The financial week opens on a note of optimism, in the wake of Friday's recovery of stock prices, the comforting signals coming from the US employment data and the words of Fed chairman Jerome Powell, who promised "patience" before move the interest rate lever further. But the strongest signal comes from China.
The yuan and the Shanghai Stock Exchange are on the rise, waiting for the American guests who will land in China in a few hours to re-establish trade negotiations between the two superpowers, after the G20 truce which froze further tariff cuts for three months.
The Chinese currency traded at 6,8461 this morning, its highest since December 5th. Both the Shanghai and Shenzhen lists (+0,3%) and the Chinese securities sector in Hong Kong (+1,4%) are on positive ground. The expansionary measures of the Chinese Central Bank contribute to favoring the rebound, which on Friday reduced the compulsory reserve by 100 points, as well as the government's green light for a new, gigantic railway development plan (125 billion dollars).
TRUMP OPTIMISTIC: BEIJING IS BAD, WILL MAKE THE DEAL
“I am optimistic – Donald Trump said yesterday – The Chinese economy is not doing well. And this will make them more open to an agreement”. A Renmin University professor, Xiang Songzuo, according to the Financial Times, calculated that, according to unofficial government estimates, China's actual growth in 2018 was only 1,67%, far below official data.
The hope in a trade agreement gave wings to the Tokyo Stock Exchange +2,44%. Sidney (+1,2%) and futures on the S&P index +0,3% also rose.
GOLDMAN BETS ON OIL, BOFA ON THE STOCK EXCHANGES
Oil also continues to rise, +9,3% last week, +1% to 57,7 dollars a barrel this morning. At these prices, Goldman Sachs recommends buying: the average price of North Sea crude estimated by the broker in the report released yesterday is 62,5 dollars a barrel.
Bank of America Merrill Lynch analysts, on the other hand, maintain that, at current prices, it is once again convenient to buy on the stock exchange: the lists have lost 19.900 trillion in value in a year; among the best-capitalised stocks, 2.055 out of 2,767 companies were down at least 20%. “The Bull & Bear indicator – they write – fell to the lowest bear point since June 2016, which is a good bullish rye”.
The "Buy" advice also applies to shares from the Old Continent. Futures signal a positive start for European markets.
POWELL DISCOVERS DOVE
The minutes of the latest Fed meeting are to be released on Wednesday. But the incoming signals from the central bank were overtaken by messages from Jerome Powell last week. The Fed chairman underlined that, if necessary, the institute "will not hesitate" to change course "rapidly" and "to use all the tools available to support the economy". In short, the Fed promises to be “patient”.
"È It is probable – wrote Gawyn Davies of the Financial Times – that the central bank realized that it had made a mistake in not signaling a possible pause in monetary tightening”. Much will depend on the next macro data: inflation is forecast at -0,1%, the first drop in nine months.
TODAY THE INDEX ON CONFIDENCE IN EUROPE
Thursday will instead be the turn of the ECB minutes, relating to the Governing Council which on 13 December confirmed the interest rates unchanged in the Eurozone until the summer of 2019 and the withdrawal of Quantitative Easing in December 2018.
In the morning, German data on industrial orders for November and the Sentix index on Eurozone investor confidence for January will be released-
LONDON, FINAL DUEL ON BREXIT
In Great Britain, Parliament reopens work for the approval of the 2019 budget. But attention is already focused on next week's vote on the agreement signed by Theresa May with Brussels on Brexit.
On the internal front, the wait for the Council of Ministers which during the week will have to approve the decree on the 100 quota and basic income holds the table: a pre-Council meeting would be scheduled for Tuesday, while the government meeting should be held during the week.
THE AGENDA: CDA CUCINELLI, THE NUMBERS OF THE BOT AUCTION
Tonight, with the markets closed, the Treasury will announce the amount of the 12-month Treasury bonds offered on Thursday 10.
On the corporate front, the Brunello Cucinelli board of directors met today to approve the accounts.
ALSO DISCOUNTED BUSINESS PLACE
The FtseMib index reopens its doors after Friday's extension: +3% to 18.820 points. 2018 ended with a loss of 16%, almost in line with that recorded by the Dax index of the Frankfurt Stock Exchange (-18%) and slightly worse than the European average (Eurostoxx -14%).
According to consensus estimates, the multiples of the blue chips listed on Piazza Affari have reached very attractive fundamental valuations in relative terms: the FtseMib records an average P/E of 10,6x, against 11,8x for the Dax, 14,5x for Cac and 17,7x the S&P500.
The expected return in terms of dividends is also among the most attractive: FtseMib 4,20% gross, against 3,40% of the Dax, 3,70% of the Cac40, 2,0% of the S&P500.
