Chinese shares rise, the renmimbi recovers. The atmosphere of peace between Beijing and Washington makes the Asian markets breathe a sigh of relief, but it does not have the same effect on Wall Street, which is much more contrasted in the face of the increasing signs of an economic slowdown, if not a possible recession.
This is the setting in which a field day opens for the Italian premier Giuseppe Conte, on a mission to Brussels, and for Theresa May, now one step away from her party's motion of no confidence, after the defeat over Brexit.
In Asia, Tokyo's Nikkei index is up 2%, Hong Kong's Hang Seng 1,5%, Taipei's Taiex 1,6%, Seoul's Kospi 1,4% . Only a modest positive variation for the CSI 300 index of the Shanghai and Shenzhen stock exchanges.
The Indian stock market also rose (BSE Sensex +0,9%), where the government took only a few hours to appoint the new central bank governor.
CONTRASTED WALL STREET: APPLE STILL SUFFERS
The US markets contrasted yesterday: the strong rise in the first part of the session, in the wake of the calmer climate on the US-China axis, breaks down in the final after the meeting between the president and the democratic leaders of the Congress, about to assume the chamber control. Trump has threatened to veto the budget if there is no funding for the wall with Mexico.
The Dow Jones index lost 0,22%, S&P 500 -0,04%. Slight progress for the Nasdaq (+0,16%). Financials slow down, held back by the possible failure to increase rates: Goldman Sachs -1,2%.
Apple fails to restart, at its lowest for seven months: doubts about the business model and fears about the latest iPhone models are growing.
The economic slowdown is pushing bond yields down while flattening the yield curve, with yields on short-term bonds not so different from those on long-term bonds. On the two-year-ten-year distance, the spread is only 11 basis points, the two-year-five-year spread has reached – 3 basis points. There is a growing belief that the rate hike is winding down.
TRUMP ON THE FIELD ON HUAWEI. OUT OF PRISON MISS MENG
Yesterday Donald Trump remains at the center of the political and financial scene, more than ever one man show. The President intervened several times yesterday on the ongoing negotiations with China. First with a tweet, in which he spoke of a "fruitful dialogue" underway, anticipating "great news for the next few days", probably the drop in Chinese duties on US cars (indiscretion leaked yesterday by Bloomberg). Trump also declared that he is ready to intervene on the judiciary to favor a positive solution to the Huawei case.
Meanwhile, Meng Wanzhou, the Chinese group's vice president, has left prison and returned home to one of her two villas in Vancouver, after depositing a 10 million Canadian dollar ($7,5 million) bail. The Canadian diplomat arrested in China is worse off, perhaps in retaliation.
BITTER BREXIT: MERKEL DOES NOT OPEN THE DOOR TO MAY
The improvement on the front of duties for the car has also given oxygen to the price lists of the old continent grappling with an increasingly complicated geopolitical situation. The better-than-expected German data on the Zew for November helped support the rebound. But the rise was reduced in the final, thanks to the mixed performance of Wall Street and the increasingly confused climate around Brexit.
Theresa May yesterday made an unsuccessful tour of European capitals which ended in Brussels. In Berlin, the prime minister was the protagonist of a curious accident: the door of her car (a Mercedes) did not open while Angela Merkel stood waiting for her guest. "A sign of destiny," commented Reuters.
EUROPE BOUNDS IN WAITING FOR DRAGON COLOMBA
Milan advances by 0,98% to 18.591 points. Positive ground for the other markets of the Old Continent even if the lists retreat from the highs in the last half hour: Frankfurt +1,49%; Paris +1,35%; Madrid +0,87%; London +1,28%; Zurich +1,74%.
The market is preparing for tomorrow's meeting of the ECB which, despite the slowdown in growth expectations, will proceed to approve the end of Qe. But operators are confident that Mario Draghi will be able to sweeten the pill, perhaps endorsing the forecast that the first rate hike will not take place before the end of 2019 and signaling the start of new LTTRO operations in the spring.
TODAY COUNT IN BRUSSELS PLAYS THE FRENCH CARD
The spread moved little, around 285 basis points in a context of waiting for the evolution of the negotiations between the Italian government and the EU Commission on the budget manoeuvre. The 12-month Bot offer is starting today. Finally, the movement on the BTP curve is interesting: purchases on the short end have widened the spread between ten and two years.
