The trade war took its first victim. Gary Cohn, former chief of staff of Donald Trump's economic advisers, resigned in open dissent with the president's decision to raise tariff barriers on steel and aluminum. Wall Street felt the pinch: Cohn, former Goldman Sachs, already a candidate in the summer to lead the Fed, was considered one of the market's point of reference in the administration. But Trump, who limited himself to tweeting that “this White House is full of energies that come and go. I like the contrasts between my men”, he has decided to espouse the hard line: the large-scale trade war between the United States and the rest of the world, at this point, seems inevitable. A cold shower for Wall Street, which yesterday had bet on a soft evolution of the presidential line.
S&P FUTURES -1% AFTER COHN'S RESIGNATION
The resignation of Cohn, the architect of the Trump administration's tax cut plan, came tonight, with US markets already closed. But this morning the future of the S&P500 index signals a decline of 1%. The news nullified in Asia the positive effect of the announcement of the forthcoming meeting between the presidents of the two Koreas, the first for 11 years.
DOWN TOKYO, SEOUL IS NOT CELEBRATING THE MEETING WITH KIM
The Tokyo Stock Exchange is starting to close down by 0,7%. The yen, considered a safe haven currency, strengthens. The cross with the dollar rises to 105,7 dollars, from 106 yesterday. Yesterday the governor of the Bank of Japan, in the hearing in Parliament on the eve of the institute's summit, was categorical: monetary policy does not change, Qe stimuli do not touch each other.
The other squares have lost ground. Seoul also recorded a slight decline (-0,2%) despite signs of easing with Kim. Hong Kong -0,4%, Mumbai -0,1%, Sydney -1,1%. Only the CSI 300 of the Shanghai and Shenzhen lists (+0,1%) showed a modest increase.
The uncertainty surrounding the tariffs affected the mood of Wall Street even before Cohn's resignation. The Dow Jones (+0,04%) is almost flat, the S&P 500 (+0,26%) and the Nasdaq (+0,56%) are up.
Note the decline of Qualcomm (-2,9%). The government security body has launched an investigation into the potential risks of the 117 billion offer made on the chipmaker by Singapore-domiciled competitor Broadcom.
DOLLAR AND OIL DOWN. SAIPEM FLIES TO THE BUSINESS AREA
The dollar fell again this morning, traded at 1,2420 against the euro. The 2,85-year Treasury Bill strengthened, with the yield down to 2,88%, from XNUMX% yesterday.
Oil down this morning on Asian markets: -0,7% to 65,3 dollars a barrel. The Energy Information Administration raised its forecast for US crude oil production to 10,7 million barrels a day, a level never seen in history.
The oil industry will require investments of approximately $20 trillion over the next 25 years to meet demand and declining fields. It is the estimate of the CEO of Aramco, Amin Nasser.
At Piazza Affari final growth for Saipem (+3%), already down by 2% before the publication of the accounts. The company confirmed its 2018 targets: revenues of 8 billion euros, debt down to 1,1 billion. New contracts at 2,7 billion euros, much better than expected. After the 2017 data, Banca Akros confirmed the buy recommendation on the stock and the target price at 4,6 euros. Tenaris +0,9%, Eni +1%.
MILAN BOUNCES AGAIN ABOVE 22 THOUSAND
Positive day for the European markets driven by the automotive industry to coincide with the start of the Geneva Motor Show.
The Milan Stock Exchange was the liveliest, breaking the 22 mark. The Ftse Mib index closed up 1,75% at 22.074,14 points. The Star index did even better (+1,86%).
The other European stock exchanges slow down in the end. However, the main European lists closed in positive territory with the exception of Madrid (-0,45%). Frankfurt advanced by 0,19%, Paris by 0,06%. Outside the Eurozone, London is doing better (+0,43%).
The markets are already tuned into tomorrow's meeting of the ECB directorate. At Mario Draghi's press conference at 14.50 pm, no news on interest rates is expected. However, a change to the guidance on purchases is not excluded where it states that these can increase again in case of need.
ISTAT PROMOTES RECOVERY, MOODY'S AND FITCH ON ALERT
The monthly note from Istat contributed to favoring the recovery of the Italian stock market: “In a positive international economic scenario – we read – the Italian economy maintains an expansive profile”. The leading indicator remains "stable at high levels, confirming the maintenance of a favorable macroeconomic scenario for the coming months". The latest data to which the report refers are therefore those released last Friday, relating to GDP in the fourth quarter of 2017.
On the other hand, the concern of the rating agencies is growing. A note from Moody's notes that the outcome of Sunday's Italian elections adds elements of structural challenge to the country's economy and public finances. "The new government's detailed tax plans will be highly relevant to the direction of Italy's credit profile," it said. In particular, much attention will be paid to any initiative to weaken the reforms on the labor market and pensions. The agency currently has a Baa2 rating on Italy with a negative outlook (only two notches below the investment grade threshold). The first date for the review falls on 16 March but it is more "probable" that the decision can be taken on 7 September.
