"Get ready for an economic hurricane: the Fed and the war in Ukraine will cause it." With these words JP Dimon, banker symbol of the USA, threw a bucket of icy water on the European price lists in the finale. A few hours earlier on Wall Street there had been the incredible tumble of S&P Global (-8%): the rating agency suspended its guidance due to the uncertain macroeconomic conditions, dragging even Moody's downwards (-8%) . All in the aftermath of the confession of Janet Yellen, head of the US Treasury: "I was wrong about inflation a year ago". On the day the Fed's budget cut, the Quantitative Tightening, officially kicked off, confirmations arrive from the United States that, for now, global finance lacks a reliable compass.
Asian stock markets fell for the second consecutive day, penalized by the declining closure of Wall Street and the fear of new restrictions in Hong Kong. The CSI 300 of the Shanghai and Shenzen price lists is around parity, as are the Tokyo Nikkei and the Mumbai BSE Sensex. Kospi of Seoul -1,3%.
The Hang Seng, the reference stock market index of the former British colony, lost 1,6%. Back from his trip to Beijing, where he also met with President Xi Jinping, the new city administrator, John Lee, said that the authorities must do more to fight the pandemic. It is the signal that, despite the reopenings in Shanghai, the zero Covid policy does not change.
Wall Street futures are little moved: yesterday the Nasdaq closed down by 0,7%, the same variation for the S&P500.
Of note is the earthquake in the Meta home (formerly Facebook). After 14 years she resigned from Coo Sheryl Sanberg, the right arm of Mark Zuckerberg.
After a promising start, the decline was triggered by better-than-expected data on US industrial activity. The news has rekindled fears of an even more aggressive tightening to cool inflation.
Bond sales began immediately after the publication of the ISM manufacturing index: the yield on the 2,93-year Treasury Note rose to 2,92%, this morning it is 2,85%, from 26% the day before. The spread between the two-year and the ten-year bond narrowed slightly, to XNUMX basis points. Real rates moved little, on the highs of the last three weeks.
Jamie Dimon thought of inflaming the spirits. But he didn't even joke about Mary Daly, the dove of the San Francisco Fed, who advocated the need for fast-paced hikes up to 2,50% "as soon as possible."
An even more aggressive Fed on inflation increases the risk of a recession. Tracie McMillion, head of investment strategies at Wells Fargo, thinks this way: during the interview given tonight to Bloomberg, the strategist says that stagnation could come as early as the end of this year.
The dollar is appreciating against most of the world's currencies: the South Korean won and the yuan in particular weakened in Asia this morning. The Indian rupee strengthens. Euro in adjustment, at 1,065, after two sessions of strong decline.
Pressure on oil prices eased overnight. This morning, the WTI is down by 2%, at 113 dollars pending the decisions of OPEC+. Saudi Arabia stands ready to ramp up oil production should Russia's output drop substantially due to sanctions. The brings it back Financial Times citing sources according to which Saudi Arabia is aware of the current risks associated with the new sanctions against Moscow and the agreement between the EU and Great Britain to ban insurance on ships carrying Russian oil.
EU manufacturing is slowing down but inflation is more frightening
Jamie Dimon's words rolled like boulders on the European price lists, helping to overturn the course of the session. The fear of inflation is increasingly alive, at its highest level since the 18s. But the publication of PMI data on companies' purchasing intentions has reawakened the risk of stagflation in investors' minds: in May the manufacturing sector dropped to an 54,5-month low at 55,5 (from 51,9 in April). In Italy the drop is to XNUMX, beyond expectations. But the scales for now lean on the side of the inflation syndrome.
Deutsche Bank sees a 0,50 increase in July
According to Deutsche Bank economists, the ECB Frankfurt will eventually have to give in to the hawks and raise rates by 50 basis points in July. Austrian Governor Robert Holzmann says such an increase is needed to give a clear signal that the ECB is serious about curbing inflation. Otherwise, he added, "even tougher measures" will be needed later.
The yield of the Btp flies to 3,18%, spread to 200 points
Tensions on interest rates one week after the ECB summit dominated the bond market. The yield on the 1,13-year German Bund rose to 1,11%, from 3,18%. The BTP instead travels at 3,11%, from 9%, to the highest since 200 May. The yield differential between Italy and Germany has returned above the psychological threshold of 198 basis points, from XNUMX at the previous closure.
The money markets price the probability of an increase of half a percentage point already in July at around 40%: they have moved for an overall tightening of 120 basis points by the end of the year.
Macro data weighed on the euro, which fell back below 1,107 against the dollar and traded at 1,062, down 0,9%.
Bags in red after the US opening. Milan -0,9%
The continental stock exchanges, after an attempt to rise in the early afternoon, took the path of sales with conviction.
Piazza Affari loses 0,9% and falls back to 24.283 basis points. The balance is heaviest in Amsterdam (-1,64%) and Madrid (-1,14%). Limit the damage Paris (-0,77%) and Frankfurt (-0,34%).
The City saves the Dr. Martens phenomenon (+28%)
Outside the single currency area, red dominates London (-1,01%). But he runs the Dr Martens footwear brand goes against the trend (+28,65%), after forecasting an increase in annual revenues, thanks to price increases and higher sales of shoes and boots.
He holds the car. Stellantis sells less (-15,5%) but earns more (+1,74%)
The auto sector, which is recovering throughout Europe, has taken care of supporting the Bull in Piazza Affari, despite the fact that the sales bulletin continues to show double-digit drops. The best stock was Stellantis (+1,74%) which in May in Italy sold 15,5% less than a year ago, in line with the rest of the market. Pirelli also made progress (+1,05%), while sales of Ferrari did not stop (-2,07%). Pirelli +1,07%, Iveco +0,35%.
Leonardo takes off, Vivendi stops at the Telecom rally
Leonardo (+1,5%) celebrates "a further expansion of the AW139 twin-engine helicopter fleet in Australia with an order for three units".
The interview with the chief executive officer of Vivendi, promo private shareholder of Telecom (-3,5%), froze the purchases of the stock: Arnaud de Puyfontaine said he will oppose the sale of the network if the offer is 21 billion.
The banks are holding back, Bper/Nexi trade agreement
The Dimon effect has hit the banks, slowing down in the final starting from the Big Unicredit and Intesa Sanpaolo. Bper (-0,35%) also closed in the red, which signed a commercial agreement with Nexi (-0,44%) for the management of POS.
Saipem (-4,1%) raises cash, a marine regasification terminal for Snam
Saipem (-4,1%) was also in the red after the upward start, which sold to Kca Deutag the onshore drilling activities. The group will collect 550 million dollars and will obtain 10% of the shares of the new entity.
Weak Snam (-0,26%) which bought Golar Tundra for $350 million, ship used for storage and regasification.
Among the big names Moncler holds (+1,1%), awarded by Barclays. More cautious Ferragamo (+0,1%).
