The Fed is ready to cut rates in case the tariff war threatens the growth of the economy. This was said yesterday by the president of the US central bank, Jerome Powell, who claimed that he was ready to act "appropriately" in the face of a worsening economic situation.
The markets, in Asia as well as in the USA, picked up the signal without delay. Europe, already in fibrillation, awaits the expansionary moves that will be announced tomorrow by Mario Draghi at the end of the ECB meeting. The equity markets recover, while bond yields, already depressed by the flight from risk, are recovering.
TOKYO LEADS RALLY IN ASIA, THEY FOLD IT BOND
The rally was led this morning by the Tokyo Stock Exchange (+1,9%) ahead of Hong Kong (+0,7%) and the CSI 300 of the Shanghai and Shenzhen stock exchanges (+0,6%). Sydney also rose (+0,8%) after the rate cut by the Reserve Bank of Australia.
The 2,118-year T Bond rebounds this morning to 2,07%, already down on Tuesday to a low of 24%. The yield spread of the three-month bond and the ten-year bond, which reached -21 basis points yesterday, goes back to -XNUMX.
APPLE AND THE BANKS FLY TO NEW YORK
Powell's words were a panacea for the American markets, which recorded the best session of 2019. Dow Jones +2,06%, S&P 500 +2,14%, Nasdaq +2,65%.
Strong recovery in tech stocks supported by the rally of Apple (+3,3%) and Microsoft. Lively banking sector (+3,65%) thanks to the rebound in bonds.
Oil is still down, with Brent at 61,6 dollars. Yesterday there was a very weak rebound, but the decline started again this morning. The OPEC and allied agreement on production expires at the end of the month. Meanwhile, China is reducing purchases to put pressure on the United States and Washington's allied exporting countries.
US REPUBLICANS SIDE WITH MEXICO
Meanwhile, the conflict over tariffs continues at a low intensity, amid mutual accusations. In the foreground today Mexico, forced to face the threats of Donald Trump. Alongside the Latin American country came the warning of the Republican senators to the President: we will not vote on tariffs.
Meanwhile, Trump is engaged in his pro-Brexit campaign in London: get rid of the EU, he said, and we will triple trade with you.
MILAN FLIES, BUT SANCTION FROM THE ECB IMPENDS
The push coming from the Fed, pending tomorrow's decisions by the European Central Bank, has caused the recovery of European stock markets starting from Milan, comforted by the more relaxed tones among government partners, after the premier's ultimatum/appeal Joseph Conte.
But today the news will be dominated by the active response of Brussels on the eventual opening of the infringement procedure for excessive debt against Italy which risks a fine equal to 0,2% of GDP, a sword of Damocles which will hang over the fragile destinies of the finances of the Bel Paese at least until the decisions of next July. Prime Minister Conte said that the fundamental objective for the country system is to avoid the procedure. The EU budget rules, he added, are respected until they are changed.
BULL MARKETS WAITING FOR DRAGONS, SPREAD TO 274
After a series of declines yesterday, Piazza Affari was the best in the Old Continent, closing with a rise of 1,79%, once again above the psychological threshold of 20 points (20.229).
Among the other price lists, Frankfurt shines (+1,55%) led by the comeback of BMW, Daimler and Continental; Madrid +1,07%, Zurich +1,35%. Paris (+0,51%) and London (+0,42%) are further behind.
Year-on-year inflation in the eurozone fell to 1,2% in May 2019 from 1,7% in April. The core figure also fell, +0,8% (against +1,2% in April). The weak dynamics of prices, together with the deterioration of the macroeconomic framework, is destined to condition monetary policy, "I do not expect a rise in rates in Europe before 2021" says Franck Dixmier of Allianz Global Investors. The situation favors the task of Mario Draghi who will have an easier time rejecting criticism of a Tltro loan plan that is too generous with Italian banks. A signal comes from the more relaxed performance of the bond market, also supported by the agreement between the government parties on the "unblock construction sites" decree.
Thanks to the appeal offered by higher yields, however, the 268-year rate fell, reaching a low of 274 points and then closing at XNUMX.
The 2,53-year reference rate fell to 2,59% from XNUMX% at the start.
THE FRENCH GOVERNMENT WILL JOIN THE FCA-RENAULT BOARD
Postponed the decision on the merger between Renault and FCA. "The Board of Directors has decided to continue to study with interest the possibility of this combination and to extend the discussion on the subject", reads the note released yesterday evening after a three-hour meeting between the representatives of the French group, +3% yesterday , and those of Fiat Chrysler +4%.
The meeting was dominated by requests from the Paris representatives on the composition of the new board and on the guarantees vis-à-vis Exor, destined to be the first shareholder of the new company with around 15%. It seems that an agreement has been found on the presence of one adviser on behalf of the shareholder state among the four attributed to Renault (same number for FCA). Barring surprises, the compromise on the influence that the French government will exercise on the new FCA-Renault could pave the way for the green light by the CDA to a framework agreement that leads to the long process for the merger. But it is possible that the new meeting, scheduled for tonight, will not be sufficient to complete the complex dossier
BANKS AND PRYSMIAN SHINE IN PIAZZA AFFARI, ATLANTIA SUFFERS
Prysmian shone in Piazza Affari (+6%), which has finally come to terms with the problems associated with the operation of the Western Link cable in Wales.
Banks in clear recovery. Among the big companies, Unicredit and Intesa recorded increases of between 2,9% and 2,2% respectively. Banco Bpm leads the race (+3,5%). Bper (+1,8%) also performed well, after the news that launched investigations for the rescue of Carige, and Azimut (+3,51%), which confirmed that it could exceed 300 million in net profit in 2019, a higher data than consent. Goldman Sachs has started hedging Anima (+6,19%), with a buy rating of €2,8 and a target price of €3,5.
Atlantia goes against the trend (-2,5%). The Minister of Infrastructure and Transport Danilo Toninelli writes on Facebook that the rule to facilitate the revocation of a motorway concession, inserted with an amendment to the Sblocca cantieri decree, must be approved.
Autogrill -0,3%, after the publication of forecasts for the three-year period 2019-2021: expected earnings per share are higher than consensus expectations. The press release speaks of an expansion of activities. edium
