FOR 2020
More modest resources, but not the ambitions of the Eurozone, waiting for a field day for the European Union. Ursula von der Leyen will present hers plan on the Recovery Fund: there is talk of a project worth 600-650 billion between loans (in the minority) and income transfers to be submitted to individual countries for examination by July (or September). But for 2020 the resources available to Italy will not exceed ten billion: half as grants, half as European guarantees for those who recapitalize "strategic" companies with more than 50 employees. At this point, it is difficult to give up the 37 billion of the Mes, which could perhaps even be more, given that according to the Minister of Economy, Roberto Gualtieri, Italy could obtain a sum exceeding 2% of its GDP.
EU STOCK EXCHANGES IN RALLY. BCE SOS: DEFAULT RISK IS GROWING
On the eve of the confrontation between the leaders of the Eurozone on the Recovery Fund and on the new EU budget, the spread between Italian bonds and the 200-year Bund fell below 15 points. A sign of confidence in the stability of the area which is fueled by the optimism on the recovery of the economies of the Old Continent, much more than by the conditions of public finances, as emerge from the ECB's "Financial Stability Review". Next year, we read, Italy will have to bear the repayment of 10% of its debt, but other countries are not much better off: France, Spain, Belgium, Finland and Portugal will have to issue securities equal to at least XNUMX% of the stock of debt to repay creditors. For at least three countries (Italy, Spain and Portugal) the risk of default is becoming more concrete. But the markets, for now, are not trembling: as long as rates remain low, the balance will be sustainable.
Piazza Affari gains 1,5% and approaches 18 points (17.860), recording a recovery of approximately 20% since the beginning of the lockdown.
Fiesta atmosphere in Madrid (+2,2%) after the confirmation of the forthcoming opening of the tourist season.
THE MACRON PLAN GIVES WINGS TO PSA AND RENAULT
In Paris (+1,46%) the Macron plan for car support. France, said the President, wants to become the leading manufacturer of "clean" cars in Europe and aims to build one million of these vehicles within five years thanks to an 8 billion plan divided into several stages, in which large incentives are envisaged for builders, provided they invest in France. PSA closed at +5,76%, Renault +6,72%.
The Frankfurt Stock Exchange slows down (+0,98%), for now the only one to have managed to return to the highs since March 6 thanks to seven sessions up on the last eight completed.
London +1,19% after the holiday break. Aston Martin jumped 39,65% after the British manufacturer confirmed that Tobias Moers, CEO of Mercedes-AMG, will be the new chief executive.
SPREAD BELOW 200, BOT AUCTION TODAY
The decrease in the spread is mainly due to the rise of the Bund, whose ten-year yield now stands at -0,43% (+6 basis points), while the BTP fell by 1,54% to 1,54% (- 2 basis points). The differential thus goes to 197 basis points, from 208 yesterday.
In this context, the Treasury is now offering 10 billion euro of six-monthly and flexible Treasuries: the yield on the 6-month Bond (0,3%/0,2% at closing) is expected to rise slightly compared to the 0,227% of the placement of end of April.
Germany yesterday placed five billion euros of bonds with a two-year maturity: requests were 3,3 times higher than the offer, a ratio never so high in the last 13 years. JP Morgan calculates that in 2020 the governments of the euro area will issue new debt for 1.000 billion euros, between 8% and 10% of GDP.
THE ECB IS PREPARING TO DO WITHOUT THE BUNDESBANK
The European Central Bank is preparing contingency plans to carry out its bond-buying program without the Bundesbank, in case the German Supreme Court forces the Bank to stop.
In that case, a surreal scenario could materialize: the ECB would start an unprecedented legal action against the German Central Bank, its main shareholder, to bring it back into the programme. Meanwhile, the Eurotower would take over the Bundesbank's share of the purchases.
AUTOMOTIVE IN THE RACE ALSO IN MILAN
In Piazza Affari, the industrialists were in the spotlight yesterday, who look with confidence at the easing of the restrictions for the Covid-19.
Automotive stocks stand out on the day of Intesa's green light for the loan of 6,3 billion to FCA (+3,39%) with the guarantee of Sace. Brembo flies (+8,08%), followed by Sogefi (+5,09%). Pirelli +2,1%, Cnh +3,55%.
Luxury also rebounds: Moncler +4,78%, Brunello Cucinelli +3,48%. Ferragamo leads the race +7,28%.
The technological ones are brilliant: Stm +3,24%, Prysmian +1,64%. However, the leading stock is Leonardo: +6,07%.
BANKS WAKE UP: BPER +10,43%
Credit awakens. Bper (+10,43%) goes into orbit, ahead of Popolare Sondrio (+7,93%), Mediobanca (+5,66%) and Banco Bpm (+4,8%). The Big Unicredit (+4,44%) and Intesa (+3%) did well.
In a study published yesterday, the EBA (European Banking Association) analyzed the possible impacts of the health emergency on the European banking system, which is much more solid than it was in 2008/09: the average CET1 ratio is close to 15 %, against 9% in 2009.
IN RED ONLY NEXI AND DIASORIN, ORACLE ADOPTS ELECTRA
In the red, two of the stocks preferred by buyers in the last period: Nexi (-2,36%) and Diasorin (-5,92%), on which Jefferies cut the recommendation from hold to underperform, with the target price rising from 101 to 120 euros.
Leap of Unieuro (+9,13%): Banca Akros confirmed the buy and target rating of 9 euro per share. On Aim, money on Elettra (+11,59%), which has reached a partnership agreement with Oracle. The agreement provides for the positioning of the Exacto platform in the market place of the high-tech multinational, a leader in the supply of Cloud and Digital services worldwide.
