The unexpected increase in German business confidence in May and the possible lifting of US tariffs on China today offer the markets the opportunity to start the week in the sign of buying.
European stock markets close the session up, also comforted in the afternoon by the matching start of Wall Street. However, some operators warn that the period will remain turbulent due to the three R's: recession, rates and risk, ie recession, rates and risks, including those induced by the war in Ukraine. This will certainly be discussed in Davos, the World Economic Forum, which is back in attendance after the years of the pandemic, with central bankers and the International Monetary Fund focused on economic and inflation prospects.
Meanwhile, Lagarde writes on the ECB blog that the end of zero interest rates in the euro area is approaching and thus gives a sprint to the euro, recovering by more than 1% against the dollar, for an exchange rate around 1,067.
Remain Government bond yields are under pressure, with the 3-year BTP over XNUMX%.
Among raw materials, oil futures move uncertainly: Brent falls by 0,15%, to 112,37 dollars a barrel. Come back gas prices below pre-war levels natural in Europe: on the Dutch TTF platform, the reference fell by 3,5% to 84,8 euros per megawatt hour after having reached a low of 83 euros. Gold weakens slightly.
Europe in green, Milan cancels the relative red
London leads with an increase of 1,71%, followed by Madrid +1,62% and Amsterdam +1,62%, then Frankfurt +1,41%, Paris +1,17%. Bringing up the rear is Milan, +0,17%, which with a tailspin however canceled the "relative" red of the day, induced by the coupon detachment by 19 blue chips, a brick on the 1,44% index.
Among the various titles the banks soar, who welcome the change of course on rates by central banks.
It was today that we spoke on the subject ECB President Christine Lagarde, with a post published on the Eurotower blog. “I expect net purchases within the App to end very early in the third quarter – wrote Lagarde – this would allow for a rate hike during our July meeting, in line with our guidance”. This is not a tightening, while “leaving policy rates unchanged in this context would constitute policy easing, which is not currently justified”.
"Resilient" Germany and end of US tariffs on China
A nice surprise in the macroeconomic sphere came from Germany, the linchpin of the euro area. The bloc's largest economy is showing more resilience to supply chain issues, the war in Ukraine and high inflation. In fact, it goes up in May German business confidence. The business climate index of the German institute Ifo grows to 93,0 after a revised reading of 91,9 in April and much lower expectations from analysts.
Meanwhile, overseas Joe Biden is considering suspend some of the trade duties "non-strategic" imposed on China by his predecessor Donald Trump and will soon discuss it with the US Treasury Secretary, Janet Yellen.
"We have not imposed any of these tariffs - Biden said in a joint press conference in Tokyo with Japanese Prime Minister Fumio Kishida - their revocation is a measure under consideration". However, what angered the Dragon was the fact that the US president said he was ready to help Taiwan in the event of a "Chinese invasion".
Saipem and banks with the turbo in Piazza Affari
Despite the coupon detachment of ten billion euro, Piazza Affari rises to 24.136 basis points, thanks to the leap by Saipem, +5,29% and the good intonation of financial stocks. Among the best, Banco Bpm +4,3% stands out, also driven by the words of the CEO of Credit Agricole Italia, Giampiero Maioli, who confirmed the French bank's interest in the bancassurance business in Piazza Meda. Also at the top of the list is Banca Mediolanum +4,09%, Unicredit +4,23%, Bper +3,06%.
In industry, Cnh rebounds +3,49%. Good Telecom +1,65%, awaiting the signing of the memorandum of understanding on the single network.
At the bottom of the list are many of the dividend-paying stocks, including Interpump -3,56%, Italgas -3,6%, Azimut -3,7%. Among the most generous coupons, there are those of Generali (-3,14%), Eni (-1,27%), Intesa (-0,39%), Unipol (-3,01%).
The spread improves, but yields rise
The race for yields in the euro area does not stop, driven today by Lagarde's words, with experts already estimating two increases of 25 basis points, one in July and one in September.
Il ten-year Italian closes at +3,02%, while the Bund with the same duration once again crosses the 1% threshold (+1,02%), for a difference of 200 basis points (-1,46% from the previous closure).
Meanwhile, the Italian finance ministry announces that it has entrusted Barclays Bank Ireland PLC, Goldman Sachs Bank Europe SE, JP Morgan SE, Nomura Financial Products Europe GmbH and Unicredit with the mandate for the syndicated placement ofi a new benchmark 15-year BTP – expiring March 2038, 5 – for an amount not exceeding XNUMX billion euro (no grow). The transaction - reads a press release - will be carried out in the near future, in relation to market conditions.
They finally arrived the report cards of the European Commission which, for Italy, speaks of excessive imbalances. “The vulnerabilities concern the high public debt and weak productivity growth, in a context of labor market fragility and some financial market weaknesses, which have cross-border relevance”.
