The perfect storm is underway. Oil plummets dragging bonds down. The Asian stock markets collapse, the forecasts on the opening of the European and American lists anticipate drops in the order of 5-7%. This is the war report awaiting Piazza Affari, which is preparing to open its doors despite the coronavirus emergency in the illusion of offering a framework of normality to a situation that is not normal.
TOKYO BELOW 20 THOUSAND, CHINA STOPS THE CONTAGION
Stock markets in Asia fall: -5,5% for Tokyo's Nikkei, below 20.000. The yen soars to 103 against the dollar, the highest since 2016.
The situation of the other price lists is no less serious: -3,5% for Hong Kong's Hang Seng, 3,7% for Seoul's Kospi. Sidney shoulder bag: -6,3%. The Australian dollar flash crashed losing 5% in twenty minutes.
The Shanghai Composite scores -6,3% despite the reopening of factories in Wuhan today. In China there are fewer than 50 new infections a day.
In Italy there are 7.375 positive cases, the dead are 366. In Lombardy, the deaths of the last 24 hours were 113.
The storm was unleashed by the violent and unexpected oil crisis, triggered by the failure of the OPEC+ summit.
ARABIA DUMPS: THE PRICE OF CRUDE DOWN 30%
Almost suddenly a bitter confrontation broke out within OPEC+: on the one hand Saudi Arabia and the other cartel operators, on the other Russia which on Friday refused to participate in the production cuts (1,5 million barrels ) requested by Riyadh in order not to further favor American shale oil producers who, without contributing to the cuts, would benefit from a price increase. But Saudi Arabia has reacted with a sharp cut in prices and announcing an increase in production to punish Russia.
The price of crude oil has plummeted: Brent is trading at 31,98 dollars a barrel (-29%), 27,99 dollars for the WTO (-32%) at the lowest levels since the Gulf war.
On the foreign exchange market, the Norwegian krone reached its lowest level in its history, at 9,51 against the dollar, in the wake of the oil price. For the same reason, the dollar-ruble cross rose by 6% to 72, a three-year high. Meanwhile, Lebanon is preparing to declare default, announcing that it is unable to meet a bond of 1,2 billion dollars.
US BOND SINKS BELOW 0,5%
A formidable snowball effect was thus triggered on the bond markets.
The 0,4949-year T bond plummeted to 1%, the XNUMX-year bond is below XNUMX%. Both are historic lows. It is not excluded that the yield on US securities falls below zero, as is already the case in Japan and the Eurozone.
The market has already priced in another 50 basis point interest rate cut by the Federal Reserve on March 18, if not sooner. Other expansive measures, first of all those on liquidity, are considered very probable, given the situation of acute market stress.
Joachim Fels, one of the managers of Pimco, the world's leading bond operator, has no illusions: "The worst - he says - is yet to come" and considers a recession in Europe and the USA as highly probable. “In Japan – he adds – it has already arrived”.
THE ECB THINKS ABOUT LOANS FOR SMES: "TOO LITTLE"
The ball now also passes to the ECB, which will meet on the 12th in Frankfurt under the guidance of Christine Lagarde. The appointment will be preceded this morning by data on the German trade balance and industrial production. Eurozone inflation data will follow between tomorrow and Wednesday, the last step before a high-voltage meeting.
The European Central Bank should intervene on the Tltro loan front and on other mechanisms to guarantee short-term liquidity, especially for small and medium-sized enterprises. Too little, thunders Wolfgang Munchau from the columns of the Financial Times who invites the ECB and the governments to more robust interventions. "But there is still no awareness of the seriousness of the problem – he admits –: two thirds of Germans believe, wrongly, that the situation is under control". Germany has so far allocated 0,008% of GDP to counter the recession.
SPREAD ALARM, AUCTIONS START ON WEDNESDAY
Against this backdrop, according to futures, a dramatic opening is looming, marked by the rise of the euro, traded this morning at 1,1495 against the dollar, its eight-month high.
If necessary, the adoption of interventions on the markets is not excluded, starting from the ban on overdrafts. It will certainly be hot on the spread front as Treasuries week begins. The offer of 12-month Bots for 6,5 billion will be held on Wednesday. In the evening, the amount of the medium-long term auction on Thursday will be announced.
In this way, he risks overshadowing a rich calendar. Board meetings of numerous companies will be held, including today: Banca Generali, Brembo, Molmed, Prima Industrie. Tomorrow Ferragamo and Telecom. Wednesday: Cucinelli Danieli Safilo. Thursday will be the turn of Generali, D'Amico De Longhi, Leonardo, Nexi, Saipem and Tod's.
