Back to dancing the Bear on the price lists. Thanks, but not only, to the Italian political situation which adds to new signs of slowdown in the European economy. The Eurozone composite PMI fell to 54,1 points in May, an 18-month low and below the consensus, down in both France and Germany. Political uncertainty and the economic situation contribute to the decline of the single currency which fell to 1,17 against the dollar (minimum since 14 November) and even more against the Swiss franc (+3% to 1,1616 since 14 May).
At the end of the morning the President of the Republic Sergio Mattarella unlocks the impasse e summons Giuseppe Conte to the Quirinale to give him the job, after the uncertainties about a possible return to the game of Luigi Di Maio. But the knot of the Ministry of the Economy remains open, which has put the markets in tension in the face of the prospect of the designation of Paolo Savona to minister. In a forthcoming book, the economist reiterates his perplexities about European monetary union. "I have never asked to leave the euro, but to be prepared to do so if, for whatever reason, we are forced willy-nilly," writes Savona.
Meanwhile, the European Commission has concluded that "the budgetary adjustment in 2018 does not currently appear adequate" because the text presented by the outgoing government does not provide for any structural adjustment.
In Piazza Affari, the index falls by 1,7% to around 22.800. Heavy losses also a Frankfurt (-1,5%), Paris (-1,1%) And Madrid (-1,3%). Outside the eurozone, more limited damage per Zurich (-0,5%) And London (-0,1%).
The fever rises again spread which rises to 191 basis points after having reached a maximum of 194. The yield on the ten-year BTP rose by 15 basis points to 2,43%. Investors turn to the German Bund whose yield falls to 0,50%. The yield differential between Italy and Spain also reached a new high since February 2012, trading at 98 basis points from 89 at yesterday's close in the late morning. In one month the gap with Madrid doubled.
I credit default swap, or the cost of insuring against Italian debt default, are on the rise and have reached their highest level since the end of August last year. The 5-year CDS reached 145 basis points, the highest level since the end of August 2017.
The suffering continues lira Turk, dropped to 4,75 on the dollar, a level never seen in history. In the space of three and a half years, the dollar has doubled in value against Erdogan's currency: bad news for Astaldi -3% on the hunt for a buyer for the third Bosphorus bridge. S&P has downgraded its rating to CCC.
There are other signs of the difficult moment for emerging markets: the Vietnam Stock Exchange (today -2%) has wiped out the gain since the beginning of 2018, losing 20% in one month.
Il Petroleum it is trading at 79 dollars a barrel, down 0,7%, not too far from the highs of the last 4 years. Reuters wrote yesterday evening that OPEC does not like the oil price at these levels, and for which, also in the next few days, it could announce a review of the constraints on production in force. The cartel of producing countries would aim to bring prices back to around $75, a level that would not have serious negative effects on the economies of client countries. Down in Piazza Affari the titles of the sector: Eni -1,8%. This morning Exane raised its target to 19,50 euros from 15,0 euros. Rating climbed to Outperform from Neutral. Saipem -3,9% Tenaris -2,9%.
All Italian blue chips are down. The financial stocks are worse: the banking sector loses 2,1%. Weak Unicredit, Where's Banca e Bpm bank, the most affected by sales with declines of over 2,5%. B for Bank -1,2%. CEO Alessandro Vandelli announces that the business plan will be presented in September. The disposal of 4,5 billion euros of non-performing loans and the 2 billion securitization will be closed by 2018. Post -1,8% Generali -2% UnipolSai -2,3%. Unipol -3% after buying 0,56% of the capital in the last few days.
Azimuth -0,4%. The managers who control the company, through Timone Finanziaria, are ready to buy shares. According to rumors, there would also be a private equity fund ready to invest, in agreement with Timone herself. Anima -3%. Among the industrialists, Prysmian falls by 2,3%. The US subsidiary General Cable reportedly being investigated by the Justice Department over corruption cases, the company said it was not aware of any investigations. Leonardo -2,3%. Profits were taken in the automotive sector, yesterday tonic on the news that China will reduce duties on vehicle imports: down Brembo (-1%), Fiat Chrysler (-1,4%) And Ferrari (-1,1%). On positive ground Fiera Milano (+3,8%) in the wake of the publication of the three-year business plan.
Among the few sectors benefiting from the political climate, renewables and environmental services stand out: KREnergy, Services Italy e Ambienthesis are among the best titles.
