The most difficult Monday of the markets kicked off in Korea, where the coronavirus has so far caused seven deaths and 760 infections: the Korean stock market index shows a drop of 3,2%, the won drops 0,7%. The Korean Central Bank is expected to meet in the next few hours to announce a rate cut and measures to support the economy.
Strong drops also for Hong Kong (-1,5%) and Sydney (-2,2%). Shanghai holds (-0,7%), awaiting new interventions by the monetary authorities but also the decision to lift some restrictive measures on the movement of people in five provinces taken three weeks ago, at the time of the outbreak of the Covid 19 flu. today non-residents in good health can leave Wuhan, the most affected city. The data on the trend of Chinese manufacturing will be released on Saturday. It is very likely that Beijing will decide to postpone the session of Parliament scheduled for March 5. "Covid-19 - said Xi JingPing - is the most serious emergency since 1949". In China, confirmed cases of the coronavirus rose by 409 to 77.150. Deaths rose instead of 150, to 2.592. Tokyo is closed for holidays.
Various factors give the sensation of emergency.
- The new increase in gold, up 1% to 1.662 dollars an ounce, from +1,5% on Friday, to a seven-year high.
- The new drop in oil: Brent loses 2,4% to 57,1 dollars a barrel. Since the beginning of the year, demand has fallen by as much as 200 million barrels, with China losing about 4 million barrels a day due to the coronavirus.
- The race for protection pushed the yield on the 30-year US Treasury to 1,91%, its lowest in history.
The euro was weak against the dollar: – 0,2% to 1,082, from +0,5% on Friday.
RECESSION RISK FOR THE QUARANTINE ECONOMY
In this context, we are heading towards a very problematic opening for Western stock exchanges, led by Italy, which has surprisingly become one of the main areas of development of the coronavirus epidemic, in third place overall behind China and Korea. The accounts of the virus, for now, register 152 infected in four regions: Lombardy (110 cases) and Veneto, the most affected, ahead of Piedmont and Emilia -Romagna. Three dead. But the balance is getting worse by the hour.
Italy, already nailed to zero growth, it seems bound to end up in a recession given the prospect of 14 days of quarantine in the richest and most productive areas, where there are more than ten isolated cities. Banks and schools close their doors, many companies invite employees to work at home. Commercial events such as Mido stop. Armani closes the Milanese fashion shows by renouncing the public, Austria has closed its borders. And this morning a very special session is announced for Piazza Affari, under the strict supervision of Consob, ready to intervene in the face of anomalous situations.
MUSTIER: “I WILL NOT GO TO HSBC”
On the market, attention remains focused on the banks. The countermoves of the Ubi shareholders to the offer made by Calo Messina are awaited (who continues to reject the hypothesis of a possible increase in the offer). But the spotlights are also on Unicredit. Rumors circulated persistently over the weekend about the departure of CEO Jean Paul Mustier, courted a bit by all the big names, in particular by the board of the Anglo-Asian giant HSBC. But yesterday, via the Financial Times, the banker's denial arrived. Mustier remains at the helm of the bank after, in just two days, the rumors about his exit had caused the stock to drop by 6,8% (equal to 2,1 billion in market capitalisation).
TREASURY AUCTIONS, ENI AND SAIPEM ACCOUNTS ON THE CALENDAR
Month-end Treasury auctions coming up this week. Wednesday will be the turn of the Bots, but the most awaited offer of medium and long-term securities scheduled for Thursday.
The calendar of the companies foresees today the board of Sogefi and Banca Intermobiliare. Wednesday will be Saipem's turn, followed by Eni's board on Friday.
IMF CUTS GLOBAL GROWTH BY 0,1%.
The coronavirus emergency was also at the center of the Riyadh meeting between the G20 finance ministers who defined a package of measures to stem the epidemic. The International Monetary Fund cut global growth estimates by 0,1% and China by 0,4%.
Of note is the publication this week of the Ifo, the German confidence index.
In the US, the candidacy of Bernie Sanders to challenge Donald Trump is gaining strength. The radical leftist swept the primary in Nevada.
Warren Buffett released his shareholder letter after a year that saw earnings explode to $81,4 billion (up from 4). The Oracle of Omaha has defended the decision to invest liquidity in solid stocks (see Apple) because it does not see great alternative opportunities on the markets. In 2019, the financial company repurchased treasury shares for 5 billion dollars. His succession, he said, was carefully prepared.
