The slowdown of the global economy is heavier than expected and the big ones are trying to take cover. The US-China summit ended without an agreement but in a relaxed, almost euphoric climate. Negotiations will continue in China immediately after the Chinese New Year which marks the beginning of the Year of the Pig next week. Then, the great peace (if there will be) will be signed directly by the two presidents. “My friend Xi and I will take care of it,” Donald Trump tweeted.
The signs of peace, together with the dovish tones of the central banks, seem made on purpose to cheer up the markets, worried by a situation that turns out to be worse than expected, from Asia to Europe, hit, more than by the expected Italian recession, by the alarm launched by the Bundesbank (surprising Jens Weidmann in a dove version) and, above all, by the conditions of the Chinese economy, almost in apnea on the eve of the Lunar New Year. The industrial production of the Dragon, the Caixin index reports this morning, fell in January to a three-year low, disappointing hopes of a rebound. Japan is also slowing down: the manufacturing industry is at its lowest in 29 months, South Korea and Taiwan are doing worse. Meanwhile, the Baltic dry index, which measures the trend of trade by sea, has lost 47% since August, when the difficulties on duties began.
BEIJING: INDUSTRIES AT THE LOWEST SINCE 2016, BUT THE STOCK IS UP
The global economy, with the exception of the US, is doing badly. But the stock exchanges are regaining strength, thanks to the renewed attention of the central banks, starting from the about-face of the Fed (a third of the experts are convinced that within the year Jerome Powell will cut rates again).
The markets thus face February with a plus sign. The CSI 300 index of Shanghai and Shenzhen gains 0,9% even if the PMI Caixin index on purchasing managers' expectations fell to 48,3 in January from 49,7 in December.
The Chinese currency feels the blow, the dollar Yuan exchange rate rises by 0,6% to 6,73: first appreciation after seven consecutive days of weakness.
In no particular order are the other markets in the region. Both Japan's Topix and Hong Kong are posting modest losses after hitting new highs.
Brent oil is down 1,5% to $61 a barrel, while WTI, the benchmark crude for the United States, is flat at around $54 a barrel: the differential between the two types of premium oils, falls to the lows of the last five months.
Energy stocks were positive yesterday in Piazza Affari: Eni +0,9%. Saipem +2,2%. Tenaris +0,6%.
FACEBOOK LEADS NASDAQ, AMAZON DISAPPOINTS
Multi-speed performance yesterday for the US markets. The Dow Jones index marks time (-0,06%), held back by the collapse of Dupont Chemical (-9,23%) after the accounts. Better S&P 500 (+0,86%) and above all the Nasdaq (+1,37%).
Facebook was the driving force behind the tech price list: +10,82%, in the best session for three years, thanks to better-than-expected accounts.
Record results also for Amazon: revenues of 72,4 billion (better than expectations of 71,87 billion), record profits of 3,03 billion. But Jeff Bezos' forecasts for 2019 disappointed operators: -4,9% after the Stock Exchange.
ITALY IN RECESSION, WEIDMANN ALARM ON BERLIN
The entry into recession of the Italian economy, although widely expected by the markets, weighed down the Italian Stock Exchange, bringing up the rear among the Eurozone markets. What worries operators is not only the 2018 data which is worse than estimated, but the far from comforting prospects for the current year, aggravated by the disturbing signals coming from the German economy, the locomotive around which the manufacturing industry revolves Italian.
The latest alarm, yesterday evening, was launched by the president of the Bundesbank Jens Weidmann: "The drop in oil prices - he said - will lead in particular to inflation that will probably drop significantly this year compared to what was forecast by the ECB at December". For Germany, in particular, the banker sees a more prolonged contraction than expected with a GDP that could fall "well below the potential rate of 1,9% in 2019".
BUSINESS PLACE +7,3% IN JANUARY
The Italian stock market closed down by 0,21%, at 19.730 points, at the end of a contested session: after a positive start, the stock market wiped out the gains in the late morning and then recovered ground at the end of the session, also in the wake on Wall Street.
January ended with an overall gain of 7,30%. During the session it had pushed to the maximum since mid-October at 19.904 points and then fell back under the weight of the banks.
The Ftse Star index (yesterday -0,4% to 33.260 points) also closed the month of January with a gain of 9% (FtseMib +7,3%). It is the best result on a monthly basis since March 2017 which ended with a +11%. In Europe, in the same period the Eurostoxx index rose by 4,80%, the Dax by 5,30%.
DEUTSCHE BANK IS SCARY (-5%)
Frankfurt closed flat yesterday, -0,06%. Deutsche Bank collapsed by 5%, worst blue chip: according to Bloomberg, executives have two months, what is missing at the end of the quarter, to revive activity and prevent state intervention. Should the results of the quarter not represent a turning point, the Berlin authorities would take the field to pilot the merger with Commerzbank.
Sales prevail in Madrid (-0,18%), while Paris and London are positive (+0,36% and +0,46% respectively).
THE SPREAD FALLS TO 243 POINTS, TEN YEAR AT 2,59%
Volatile session but flat finish for the bond market. After the decline in the wake of the announcement of the GDP data, the market first resumed the upward path, to then essentially reset it.
The Btp/Bund spread closed at 243 points, the ten-year rate almost unchanged at 2,59%.
The reference ten-year derivative reached its maximum contract at 129,81 and the one-year BOT fell to its minimum yield at 0,054%.
Banks under fire in Italy, but not only. In addition to the situation of Deutsche Bank, the European sector index (-2%) is weighed down by the accusation of the European Commission, according to which eight banks have cartelized in the trading of government securities.
In Milan, the sector suffers a landslide of 3,8%. Almost all credit titles appear at the bottom of the list. The worst was Bper -6,1%, but Ubi (-4,7%), Banco Bpm (-4,9%), Unicredit (-4%) and Intesa Sanpaolo (-3,2%) also lost.
FERRARI ENGAGES SIXTH: +11%
At the other end of the main price list, Ferrari is up 11% after several suspensions with extremely high volumes. Investors were thrilled by the 2018 results in line with expectations and above all the anticipation for next year of the 2020 objectives in terms of EPS and free cash flow. The introduction of the first electric car on the market is expected after 2022.
Fiat Chrysler also benefited from the results (+1,5%). China's Zhejiang Geely Holding said it has no interest in Alfa Romeo.
On the contrary, Cnh (-2,81%) and Pirelli (-3,16%) closed in deep red, on which Equita Sim lowered the target price to 8,1 euros from 8,3, while Banca Imi to 7,5 from 8 euros. Both confirm the buy rating.
LIVE BY ELLIOTT ON TELECOM ITALIA (+5%)
Telecom Italia was also well bought, taking advantage of the increase in the stake owned by the Elliott fund, which rose from 8,8% to 9,4%. The stock closes at +5%.
Purchases also on Leonardo (+1,3%) after the OK of the Antitrust at the completion of the purchase of the controlling share of Vitrociset.
Positive Juventus (+2% despite yesterday's defeat in the Italian Cup.
Out of the main list, Tiscali did well (+3,9%) after the company issued a 10,6 million convertible bond, with a one-year maturity, fully subscribed by the shareholders Ict Holding Limited and Sova Disciplined Equity Fund in equal shares .
Money on Safilo (+3,7%) after the advances on 2018 revenues and ebitda released yesterday.
