The tension eases, but the markets don't trust too much. To reveal the mood of investors is the trend of gold, the most popular safe haven asset in times of crisis. The yellow metal gained 0,7% this morning, to 1.485 dollars an ounce, a level not seen since 2013. White House adviser Larry Kudlow had tried to comfort the frightened lists of the prospect of a currency war, swearing by Trump's willingness to reach an understanding. But the forecast by Ian Hatzius of Goldman Sachs has gained more traction on the markets: Washington and Beijing will not reach an agreement before the US elections in November 2020.
TRUMP INSISTS: RATES MUST FALL. THE FED BRAKES
Meanwhile, there is talk of rate cuts again. James Bullard, president of the Saint Louis Fed, has come out against new short-term interventions on rates. Peter Navarro, the most extreme interpreter of President Trump's thought, replied: the cost of money, he said, must be reduced by at least three quarters of a point, "but the ideal would be 1 percent". The move affected US Treasuries, which rose 1,67%. The two-year Treasury is near a 20-month low, at 1,56%.
WEAK TOKYO. THE YUAN STILL DOWN
In this context, Wall Street's rebound after Monday's crash has had only a modest following.
The Asian stock exchanges are mixed: Tokyo's Nikkei -0,5%, CSI 300 of the Shanghai and Shenzhen lists unchanged, the Hang Seng in the red (-0,4%), while signs of impatience are coming from Beijing the protests that are putting the stability of the financial center at risk. The Taiex of Taipei (+0,3%) and Sydney (+0,7%) rose. The Korean Kospi is weak (-0,2%).
Washington has announced its intention to report China to the IMF for "currency manipulation". Beijing responded with interventions that favored the recovery of the yuan on the market, but this morning the Chinese currency returned to fall against the dollar and the Japanese yen to strengthen.
The dollar-yen exchange rate fell to 106,1 from 106,5 the day before. The yuan dollar moved to 7,047 from 7,019 at the close. The US currency appreciated against the Malaysian ringgit for the fifth consecutive day, at 4,19. There are signs of stabilization of the Korean won and the Indonesian rupiah.
THE COST OF MONEY IS DROPPING IN NEW ZEALAND
The New Zealand dollar fell to a four-year low of 1,56 against the US dollar after the central bank cut interest rates by half a percentage point.
In the midst of so much volatility, the euro is a champion of stability: this morning the single currency traded at 1,121 against the dollar.
Wall Street yesterday reacted to the negative streak of five consecutive sessions in the red: Dow Jones +1,21%, S&P 500 +1,30%, Nasdaq +1,39%.
Apple (+1,9%) and the semiconductor index (+1,28%), the hardest hit by the currency war, rebounded.
THUD OF WALT DISNEY AFTER THE ACCOUNTS
Sudden thud by Walt Disney (-3,86%) in the post stock exchange due to the announcement of the quarterly accounts, which are also showing strong growth.
Brent oil traded at $58,9 a barrel this morning, down 0,3%. Yesterday it closed down by 1,3%.
MILAN STARTS WELL, THEN GOES IN RED
Shy rebound yesterday for the European stock exchanges after the black Monday. But the rally was short-lived and European markets went downhill in the afternoon.
Piazza Affari lost momentum in the last half hour and lost 0,68%, falling back to 20.631 points.
Meanwhile, the confrontation on the maneuver between Matteo Salvini and the Minister of Economy, Giovanni Tria, is inflamed. “The 2020 deficit – thunders the deputy prime minister – cannot be less than 2%. If the GDP is at a standstill or you give it a big jolt or a cost-free manoeuvre, I'm not doing it. Someone else will do it,” Salvini said after announcing to the social partners his commitment to reduce taxes in 2020 by 15 billion euros.
The other markets also slow down: Frankfurt -0,75% despite the promising recovery of orders in the manufacturing sector, which rose by 2,5% on a monthly level in June, exceeding consensus expectations, stuck at +0,5%.
TENCENT ENTERS UNIVERSAL AND MAKES VIVENDI FLY
Paris also closed in the red (-0,13%) despite the recovery of luxury stocks (Lvmh +2,10%). Also in great evidence Vivendi (+3,96%) after the news that the Chinese Tencent will buy 10% of Universal Music, controlled by the Bolloré company.
London -0,69%, conditioned by the commdity sector, linked to the trend of Chinese demand.
The Btp accelerate towards the end of the session, especially in the long and extra-long part of the curve.
In a market with thin volumes and exposed to volatility, the gap between BTPs and Bunds on the 10-year segment settled at 205 basis points at the end, from 212 at the end of the previous session.
The ten-year rate stops at 1,52%, from 1,56% at the last closing.
On August 9, the Treasury will auction 6,5 billion 12-month BOTs.
UNICREDIT: MORE USEFUL, BUT THE TARGET IS DROPPING
Unicredit's quarterly report arrives: profits up 80%, to 1,9 billion euros, also thanks to extraordinary items (i.e. the sale of Fineco). But the institute lowered its guidance on revenues for 2019 (18,7 billion from the 19 already forecast) due to the impact linked to the drop in interest rates. Revenues decreased slightly (to 4,5 billion from 4,6).
In Piazza Affari yesterday banks generally weak with some exceptions: Banco Bpm holds at +0,12% waiting for the quarterly which it announced after markets closed: in the first half the net profit was 593,1 million, a strong progress compared to 352,6 million a year earlier. For the whole of 2019, the EPS is expected to exceed 30 cents, in line with market consensus projections. Creval's accounts are also out (+1,86%).
Finecobank recovers 2,25% after the fall on the eve thanks to the 'buy' promotion by Deutsche Bank. Mediobanca, on the other hand, lowered the bank's target price after bills to 9,2 euros, below expectations on revenues and margins.
FLAME OF CUCINELLI, TOD'S STOPS
In the luxury segment, Brunello Cucinelli's upswing was worth noting, +0,72% at the close but even gained 4% in the session after the promotion of Jefferies to 'buy' from 'hold'. On the other hand, Tod's took advantage (-4,33%), which in the last week saw prices rise by 21% despite the general weakness of the market. Moncler -0,8%, Ferragamo +0,3%.
FCA ADVANCES, PININFARINA COLLAPSE
In the automotive sector, FCA is saved (+0,8%), supported by the expectation of the resumption of talks with Renault. In red Ferrari (-1%) and Pirelli (-1,5%).
Pininfarina (-9,06%) is the worst stock in the list after the revision of the guidance with an estimated reduction in production value of 10%. The company ended the first half with a net loss of €2,64 million, compared to the profit of €3,1 million booked in the first six months of 2018.
Also noteworthy is the decline of Cairo Communications (-4,44%): Equita Sim reduced the rating from buy to hold and the target price from 4,1 to 3,5 euros.
