Donald Trump puts optimism in the drawer. The coronavirus, the president said, can cause up to 250 deaths in the United States, now leading the dramatic contagion accounting. The news extinguishes the residual optimism of the stock markets, already busy dealing with the balance sheet for the worst quarter of the XNUMXs and resigned to seeing new shocks arrive in the next few days, starting with the data on the American labor market. The first confirmation came a few hours ago from Tankan, the synthetic indicator of Japan's state of health: the figure, down for the fifth quarter in a row, is the worst since the days of the Lehman Brothers crisis. The markets take note of this and prepare for a new difficult day.
Futures on the S&P index (-1,9%) anticipate a red start for US stock exchanges. An even worse opening is looming for the City: -2,6%.
In Tokyo, the Topix index dropped one percentage point, as did the Hang Seng of Hong Kong, weighed down by the waiver of the HSBC dividend.
An air of timid recovery on Chinese lists: Shanghai +0,7%. The Korean Kospi is red again: -0,9%. A new case of contagion has occurred in one of Samsung's leading factories. The positive news comes from Sydney (+2,8%) on the wave of the drop in infections in Australia and the recovery in the price of iron.
FROM THE BEGINNING OF THE YEAR WALL STREET -20%
Wall Street down: Dow Jones -1,84%, S&P 500 -1,60%, Nasdaq -0,95%. Since the beginning of the year, the loss is one-fifth. Volatility, however, hasn't changed direction: it continues to fall, with the Vix index reaching 53,5 (-6%).
TRUMP DEMANDS MORE INFRASTRUCTURE
Trump finds a way, even in a moment of rare depression, to send an expansive signal. “With interest rates finally at zero – he tweeted – phase 4 of the war against the epidemic can begin with the launch of a billionaire infrastructure”.
However, for now the support comes from monetary policy. Yesterday afternoon, the Federal Reserve announced the launch of a new liquidity supply line intended for all central banks and all institutions that have an account with the New York Fed, therefore also the People's Bank of China, hitherto excluded . The Fed thus protects itself from the risk that China, in need of dollars to prevent the default of the many Chinese companies over-indebted in foreign currency, begins to demobilize its reserves in Treasury Notes, approximately 1.100 billion dollars.
The price of oil rose: Brent +13%, to 25,8 dollars a barrel, due to the US willingness to reach an agreement on production containment to be reached with Saudi Arabia and Russia. Eni rebounds: +7,3%.
Euro-dollar moved little this morning, at 1,102. In the Netherlands not everyone, not even within the government, likes the position of total closure of Corona Bonds: Gert-Jan Segers, the leader of the Christian Union party, distanced himself from some statements made by the Finance Minister on the epidemic and he added: "Italy is in ruins, as far as I'm concerned the first message should be: we come to help you".
The downward trend in new infections is confirmed in Italy. The daily number of hospitalized is falling: only 42 yesterday in intensive care. The number of deaths is growing (837 yesterday, on Monday there were 812). Over 1.100 new healed. According to the president of the Istituto Superiore di Sanità, Silvio Brusaferro, we have reached the stage in which the peak remains stable and precedes the drop in infections ("plateau", was the term used). Brusaferro also explained that the transmission index, the so-called R with zero, is close to one, i.e. a positive has the potential to infect a single person.
BUSINESS PLACE -27,5% SINCE JANUARY
It was also a nightmare quarter for the European markets. Since the beginning of the year, Milan has accumulated a loss of 27,50%. The Eurostoxx 50 index reports a drop of 25%: not even in the darkest period of the subprime crisis (2008) and the spread crisis (2011) the market did worse. And so, while awaiting a season of shareholders' meetings marked by the renunciation of dividends, operators have only one rule: to resist, while waiting for better times that the experts do not see on the horizon for now.
According to the Centro Studi di Confindustria, in 2020 the Italian gross domestic product will suffer a collapse of 6%, leading Italy into a deep recession. But it could be worse if the acute phase of the health emergency is not overcome in May. In the event that "the health situation does not evolve positively, the economic forecasts should be revised downwards".
GOLDMAN SACHS SEES GDP AT -10%
Goldman Sachs assumes a 10% deficit-GDP ratio in Italy and Spain. In this situation, the economists of the US banking giant estimate that Italy's debt-to-GDP ratio could jump up to 160% (to 120% in the case of Spain and France).
In this context, Piazza Affari tried yesterday to get back on its feet thanks to the support of the Chinese recovery and, in the end, to the signals coming from the US markets. The operation was successful: the index rose by 1,06%, over 17 (17.050 points at closing).
The other markets were also positive: London grew by 1,8%, Frankfurt by 1,2% and Paris by 0,4%.
The ECB's purchases serve to guarantee a semblance of normality to the bond market awaiting an agreement in extremis with the Eurogroup on which the finance sherpas of the Euroland countries are working to avert the worst.
THE TREASURE PASSES THE AUCTION TEST
Yesterday, the last day of month-end auctions, the yield on ten-year BTPs nevertheless rose to 1,52% (from 1,47%) at the end. The spread decreases, remaining close to 200 points (198).
The offer of medium/long-term securities went through without problems. The Treasury has placed all the bonds (8,5 billion euros). Richard McGuire, strategist at Rabobank, says that the operation took place as if it were any day: "This is very encouraging, it means that the ECB has been successful in its intervention to reassure the markets through the strengthening of Qe".
