The US economy is growing again, but after Europe, Japan is also slowing down. The economic situation is reflected in the dollar and in the trend of US T bonds, while bets are reopening on the rise in US rates. The tensions over oil after the bloodbath that continues to accompany the opening of the US Embassy in Jerusalem contribute to agitating the climate. The market takes the US sanctions against Iran for granted while Europe, led by France, tries to avoid a definitive rupture. Peace in North Korea is much less obvious after Kim's stiffening in the face of American military maneuvers together with Seoul. And once again an agreement on tariffs between Washington and Beijing seems a long way off: Vice Premier Liu He is in the US for negotiations that promise to be very complicated.
JAPAN INTERRUPTS ITS GROWTH
There is therefore no shortage of reasons for the nervousness of the markets. The Japanese Stock Exchange is weak after the confirmation that the long positive streak of the economy has been interrupted. The GDP of the Land of the Rising Sun recorded a drop of 0,6% in the first quarter, much more than forecasts (-0,1%). In addition, the figure for the fourth quarter of 2017 was revised downwards, from +1,6% to +0,6%. The yen fell against the dollar to its lowest level in the last four months, at 110,3.
The Seoul Stock Exchange was flat, while South Korea's currency, the won, weakened against the dollar to 1.077. The Hong Kong Stock Exchange loses 0,8%, and Chinese listings are also down.
The euro-dollar cross dropped this morning to 1,185, close to the lows of the year. The sharp rise in the dollar knocked out gold, which yesterday recorded its worst session in the last year and a half: -1,7% at 1.290 dollars an ounce. This morning on the Asian markets, the precious metal rose to 1.293 dollars.
THE US ECONOMY ACCELERATES: THE 3,065 YEAR TO XNUMX%
The US bond market is in great turmoil: the yield on the ten-year Treasury Bill has reached 3,065%, the highest since the beginning of 2011. The two-year yield rises to 2,56%, its highest level since 2008. Sales on Japanese sovereigns are on the rise : the 0,048-year slipped to 0,64%. Strong pressure also on the German Bunds. Berlin's ten-year trades at XNUMX%, the highest since March.
Sales on bonds, whose yield moves in the opposite way to the price, also affected Wall Street: the Dow Jones closed down 0,78%, after eight consecutive days of gains. S&P 500 -0,68%. NASDAQ -0,81%.
The upward pressure on US market rates is partly linked to the acceleration of the real economy: April retail sales grew in line with expectations by 0,3%, but data for the month were revised upwards previous. The anticipatory data relating to the index of the manufacturing sector (Empire Manufacturing) for May was much higher than expected, with a result up by 20,1 points against estimates of 15 points.
OIL TRAVELS AT HIGHEST, SAIPEM +2,4%
Oil moved little this morning, which however remains at a very high level, at 78,4 dollars a barrel in the Brent version after having passed the barrier of 79 dollars. The differential between North Sea oil (Brent) and the reference oil for the United States (WTI) widens to +7,3 dollars a barrel, the highest in the last three years.
In Piazza Affari, among the best stocks are the oil companies Saipem, which rises by 2,4%, and Eni +0,5%, within a European oil & gas sector that is up by about one percentage point. Tenaris +0,46%
SAVE ARGENTINA: IT CAN PAY THE DEBT INSTALLMENT
The Argentine peso recovered against the dollar to 24,05 from 24,98 the day before, on the news that the state managed to complete the auction of bonds from one month to five months: thanks to the 620 billion pesos collected, Argentina can repay debts due today.
THE WEAK EURO SAVE EUROPE. MILAN +0,3%
The European stock exchanges moved little, cooled by the data arriving from Germany: +1,6% against a forecast of +1,8% the first estimate of the quarter's GDP. Supporting the lists was the decline of the euro, yesterday at a four-month low
An increase of 0,31% to 24.297 points was enough for Milan to win the palm of the highest increase. Volumes are growing, traded at 2,85 billion.
TLC SUFFER: VODAFONE -4,3%, ILIAD -19%
Frankfurt is flat in the Eurozone, Madrid loses 0,5%, Paris gains 0,23%. Heavy fall of Iliad (-19%) after the drop in revenues in the fixed. The telephone company is preparing to land in Italy "by the end of the summer". Objective? Break even in Italy in terms of gross operating margin (ebitda) with a market share of less than 10 percent.
London +0,13% despite the crash of Vodafone (-4,26%) after the unexpected resignation of Vittorio Colao.
IMF: EUROPE SHY ABOUT REFORMS
In Europe, economic growth is robust, above all thanks to domestic demand, but governments are not exploiting this situation enough to reduce debt and implement reforms. This was stated by the International Monetary Fund in the spring edition of the "Regional Economic Outlook for Europe" report.
The Fund estimates that growth in advanced European economies, especially in the euro area, will slow to 2,3% this year compared to 2,4% in 2017 before slowing further to 2% in 2019 in a forecast also shared by the European Commission .
