Richard Clarida, the influential Fed vice chair, said on Thursday for the first time that the central bank may be considering a rate cut, although the economic situation does not currently warrant such a move. The pessimism that is now hovering over the financial markets is beginning to seriously worry those responsible for monetary policy, grappling with the war on duties, the mine of Brexit and the dispute between the EU Commission and Italy from which the response letter on the findings for excessive public debt will arrive today. In short, the moment for dialogue has not yet arrived. Donald Trump is certainly not intimidated by Beijing's increasingly furious reactions.
TRUMP THREATENS NEW DUTIES IN MEXICO
Indeed, it raises the challenge with Mexico with which it has also just signed the renewal of NAFTA. In a tweet last night, the president threatened a 5% increase in customs tariffs starting June 10, to be raised to 25% in October, if the arrival of illegal immigrants does not stop. In this climate, he is not surprised that May confirms the tradition that calls it the black month of the stock exchanges.
CAR STOCKS UNDER FIRE: NISSAN -5,2%
– Tokyo's Nikkei index loses 0,7%, at this level, May ends with a drop of 4,7% (expressed in dollars.
– Much heavier is the monthly balance of the CSI 300 index of the Shanghai and Shenzen stock exchanges, up slightly this morning: the decline, in dollars, is 9,3%. Hong Kong's Hang Seng, down 0,2% at the end of the session, lost 8,9% in May.
– Heavy car stocks at their lowest since January under the pressure of the tariffs announced by the US president. The Korean Kia loses hits -4,7%. Nissan shoulder strap -5,22%.
– Seoul's Kospi, despite gaining 0,3% this morning, ended May down 9%. The Mumbai Stock Exchange is an exception, gaining 2% on these levels in May.
– Safe-haven assets are on the rise, starting with the yen: Gold gains 0,3%.
WALL STREET 2,18% T BOND HOLDS UP
The march of ten-year T bonds continues at the lowest levels for 20 months at a yield of 2,18%, a new low for the period. Markets have now come to price in three interest rate cuts in the US between now and the end of next year.
– The US markets were slightly moved but positive on Thursday: Dow Jones +0,17%, S&P500 +0,21%, Nasdaq +0,27%.
– Down in oil prices held back by the risk of recession. Texas WTI crude fell to a three-month low tonight, trading at $55,2 a barrel this morning. May closes with a 12% drop.
THE EURO MISSES HOT, MILAN -8.8% IN THE MONTH
The euro also lost ground this morning, penalized by fears about the Italian accounts and by the slowdown in inflation in Spain and France: the single currency traded at 1,113, the lowest since mid-2017.
While waiting for the response to the letter from the EU Commission on the disputes to the Italian public accounts, Piazza Affari accused the blow, once again closing in the red -0,26% at 19.947 basis points.
The loss for the month is 8,8%. However, it drops to 5,5% if we take into account the flow of dividends collected over the period. A similar decline was recorded for the Eurostoxx index (-5,5%). Slightly better than the German Dax -3,5).
Positive ground for the other stock exchanges in the Eurozone: Frankfurt +0,52%; Paris +0,51%; Madrid +0,86%; London +0,5%. Outside the euro area, stick to Zurich, -1,4%.
PUBLISHING: SPRINGER IN KKR'S SIGHTS
Worth noting is the interest of KKR, one of the leading global private equity firms, in Axel Springer +20%, the leading European publishing house (15 employees). The plan, which provides for the delisting and entry of KKR in majority alongside the widow, already the publisher's fifth wife, comes the day after the announcement of Mediaset's landing in the capital of the ProSieben Sat TV network.
Confirming the reawakening of attention to the press was also the flight to the City of the Daily Mail +10% after recording an increase in profit (+19%) 19%, above expectations.
FT: MARKETS STILL PAMPER BTPs
The threat of a government crisis in Italy affected the performance of the BTP, which closed at 2,65% (+1 basis point). In the morning, the Treasury passed the auction test by placing the maximum amount of 6 billion euros in 5 and 10-year BTPs together with a January 2025 CCTEU. The Financial Times on Friday headlined "The markets pamper the BTPs".
The 2,75 billion euro ten-year BTPs were issued at a 2,60% yield. The coverage ratio is 1,28, never so low since June 2018. The demand for the five-year bond is stronger, with a coverage ratio of 1,78, the highest since August. The Treasury has issued bonds worth 1,9 billion euros.
In the meantime, the rest of the periphery of the Eurozone is flying. On Wednesday there was an all-time low for the Spanish ten-year bond and the Portuguese bond, on Thursday it was the Greek market that reached levels never seen before (3,03%).
FIAT-RENAULT: ELKANN WILL GO TO JAPAN
The great maneuvers are accelerating while awaiting the Renault board which will have to approve the merger with Fiat Chrysler -0,83%. The newspaper Les Echos opens on Friday with John Elkann's abrupt no to correct the offer for the French house upwards, as requested by some advisers. Meanwhile, the Nikkei Time reveals that Elkann himself has sent a letter to the highest representatives of Nissan and Mitsubishi.
Ferrari slightly up +0,2%. The veil has been lifted on the new SF90 hybrid model (the basic version costs 300.000 euros). CNH Industrial +1%, announced that it has received an order for electric buses from the Parisian public transport operator.
FLY LEONARDO, CONTRAST THE BANKS
Fly Leonardo +4%. Speaking on the sidelines of an event in Canada, Chief Executive Alessandro Profumo said US subsidiary DRS is getting a lot of orders from the Pentagon. DRS announced at the beginning of the week a maxi-commission worth 977 million dollars.
Fight the banks. Unicredit -0,5%. Ubi Banca +0,2%. With regard to the Banca Carige grain, on Thursday the managing director of Banco BPM +0,3%, Giuseppe Castagna said that it can only be saved if the State gives help to those who come to the rescue. Bper Bank [EMII.MI] -0,7%.
Great maneuvers on Anima +2%. Arca's shareholders should soon decide whether to proceed with the IPO or proceed in other ways, for example by forging an industrial alliance with other asset management companies.
Generals+05%. Fitch raised its financial strength rating to 'A' from 'A-' and confirmed its issuer rating at 'A-. UnipolSai +1,4%.
According to Equita, they invert the luxury route, victim of the disappointing sales figures arriving from the USA. Ferragamo -3,3%. Moncler -0,54%.
Profit taking among utilities.
The defensive stock par excellence is also down: Campari -1,23% after the downgrade of Morgan Stanley which considers the stock too expensive and indicates a target price of 7,9 euros.