Fitch too could make a decision on the matter on March 16 (August 31 is another useful date). The outcome of the elections, reads a note, "makes the formation of a stable government difficult, increases the possibility of some and further weakens the prospects for structural reforms". The economic policy implications will become clearer as the negotiations on the new government proceed, "nevertheless we believe that some fiscal easing is now more likely, limiting the reduction of public debt" says the agency which currently has a BBB sovereign rating on Italy, with a stable outlook.
THE SPREAD RETURNS TO 132 POINTS, FIRST AUCTIONS AFTER VOTING
The BTPs slowed down in the end, canceling the rise after having found the pre-election spread levels during the day, lost following yesterday's instinctive widening.
The spread between 10-year BTPs and its German counterpart drops to 132.60 basis points, -2,57%, while the yield, after a peak yesterday at 2,14%, the highest since mid-October, fell to 2,03 and then closed again then on the final at 2,10%.
After an initial underperformance of the BTPs compared to Spanish bonds, at the end the relative spread remained unchanged at 62 points, a level in any case close to the highest level since the end of January.
Spain placed 4,92 billion 6 and 12-month bonds, while a total of 791 million indexed bonds arrived from Germany in 2026 and 2030.
The week on the primary market continues today with the offer of 4 billion German five-year government bonds (Bobl).
Today, with the markets closed, the first details of the Italian auctions in mid-March will arrive, the first post-election test for the Treasury. For Monday 12 Intesa Sanpaolo expects the offer of 12-month BOTs for 6,5 billion (a figure similar to the one maturing) and to follow up to 8 billion of medium-long term paper, including the new 7-year BTP in March 2025.
TIM, SINGER ASKS FOR MORE INDEPENDENTS FROM THE BOARD
The upside momentum was accentuated by incoming flare-ups from some blue chips.
The cover certainly belongs to Telecom Italia: +5.95% at 0,77 euros pending the exam of the accounts and the industrial plan approved last night by the Board. But the reason for the leap on the Stock Exchange is linked to the news, confirmed at the request of Consob, that Elliott management, the financial company controlled by Paul Singer (34 billion dollars of managed assets), has put together a package of Tim ordinary shares not to exceed, as of today, the thresholds that impose disclosure pursuant to the applicable Italian laws', ie 5 per cent” to which must be added a “significant” share of savings. "Although Elliott may further increase its stake in Telecom Italia (and in which case it will disclose the exceeded thresholds in accordance with Italian law), it is not seeking and will not seek to gain control of Telecom Italia," a spokesman continued. ”.
Singer's goal, known to the Italian public for financing the Chinese owners of AC Milan (who will have to repay him 303 million) and for his tug of war with Hitachi In Ansaldo Sts, is to gather more votes than Vivendi (strong by 23,9%) by mobilizing institutional investors, around 40% of the capital, dissatisfied with the management of the company, starting with the conflicts of interest between Vivendi and Mediaset, 29,9% owned by the French.
Meanwhile Mediaset is rebounding (+3,5%) after the post-electoral fall.7
MOODY'S PROMOTES FCA, MARELLI SPIN-OFF IN VIEW
Fiat Chrysler also rose sharply (+5,67%) over 17 euros on the day of Sergio Marchionne's press conference at the Geneva Motor Show. Many news of the day, even regardless of the words of the CEO. This morning Moody's raised Fiat Chrysler's rating by one notch, to Ba2 from Ba3, outlook stable. Analysts motivate the hike with "significant improvements in its credit metrics over the past three years, especially deleveraging." In addition, American analysts predict "the continuation of a strong operating performance in the current year, based on the renewal of a large number of high-margin products in the SUV and pick-up segment".
On the Magneti Marelli front, the Reuters agency instead reported that the group will carry out the spin off of the subsidiary through a listing on the Stock Exchange which does not provide for the collection of fresh resources through the sale of new shares.
Also in evidence was Cnh Industrial (+2,5%) which benefited from the confirmed outperform recommendation of Mediobanca Securities on the stock, with a target price of 13 euros.
FIREWORKS BY FINECO, THE BANKS START AGAIN
Asset management is good. FinecoBank (+3,9% at the close) recorded an increase of 4,12% to 9,968 euros after the release of the data on net inflows for February, positive for 609 million euros (+33% compared to the same month of 2016) . Azimuth +2,5%.
Banks have recovered ground, after the decline recorded on Monday. The index of Italian institutes rose by 1,7% against a gain of 0,3% by the European Stoxx for the sector. Above all, Banco Bpm (+2%) and Bper (+2,7%) stand out. Mediobanca gained 1,6% after Deutsche Bank started hedging the stock with a 'buy'. Unicredit +2,3%, Intesa Sanpaolo +0,9%.
THE STARS SHINE. LUCCICA DE' LONGHI
In the rest of the catalog, several medium/small caps shine. Salini Impregilo rises by 7%.
Trevi +6%, Mondadori +4%, Emak +5%, Isagro +5%, Geox +4%.
De'Longhi +7%. Berenberg upped the recommendation to Buy.
In negative territory only Luxottica (-1,77%) which bought 67% of the Japanese company Fukui Megane, and Ferragamo (-0,7%).