A busy day for the eurozone debt market, in the wake of the rise in the yield on US Treasuries, again over 3%, at the top for three and a half years. The prospect of the impact on crude oil of US sanctions against Iran weighs heavily.
SPREAD TO 131. ALREADY 3,723 BILLION FOR BTP ITALIA
At the end of the session, the ten-year BTP settled at 1,91%, from a maximum of 1,95%. The spread with the Bund closed at 131 basis points.
The declarations of Villeroy de Galhau contributed to moving the market in the euro area. The Banque de France governor argued that the ECB could update its rate guidance as the end of QE nears.
Meanwhile, Italian political uncertainty is growing, but the picture does not hold back the approval for the BTP Italia: yesterday subscriptions for the title expiring in May 2026 rose to 3,723 billion thanks to 1,417 billion requests which added to the 2,306 billion on Monday. The placement with the public closes today, tomorrow there will be the offer reserved for institutional investors.
BUSINESS CENTER TRAVELS ON PIRELLI TIRES
The positive performance of Piazza Affari is largely due to the positive reception of the data from Pirelli (+4,34%), the best blue chip of the day, which thus eliminated the loss since the beginning of 2018. The group closes the first quarter of 2018 with revenues growing by 5,7% (organic) to 1,31 billion euros, with a decrease of 2,2% after the impact of exchange rates. Organic revenue growth should be 9% higher (+4% including exchange rates and the application of the new IFRS 15 accounting standard), slightly down on previous estimates due to the decision to reduce exposure to the Standard segment. On the other hand, the expected growth in High Value, a sector on which the company has announced its focus for some time, has been confirmed.
Among industrialists, the rise of St decreased during the day: +0,2% after reaching an increase of more than two percentage points on the wave of indications arriving from the Investor day in London. Prismian +0,1%.
Fiat-Chrysler -0,4%. Complications ahead for the negotiations with the United States environmental authorities, in the course of a lawsuit against the company, it was revealed that the company had not correctly informed investors on the subject of diesel engine emissions.
COMMERZBANK GIVES THE BOOST TO THE BANKS
The banking sector also stood out, in line with the rest of Europe (+0,3% the Eurostoxx) pushed by Commerzbank (+3%) which promised to return to distributing the dividend in 2018.
The Italian index advanced by 0,6% on the back of the rise in market rates and the positive data on loans and non-performing loans published by the ABI. The most pronounced increases concern Ubi (+1,7%) and Banco Bpm (+1,3%) which by the end of the year should expel, through state guarantees, 8,5 billion euro of non-performing loans, including, five billion euros by June. Bper Banca also rose (+1%). The big names were also positive: Unicredit +0,3%, Intesa +1%.
Banca Mediolanum -1%. The Rome Public Prosecutor has opened an investigation into a 2016 ruling by the Council of State which allowed Fininvest not to sell a 20% stake, as prescribed by the Bank of Italy, following the loss of the integrity requirements of Silvio Berlusconi, who has also regained full political rights in recent days.
The management is positive. Azimut (+1,3%), Banca Generali +0,7% rebounds. Fineco Bank is setting the pace (-0,1%).
UNIPOLSAI AT THE BOTTOM OF THE BASKET. DISAPPEAR LIGRESTI
Insurance companies are weak: Generali -0,1%. Bringing up the rear of the main basket is Unipol Sai -1,9% on the day of Salvator Ligresti's disappearance.
At the end of the month, the company's stock will leave the MSCI Europe index, which Pirelli and Moncler will enter (flat).
PRADA UNDER FIRE, LUXURY SUFFERS
Fall in Salvatore Ferragamo fashion (-0,3%). The strong fall of Prada (-5%) in Hong Kong weighs heavily: the stock was hit by the Citigroup sell.
Ferragamo -0,3%. In Hong Kong Prada lost 5% after the Citigroup sell. The stock loses another 2,8% this morning
QUARTERLY: ERG DECREASES (-3,5%)
In the rest of the list, the day was dominated by a rain of quarterly reports.
Technogym (-2%) under pressure from profit taking, despite higher-than-expected revenue growth.
Esprinet -3%: debt grows. Ima -0,5%, Saras +0,2% reacts little to the quarterly results.
Erg moves back (-3,5%). Results of the quarter. Adjusted EBITDA of 162 million, in line with forecasts. Debt at 1,23 billion. 2018 targets confirmed: Ebitda at 475 million euros.
Shipyards +1%. Commissioned by Silversea Cruises extra luxury cruise ship worth over 320 million euros.
Giglio Group (+1,3%), closed the first quarter of 2018 with normalized EBITDA of 3,1 million euros, +32% compared to the first quarter of 2017.
Cerved (-0,1%) finalized the purchase of the non-performing loan recovery platform, called “Juliet”, from Monte Paschi.
Isagro (-1%) has published the results as at March 31st 2018. Revenues at 42,2 million euro, down by 5 million year on year. Ebitda at 4,5 million euros, down by 2,9 million on an annual basis.
