"Europe is probably already in a recession," says Luca Paolini, Pictet strategist. "No one thinks about shopping - he continues - with the war on their doorstep, moreover with the risk of inflation growing". Within a few days, the destinies of Europe separated from the rest of global finance: the EU stock exchanges are down 20% since 24 February, the others almost unchanged. The gap between natural gas prices is impressive, 33 times higher in Europe which, for now, is refraining from following the US in the probable Moscow oil embargo.
The EU stock exchanges cost 25% less than Wall Street
Compared to the big Americans, European blue chips are now at a discount of a good 25%, something that hasn't happened since the Greek crisis of 2011. "But probably - concludes the analyst - this will not be enough to entice purchases". Only a positive outcome in the Ukrainian war could change the picture. "For now we just have to wait." The analyst's opinion is confirmed by the trend of the markets, which are weak everywhere, not only in the Old Continent, which today is looking for a common strategy on energy, defense and food security, the three Achilles heels of the EU.
After a thrilling session in Europe. Poor results from yesterday's third round of negotiations depressed Asia Pacific stocks this morning. Progress by the US Congress in passing a law banning imports of Russian oil is bringing crude back up.
Beijing's bonds are also losing ground
Tokyo's Nikkei loses 1,7%. CSI 300 of the Shanghai and Shenzen price lists -0,7%. Hong Kong's Hong Seng -0,2%. Kospi of Seoul -0,8%. Mumbai BSE Sensex -0,2%.
Bloomberg reports that there was a real flight from China's government bonds by foreign investors in February. Net outflows totaled 35 billion yuan, about $5,5 billion, a record high.
Wall Street futures are down slightly today. Yesterday the S&P500 closed down 3%, its worst session since 2020. The Nasdaq -3,6% (down 20,1% from its highs) has officially entered the bear market.
Intel presents the IPO of Mobileye. Euros at lows
Tonight Apple presents the new iPhone. Intel, meanwhile, presented the file for the IPO of the Israeli subsidiary Mobileye, leader of self-driving car systems. The goal is a valuation of $50 billion.
The 1,78-year Treasury Note trades at 1.788%. Gold down slightly to XNUMX dollars an ounce.
Euro little moved at 1,086, close to the lows since May 2020: the markets are betting that the ECB, more out of necessity than conviction, will confirm the soft policy, even at the cost of taking risks on the inflation front.
Oil stock exchanges. The index of fear rises
Make way for geopolitics, dear analysts. Fundamental calculations, but also assessments of interest rates and inflation, have now escaped the scrutiny of insiders, including central bankers. Under the skies of war, what matters is the ability to adapt to extreme conditions, under the banner of maximum volatility. It is the key to understanding a day spent under the banner of tug of war on raw materials: opening on the edge of terror in the wake of the threat of US sanctions on Russian oil; prices recovering after the slowdown in Germany and the Netherlands on this hypothesis; final back in the red after a senior US official told Reuters no decision on the matter "has been made", but "is likely to involve only the US if it were to happen".
All in the midst of signs of détente (the next meeting between the delegations on Turkish soil) and diktat arriving from Putin. The result, apart from the roller coaster on energy, is extreme volatility: for the ninth consecutive day the Vix fear index remains above 30 points, much more than the average of the last three months (around 24 points).
The Btp better than the Bund, spread at 159
The Italian secondary is holding up the shock wave less badly than the Bund, the safe haven asset par excellence, which has been declining lately.
The spread between Italian and German ten-year bonds fell to 159 basis points (-1,9%), with a Bund rate of -0,01% and a BTP of +1,58%.
Moody's sinks Moscow. Putin will pay us in rubles
Moody's further downgraded Russia's rating to Ca. A paradoxical situation given that Moscow's public debt does not exceed 20% of GDP but the risk of default has grown geometrically with the ruble's landslide from 75 on the dollar (before the war ) to 160.
In contrast, Moscow has decided to pay creditors of foreign currency bonds in rubles: a move that raises the cost of protecting against debt default. Countries such as who will be refunded in rubles fall into the category of Italy, part of a blacklist of hostile nations drawn up by Putin.
The CDS explode, Moscow towards default
But not all foreign currency bond regulations offer this possibility: for these bonds, in the event of payment in rubles, a "trigger event" could occur, i.e. an event which determines default and which allows CDS holders to repay by their counterparty. Russian 5-year credit default swaps (CDSs), contracts that pay in the event of default, jumped to a record 2.619 basis points from 1.725 points on Friday. Second Bloomberg, this corresponds to a record 80% probability of the country's insolvency. Despite the government decree, the state giant Gazprom repaid its bondholders 1,3 billion dollars for the bonds maturing yesterday, with payment in US currency (and not in rubles) through vehicle companies in Europe.
