Will it be true? Financial markets shifted into reverse this morning on suspicions that Donald Trump "sold" on Wednesday an oil deal between Russia and Saudi Arabia that is in the offing. The suspicion is that the US president wanted to obscure the news of the dramatic increase in layoffs in the US in this way: requests for subsidies rose to 6,6 million workers during the week.
BRENT FAILS, TOKYO CLOSES DOWN
- North Sea oil, which jumped yesterday to a high of 36 dollars and then settled just above 30, is down 3,8% to 28,8 dollars a barrel. Texan crude trades at $24,50, down 4,5%.
- Asian stocks slow down ahead of the weekend: Tokyo's Nikkei -0,6%, Hong Kong's Hang Seng -0,6%, Shanghai Composite -0,3%.
- The financial world continues to take refuge in US Treasury bonds: this morning the 0,593-year yield slipped to a yield of 0,563, one step away from the all-time low of XNUMX%.
- To demonstrate the hunger for dollars on the planet comes another figure from the Guinness Book of Records. The Fed balance sheet reached $5.860 trillion, an increase needed to replenish the markets with liquidity.
AHEAD NEGATIVE OPENING FOR WALL STREET AND EUROPE
- Futures on the S&P 500 index are trading at -0,78% this morning, reducing yesterday's gains. Indeed, US stocks have turned higher due to the news announced on oil; Dow Jones +2,24%, S&P 500 +2.28%, Nasdaq +1,72%.
- In great evidence are the oil companies, where double-digit increases are not lacking, from Apache Oil to Marathon.
BUT TRUMP IS IN A HURRY: DEFAULT IN SIGHT FOR SHALE OIL
But how are things really? The oil deal will probably take place. But times and ways are yet to be defined starting from the quantities anticipated by Trump who spoke of production cuts of at least ten million barrels or even 15, "which is technically impossible" according to the experts interviewed by Reuters. And the two contenders for now do not change their attitude. The Russia he wanted to clarify that there were no talks between Vladimir Putin and Prince Mohammad bin Salman. Saudi Arabia yes, he anticipated the desire to convene an OPEC+ summit, extended to include Russia, but for the moment he is going full steam ahead with the increase in production, just as consumption is collapsing.
But Russia and Saudi Arabia have the strength to continue the tug-of-war, the US shale oil producers, struggling with their first bankruptcies, do not. The oil lobby, led by those of Texas, which until a few days ago was against any negotiations with OPEC, seems to have revised its position and from tomorrow it will confront the White House on the possibility of opening negotiations with other countries . Hence the feeling that there will be an agreement in the end.
DECISIVE DAYS FOR EUROPE. HALF FLOP THE SPANISH AUCTION
It is not difficult to predict that the increase in oil, which on Wednesday favored the flare-up in Milan, is however destined to return to the opening, giving way to the great maneuvers in Europe in view of the Eurogroup summit on Tuesday. In short, we need to act quickly, also because the rating review season is upon us, the risk of a rating downgrade by the agencies is rising, which makes the placement of new bonds much more complicated, if we had an advance yesterday with the auction of the new Spanish bond at thirty years, demand was very sluggish, at levels not seen for about ten years.
OIL GAVE WINGS IN MILAN ON WEDNESDAY +1,75%
European equities finished Wednesday's session in positive territory after starting lower on dramatic US labor market data. The revenge came with Trump's tweet on the oil deal that gave wings to the stocks of the energy sector, so important for Piazza Affari that it is no coincidence that it jumped to the top of the rankings of the Old Continent, leaving behind Frankfurt and the other markets. Milan recorded an increase of 1,75% to 16834 points.
- Only Zurich +1,21% keeps pace with the Italian stock exchange. The others are far behind: London +0,48%, Paris +0,33%, Madrid +0,28%.
- Frankfurt limits the hike to 0,25%.
THE SPREAD DOWN TO 190 POINTS
Closure marked by an increase also for debt securities. The spread settled at 192 against 210 on the eve after having dropped to 190.
Meanwhile, the 1,5-year yield returned just below the 1,493% threshold to end the session at XNUMX%.
