Positive signals are coming from the USA and Beijing on the talks between the two superpowers on tariffs. “We have a good chance of concluding an agreement” declared US Commerce Secretary Wilbur Ross. Deputy Prime Minister Lue He also participates in the talks, to underline the importance of the negotiations. But optimism is being curbed by new signs of a slowdown in the economic cycle and the tug of war between the US House of Representatives and President Donald Trump who today will travel to the border with Mexico to support the need for an anti-immigrant wall: the show It's guaranteed.
GHOSN PLEDS INNOCENT IN COURT
A much more exciting show took place this morning in the Tokyo court where Carlos Ghosn, who reappeared in public after his arrest, vigorously maintained his innocence with respect to the alleged illicit gains: the tug of war between Paris and Tokyo, decisive for the fate of the automotive group between Renault, Nissan (+0,7% this morning) and Mitsubishi continues.
In Tokyo, the Nikkei index rose by 1,3%. The CSI 300 index of Shanghai and Shenzhen stock indexes is down by 0,3%. Hong Kong is up 0,2%
The dollar appreciates against the Chinese yuan, the Japanese yen and the Korean won. The euro-dollar cross drops to 1,144 from 1,147 yesterday.
TECHNOLOGY RUNS AGAIN: SOFTBANK +5%
Of note is the leap forward of Softbank, the high-tech giant with ramifications all over the world, which stands out with a 5% increase, rebounding after the decline following the mobile IPO. the Wall Street Journal reports that the investment in the startup WeWork, initially expected to be around six billion dollars, will be reduced to two billion.
The tech sector is trying to recover after the shock of Apple's profit warning, -0,22% despite the announcement of the agreement with Samsung which will allow access to i Tunes content from the Korean giant's smart TVs.
RUNS NETFLIX, AMAZON EXCEEDS MICROSOFT
But the "enemy" Netflix (+5,97%) takes flight, leading the S&P 500 index together with Amazon (+3,44%), the new leader of world stock exchanges with a capitalization of 797 billion dollars. ahead of Microsoft.
Anti-tumor drugs are another sector in great effervescence: Eli Lily paid 8 billion to secure control of Loxo oncologics, the day after the Squibb-Myers blitz on Celgene (90 billion).
Thanks also to these transactions, the US indices closed in positive territory: Dow Jones +0,42%, S&P 500 +0,70%. NASDAQ +1,26%.
BUT THE ECONOMIC SLOWDOWN, THE ISM INDEX DOWN
However, the week began on Wall Street with new confirmation of the slowdown in the US economic cycle: the ISM index of purchasing managers of non-manufacturing companies fell to 57,6 in December from 60,7 in November. The consensus was expecting 58,5.
There has been a slew of negative macroeconomic data in recent days.
The new boost loss signal hasn't spooked investors, who expect to be helped by central banks. But not everyone is so optimistic, Mike Wilson of Morgan Stanley, one of the most followed strategists on Wall Street, says in the latest report that he doesn't feel like providing indications on 2019, also because the earnings alarm from Apple is one of those corporate events capable of undermining investor confidence.
OIL ON THE RISE, CHINA BEHIND THE GOLD BOOM
Oil continues to rise, +9,3% last week, 57,4 dollars a barrel this morning. At these prices, Goldman Sachs recommends buying: the average price of North Sea crude oil in 2019 estimated by the broker in the report released yesterday is 62,5 dollars a barrel. On the contrary, Société Générale cuts its 2019 average price forecast by 12% to 64,2 dollars, stating that considerations on the trend of the global economic cycle will guide prices.
Down yesterday Eni (-1%). RBC lowered the target to 16,50 euros from 18 euros, confirming the Sector Perform opinion. Saipem + 2,4%. Tenaris + 1,2%.
Gold loses hits (-0,5% to 1,282 dollars an ounce), retreating from the highs reached last week. The latest data shows that the Chinese Central Bank, after two years of absence from the market, increased its positions to 0 million ounces at the end of December from 59,56 million ounces previously. Poland and Hungary have also returned to buying, increasing their respective gold reserves for the first time in many years.
GILETS JAUNES AND BREXIT HOLDING DOWN EUROPE
Weak session for the price lists of the old continent, conditioned by the latest wave of protests by yellow vests in France and by tensions over the forthcoming votes of the British Parliament on May's plan for Brexit The concerns were reflected in the drop in the confidence index, dropped in January to a four-year low. In particular, the item regarding expectations for the future fell to -19,3 from -18,8: "Based on these data, the eurozone is dangerously close to stagnation" , admonished managing director Manfred Huebner.
ONLY POSITIVE MILAN AND MADRID
In this context, the peripheral price lists shone. In fact, only Piazza Affari (+0,65% to 18.953 points) and Madrid (+0,41%) closed on positive ground. Milan thus returned to the levels of last December 19th.
In red Frankfurt (-0,17%) and Paris (-0,38%). Bringing up the rear is Zurich (-0,85%).
Outside the Eurozone, London -0,39%. The first moment of truth for Brexit is set for January 15 when, according to the BBC citing government sources, Parliament should approve the agreement signed with Brussels last November for a mutually agreed divorce. But the uncertainty is very high.