REGLING: “CORONA BOND TAKES 3 YEARS”
Meanwhile, attempts continue to find an agreement on emergency financing and guarantees for the various countries' debts. The Coronabonds, the director of the European Stability Mechanism, the German Klaus Regling, argued in the columns of the Financial Times, require 3 years of preparation but they could be issued immediately if the current (but never adopted) measures were adopted.
The Dutch Finance Minister, Woepke Hoekstra, gave an interview yesterday afternoon in which he reiterated that it is not the time to talk about Eurobonds but adds that Holland is ready to provide aid, even going beyond what would be within its competence .
PLUS SIGN IN THE QUARTER ONLY FOR DIASORIN AND RECORDATI
The quarterly balance of the main basket closed with only two blue chips out of 40 in positive territory: Diasorin +4% and Recordati +3%, two stocks in the pharma sector.
Atlantia, one of the stocks that suffered the most, posted the best performance yesterday: +7,3%. The market welcomes the possible sale of between 40 and 50% of Aspi to F2i and Cassa Depositi e Prestiti.
INTESA COMPLY WITH EBA: DIVIDEND ONLY IN OCTOBER
Attention was focused on the postponement (or cancellation) of the payment of dividends, especially in the banking sector, in line with the recommendation of the European Authority, which strongly suggested postponing the coupons to October, in the hope that in the meantime overcome the emergency.
Intesa Sanpaolo (+1,20%) promptly accepted the request. At the shareholders' meeting on 27 April, the board will propose the allocation of the entire 2019 profit to reserves. Previously, the board approved a proposed cash dividend of approximately $3,4 billion (19,2 cents per share).
On the other hand, the proposal for a capital increase to service the offer on UBI remains confirmed (yesterday +0,9%), on the agenda of the shareholders' meeting of 27 April. "The strategic motivation of the operation - reads a note - assumes even greater value in the context following the epidemic".
The decision entails an increase in the level of the pro-forma fully loaded Cet1 as at 31 December 2019 from 14,1% to 15,2%. The BoD will convene a meeting after 2020 October "to implement the distribution of part of the reserves to shareholders by the end of the XNUMX financial year" and thus support the disbursements of the shareholder Foundations.
ALSO SLIDING THE COUPON OF BANCO BPM, UBI AND UNICREDIT
Similar behavior by Banco Bpm (-1,03%), which yesterday held the Board of Directors. Unicredit (-1,75%) has already anticipated a similar behavior. Mediobanca (+4,15%), Popolare di Sondrio (+4,15%), Bper (+3,09) and Mps (+2,81%) closed up.
In assets under management, Azimut (+4,1%) and Banca Generali (+2,41%) shine.
THE POSTPONEMENT OF THE COUPON HAS WEIGHING ON PRYSMIAN
The dividend issue doesn't end with the banks. The waiver of the coupon does not punish Tod's (+5,6%). Prysmian, on the other hand, loses ground (-4%): the board of directors has decided to reduce the dividend to 0,25 euro per share, equal to 50% of that originally proposed. The possible distribution of the remaining 50% will be decided later, "in relation to the evolution of the scenario and the effects of the current health emergency". Among the industrialists, Buzzi (+4,35%) and Stm (+2,42%) also shine.
BREMBO JOINS PIRELLI
Brembo (+2,18%) acquired a 2,4% stake in Pirelli (-2,27%). "The strengthening of Pirelli's Italian and Chinese shareholders in recent months and the entry of new ones, such as Brembo, into the company's capital - commented Marco Tronchetti Provera - confirms the quality of the work done in recent years and the solidity of the group" . Banca Imi has lowered the target of the Bicocca share from 5,3 to 3,6 euros, reaffirming the hold rating.
FLY FCA: MANLEY AND ELKANN IMITATE RONALDO
Saving time also for the Agnelli team, in line with what has already been decided by the Juventus players. Fiat Chrysler (+4,15%) has launched its savings strategy. The CEO Mike Manley in a letter addressed to the group's workers wrote that the group will ask “the majority of employees in the world not yet impacted by reduced hours or social safety nets to accept a temporary deferment of 20% of salary. Myself – underlined the CEO of the group – I will cut my salary by 50%, the top staff by 30%”.
John Elkann has done more: between now and the end of 2020, the president will waive his salary. A relative sacrifice, given the good health of Exor (+0,58%), which announced an agreement to acquire 8,87% of the US ride-sharing company Via Trasportation with a total investment of 200 million dollars. Positive day also for Ferrari (+1,72%) and Cnh Industrial (+1,6%).
AN ITALIAN MILK CHAMPION IS BORN
Still to be reported the consolidation operation in the milk sector. Newlat, which belongs to the Mastrolla family, has acquired the majority stake in Centrale del Latte d'Italia (+3,57%), equal to 46,2%. This was announced in a joint press release with the Finanziaria Centrale del latte of Turin, with the latter reinvesting in Newlat Food, with a 5,3% stake. The buyer will launch a Public Offer for the same purchase price of one euro and 0,33 Newlat Food ordinary shares for each Centrale del latte share. The group will represent the third largest Italian operator in the sector.