The meeting between Giuseppe Conte and the president of the Commission Jean Claude Juncker is scheduled for today. The prime minister invited the European authorities to "overcome short-sighted rigour".
THE PARIS RATING COMES INTO THE SIGHT
Meanwhile, the spending measures announced by Paris to extinguish the protest of the yellow vests, equal to about 10 billion euros, provide aid to the Italian government, in its confrontation with the European Commission. “If the deficit/GDP rules apply to Italy, I expect them to apply to Macron as well,” said Luigi Di Maio.
The measures had the effect of pushing the differential between the yields of German and French bonds to the highest since May 2017: the spread, in fact, reached a maximum of 52 basis points, the highest for 18 months, in any case very far from the difference between the BTP and the Bund. But the market is already betting on a cut in Paris' rating.
ITALY? A GRAY SWAN, SAYS NOMURA
A note of optimism is provided by Nomura. Italy, she claims, could be the positive surprise of the coming year. The thesis is reported in a report entitled "Nine gray swans for 2019". The market may have overpriced negative factors (ie Black Swans) only to find that it overpriced. This could be the case of the Bel Paese which, net of interest expenditure, has had a budget surplus since the early 90s. And if the expansive measures of the maneuver go through, Nomura adds, Italy would enjoy a fiscal stimulus similar to that of the US in 2018. Therefore, writes the Japanese house, Italian bonds could be the surprise of 2019.
PRYSMIAN FLIES: CEO BATTISTA BUYS SHARES FOR 400 THOUSAND EUROS
The rebound of was broadcast in Piazza Affari Prysmian (+6,15%) after the sharp declines of the last few sessions, not justified by the outlook of the leader of the world cable market: the guidance for adjusted Ebitda for 2018 remains at 860-920 million euros. The rally was favored by the purchases of CEO Valerio Battista who, on 6 December, bought 27.512 shares on the market at an average unit price of 15,1616 euros which for the manager entailed a total investment of 417.125,94 euros.
TRUMP ALSO GIVES WINGS TO FIAT CHRYSLER
The automotive sector also performed well after Bloomberg's rumors according to which China is preparing to reduce customs duties on cars imported from the United States, bringing them from 40% to 15%. The Chinese government is expected to examine the dossier in the coming days. fca advances 2,8%, Cnh +2,4%. He did better bmw: +3,3% in Frankfurt. The German group, which exports sports cars from the United States to China. The German manufacturer has calculated that the tariffs could cost the company around $300 million.
The rebound in tech stocks has given a boost to stm+3,23% toned like other chip manufacturers.
TELECOM STARTS AGAIN IN VIEW OF THE VIVENDI CHALLENGE
Telecom Italy earn 3%. Vivendi's request to convene a meeting to regain control of the Board has rekindled the speculative appeal on the stock: the market senses the deal, anticipating a last-minute clash between the two contenders.
BPM BENCH AT THE TOP, BPER SUFFERS
The banks with a slightly negative index were mixed. In evidence Bpm bank +2,5% after the sale of a Npl portfolio to Fonspa-Elliott. The transaction took place at 30% of the nominal value. The bad debt management platform was valued at 143 million. Instead it goes down Dobank-3,5% which was in the running, in consortium with others, for the same assets.
He also suffers Bper (-2,12%), which worsened in the middle of the day after the CEO of Unipol Carlo Cimbri once again indicated the Emilian bank among the possible subjects interested in the purchase of Unipol Banca.
Good utilities. Enel +1,8% after Morgan Stanley raised the target price to 6,20 euros. Terna + 1,9%. Atlantia + 1,4%.
ASTALDI AGAIN ON THE ROLLER COASTER
Astaldi's ups and downs continue, yesterday in a nosedive (-10,9%) after a positive start. Salini Impregilo has admitted that it is working on an industrial proposal that could also involve other Italian partners.
PURCHASES FOR INTERPUMP, GIGLIO RAISES THE ESTIMATE, OVIESSE ON SALE
On the Star it shines Interpump (+2,41%), which acquired 100% of the Spanish company Fluinox.
Excellent performance also for Giglio G. (+14,15%) which is preparing to divest activities related to traditional media and aims to close 2018 with better results than the industrial plan.
The landslide continues Oviesse: -9,93% after -13,8% on Monday, waiting for the third quarter results.