AT VIA SURE, THE EUROPEAN UNEMPLOYMENT FUND
The rally is linked in particular to the initiatives taken within the European Commission which among other things has launched one anti-crisis tool called 'Sure' (Support to mitigate unemployment risks in emergency) which will be used to finance national redundancy funds and protect jobs. The use of funds not committed to social cohesion will also be made flexible, in order to mobilize resources to deal with the effects of the pandemic. President Ursula von der Leyen said that every means available will be used to address the crisis with resources will be raised on the market through the issuance of AAA bonds.
COMMERZBANK: BTPs SOON JUNK BOND
Commerzbank analysts throw water on the fire of optimism. Italy, starting from a debt/GDP ratio of around 150%, will hardly avoid the rejection of the rating agencies which will cause BTPs to fall into the arena of non-investment grade securities.
Fitch estimates a decline of 1,9% in 2020, with a US decline of 3,3% and 4,2% for the euro area. Italy will suffer a severe blow: -4,7% this year, with a prospect of recovery at a rate of 2,3% in 2021. These are not surprising percentages given the current situation and Confindustria's new alarm cry : -16,6% industrial production in March, -5,4% in the first quarter of the year, with "significantly worsening prospects".
TRUMP'S TWEET WAKES UP ENI +60% FROM MARCH LOWS
“I just spoke to my friend Mbs (Crown Prince) of Saudi Arabia, who spoke to President Putin of Russia, and I expect and hope they will cut about ten million barrels, and possibly a lot more. If that happens, it will be great for the oil and gas industry!” With this message (moreover not confirmed by the Kremlin) President Trump has sent prices into orbit. Brent has risen above $36, with a historic leap of 46,27%. Saudi Arabia, which aims at a new distribution of production involving Russia (and perhaps the United States) has already anticipated the convening of an OPEC+ summit. Russia is much more cautious, but this has not prevented a sharp rise in market prices which is particularly welcome by US shale oil producers and their Wall Street lenders.
At Piazza Affari Eni took off +6,93% to 9,83 euros after having passed the 10 euro barrier during the session. From the March lows of 6,26 euros, the gain is 60%. While since the beginning of the year it has still lost 27%, quite in line with the -28% of the Ftse Mib.
Saipem also stands out + 8,87%. Followed by Tenaris +7,15%. Down Saras -5,28% affected by the decline in refining margins.
AGREEMENT IN VIEW, ATLANTIA WILL NEVER STOP
Atlantia's march continues +5,9%: operators now consider the intervention of the Cassa Depositi e Prestiti and the F2i Fund in the capital of Autostrade per l'Italia as near. According to Equita "an agreement with the government is important to overcome the uncertainties introduced by the Milleproroghe on the Aspi concession which caused the downgrade of S&P and Moody's to junk". Bank of America has raised its rating to buy, with a target price of 20 euros.
They recover the utilities, after the setback on the eve. Enel +1,2%. Well bought Terna +2,82% and Snam +5,8%, sacrificed yesterday.
Revenge on the field also for Pirelli +3,5%.
MORE PURCHASES ON MEDIOBANCA, VOLA POSTE
Stands out among the financial Mediobanca +3,5%. It is not excluded that Del Vecchio is taking advantage of the discounted prices to round off his share.
Contrasted banks Unicredit yields 1,21%. It has been achieved the agreement with the unions on redundancies: 5.200 voluntary and incentivized exits and 2.600 hires.
Sale Intesa +0,21%. In great evidence Banco Bpm +2,7% Mps +1,8%.
In general insurance, +2%. Unipol +1,60%. Consob surveys revealed that in 2019 the company acquired 1,956% of Mediobanca.
Poste Italiane +5,4%. The company contributed 265 billion euro to Cdp funding from savings bonds and postal savings books (+2,7% year-on-year).
GIGLIO GROUP AND ITWAY, RISE FROM COVID-19
In the rest of the list:
Focus on Interpump +6,05%. Equita Sim confirmed the buy rating, reducing the target price on the stock by 12% to 31 euros, after a meeting with the company, mainly focused on the situation created by the Covid-19. The resilience of the group, according to analysts, should also prove itself in this crisis, to which Interpump arrives with a very low net debt that leaves room for M&A over the next 12-18 months.
The boom of Giglio Group +35% should be noted. The e-commerce leader has signed an agreement to supply Confindustria member companies with anti-Covid-19 masks imported from China, its main business centre.
Spectacular growth also for Itway +28,5% which yesterday presented an App that allows patients affected by Covid-19 to be monitored remotely.