Record volatility: in Milan (-1,36%) a gap of 1.100 points
Between ups and downs Piazza Affari closes one of the most complicated sessions (-6% at the opening to the lowest since November 2020) with a drop of 1,36% to 22.160 points from a minimum of 21.060 points. Frankfurt suffers the most (-2,01%).
The data on orders from German industry, recorded in January before the Russian aggression against Ukraine, now has historical value. Orders for industrial goods rose 1,8% month on month in seasonally adjusted terms, following a revised 3,0% increase in December, according to data from the Federal Statistical Office.
Germany restarts, but investor confidence collapses
Investor sentiment in the euro zone tumbled in March in light of Russia's invasion of Ukraine and its implications for the global economy, according to a survey released today. The Sentix index for the euro zone fell to -7,0 in March from 16,6 recorded in the previous month, hitting its lowest since November 2020.
The other squares are also in red: Paris -1,31%; Madrid -0,95%; Amsterdam -0,4%; London -0,44%.
Lvmh closes Moscow, but pays salaries
Lvmh (-1,7%) and Kering (-3%) have decided to "temporarily" close their stores in Russia. A painful choice for Bernard Arnault who has 124 stores in the country. The billionaire has guaranteed the salary of the employees.
Skyrocketing gas, new record at 345 euros
At the center of the session the unbridled rise of gas and oil. Gas updated its all-time high to a new record of 345 euros per megawatt hour, to then slow down to around 280 euros in Amsterdam.
During the night, Brent almost reached 140 dollars a barrel in Asia. North Sea oil climbs 4% to $123 a barrel; Texan crude +2,17% to 118,2 dollars a barrel.
The gold march does not stop either, with the bar for immediate delivery trading in the area of 1984 dollars an ounce. Futures travel above 2 thousand.
Oil and steel push Tenaris
Energy stocks lead the race taking advantage of the rally in commodities. In the lead is Tenaris (+13,3%), supported both by the rise in oil prices and by the prospect of orders for steel on the European market after the exit of the Russian competition.
Eni is also flying (+4,29%). Saipem closes in the red (-2,66%).
The defense runs: Leonardo and Fincantieri at the top
On the shields the titles of the Defense. Leonardo (+6,3% to 8,034 euros) accelerates together with Fincantieri (+7,67% to 0,5375 euros), in clear contrast to Piazza Affari, which experienced another complicated day due to the war in Ukraine and the its repercussions.
Equita sim, which respectively has a buy rating and a target price of 8,8 euro on the two stocks and a hold rating with a target price of 0,69 euro, underlines that "the Italian government is evaluating with the next budget law (October 2022) a gradual increase in military spending of around 8/10 billion euros over the next five years".
Prysmian also did well (+4,5%), in line with its French rivals in Vallourec (+7%).
Tim recovers, then crashes
A roller coaster ride for Telecom Italia which in the morning recovered 10% of a large part of the ground lost in the last two sessions of last week (-30%). Then, in closing, it yielded 5,45%, falling back to 0,236 euros.
Banks: failed rebound, Exor group under fire
The banking sector is still in the red: Unicredit is the worst (-5,6%), followed by the pair Bper (-5,17%) and Bpm (-4,61%). Understanding (-2,79%).
At the bottom of the list, the jewels of the Exor house stand out: Stellantis loses 6,4%, followed by Ferrari (-5,68%). Iveco leaves 3,24% on the ground despite the memorandum of understanding with Hiunday for the development of technologies.
Gas Plus starts again (+19,24%), the best stock in the Milanese index.
Iervolino buys Espresso. Republic on strike
Big hit in publishing. Danilo Iervolino, 44, new president of Salernitana, former head of the Pegaso online university sold to the CVC fund, announced the purchase of Espresso after the purchase of Blue Financial Corporation (publisher of the Italian version of Forbes). The weekly is sold by the Gedi group, controlled by Exor. The operation, reads a note, will be conducted by the newly established company L'Espresso Media, 51% owned by BFC Media Spa +1,43% to Egm and 49% by Idi srl with sole shareholder, i.e. the vehicle by Danilo Iervolino. The operation is more like an alliance than a simple sale.
“The agreement provides for various forms of collaboration – explains the note on the transaction – including the continuation of the combination of the weekly L'Espresso with the Sunday edition of the newspaper La Repubblica, the joint promotion of publishing initiatives, distribution services at newsagents and subscription management”. The novelty caused the resignation of the director Marco Damilao (replaced by Lirio Abbate) and the strike of journalists. Even Repubblica is on strike today.