SPREAD TO 269, 7 BILLION BOTS COMING
Negative closing for the Italian bond market, with investors maintaining a cautious stance, awaiting the first medium-long term auctions, which could be joined by a syndicated operation on the 15-year segment.
The differential between the Bund and the BTP reached 269 basis points from 264 basis points at Friday's close. The Italian 2,90-year rate rose to 2,88% from 12% at the previous closing. The Ministry of the Economy will make 7-month Treasury bonds available for 10 billion euro in the auction scheduled for Thursday 7,5 January, against maturing bonds for XNUMX billion euro.
Tomorrow the details of the first medium-long term auction of 2019 will be announced, scheduled for Friday 11 January. In UniCredit's expectations, 2,5-3 billion of the 3-year Btp in October 2021, 1,5-2 billion of the 7-year Btp in November 2025 and between 750 million and 1,25 billion euros of the 15-year Btp in September will be made available 2033.
ALSO A 15-YEAR STOCK, DBRS RATING ON FRIDAY
This year the Ministry of the Economy will have to place around 400 billion euros of public securities on the market. 250 billion euros are expected to be issued in the medium/long-term segment, against maturities of around 200 billion.
A strong increase in emissions is anticipated in the Nadef. A cost of four points of GDP is planned for 2021, i.e. just over 76 billion based on planned growth. This is almost 11 billion more than the 65,5 in 2017, which at this point gets the prize for the "best" year in the euro era. To find a value similar to that scheduled for the end of the three-year period, we need to go back to 2013, i.e. the day after 2012 in which the Italian sovereign debt crisis brought the annual cost to the record figure of 83,6 billion.
The update of the Italy rating by the Canadian agency Dbrs will also be released on Friday.
Lastly, next week the issuance of a new 15-year BTP could be launched through a syndicate: "We are in a situation of relative tranquility - an operator told Reuters - and the Treasury could take advantage of it to move forward with funding, given that 2019 will be quite challenging”.
CARIGE, THE GOVERNMENT WILL GUARANTEE THE BONDS
The operation was triggered rescue for Carige. A flash council of ministers yesterday evening approved a decree which provides for a state guarantee on the new bonds that the bank will issue (probably already today). The Treasury will also guarantee the new loans "disbursed at the discretion of the Bank of Italy" in compliance with EU legislation on state aid. The decree then provides for the tools to allow the bank to access the "precautionary recapitalization", i.e. the bailout on the Monte Paschi model with an outlay of 1,2 billion.
TOWARDS A WEDDING WITH A DOWRY: UNICREDIT AND UBI SUSPECTS
With their backs covered by public intervention, the three commissioners will be able to devote themselves to non-performing loans with the aim of selling, probably to Sga, at least less of the 2,8 billion in the institution's belly and reducing the stock below 10%. At that point it will be possible to proceed with the aggregation with a buyer: suspects Unicredit, yesterday +2,6%, Ubi (+1,9%) and Crédit Agricole.
Before the evening twist, the Italian banking sector had experienced a positive session at the origin of the rally in Piazza Affari: the sector index recorded a rise of 1,7%, against a weak trend in the rest of Europe. Understanding Understanding St. Paul (+1,7%), included in Mediobanca Securities' portfolio of preferred securities.
Asset management also made a big splash: Azimut +3,8%, Mediolanum +2,4%. Flexing Generali (-0,3%): Deutsche Bank cut its target price to 15,8 euros.
STM, AGREEMENT WITH CREE (USA) ON WAFERS
Late evening news for another protagonist of the session. stm (+3,9%) recovering after the crash linked to Apple's profit warning, announced that it had signed a multi-year agreement for the supply by the American Cree of wafer blanks for the automotive industry.
Under fire instead Pirelli (-1%), affected by the downgrade of JP Morgan which cut the rating to Neutral from Overweight, with the target price at 7 from 8,8 euros. The broker believes that the European auto sector is unlikely to recover in the first half of the year.
THE MARKET APPRECIATES THE FERRARI RETURN
Positive closure for Fiat Chrysler (+ 0,7%). Revolution at Ferrari (+2%) on the eve of the resumption of the Grand Prix season: the team principal, Maurizio Arrivabene, will be replaced by the one who until last year was the technical director of the team, Mattia Binotto, wanted by Marchionne to revive the performance of the Red. Perhaps already today the official announcement.
The two freshmen of the main basket are highlighted: Amplifon + 3,06% Juventus + 2,96%.
RECORD SALES FOR CUCINELLI (+3,8%), VOLA D'AMICO
Of note in the luxury performance of Brunello Cucinelli (+3,8%): the sales figures for 2018 were released after the Stock Exchange. Moncler (+2,72%), still under fire Tod’s (-1,7%).
Among the other stocks, the excellent performance of D'Amico: +15,87% after the signing of an agreement for the sale and 'leaseback' of the Mt Cielo di Houston, a vessel currently under construction in South Korea, due for delivery at the end of the month.
A JP Morgan downgrade pushed tire makers and auto parts maker Michelin, Gestamp, down, adding further weight to the sector, already hit by regulation and a slowdown in sales in China.
JP Morgan believes the European auto sector is unlikely to recover in the first half of the year.
