The long streak of blood running down from Gaza dyes the banks of Red Sea and also puts supplies at risk LNG bound for Europe. Yesterday dozens of tankers decided to change route to avoid passage in an increasingly risky area. The situation of the forgotten war in Ukraine or the echo of Beijing's threats after the vote in Taiwan is no less serious.
Cyclone Trump enters the scene
But the news of the day is the obvious one Donald Trump's statement in Iowa, the first stage in the race towards the Republican nomination. The triumph, however, cements Trump's undisputed role as frontrunner, after he was able to mobilize his base again and win back the party by transforming all the accusations into a "witch hunt", into a “judicial persecution” orchestrated by the “usurper” Joe Biden.
The tycoon cashes in half of the 40 delegates up for grabs, only 2% of the total. But he starts off on the right foot and strengthens his grip on the Grand Old Party even in Congress, where he has the support of the majority. “A decisive and historic victory and should bring the Republican Party together so we can achieve definitive victory in November,” commented House Speaker Mike Johnson. Today all candidates fly in New Hampshire: Trump passing first in courthouse in Manhattan, where a second lawsuit for defamation by the writer Jean Carroll awaits him.
Oil, the risk increases. But the recession is slowing down prices
This also contributes to a negative start to trade in Europe. The risk of an interruption, or at least of serious complications for the patients, is growing oil supplies following attacks by Houthi militias on an American ship in Yemen.
Il Qatar yesterday stopped the transport of liquefied gas in the Red Sea. Yet the system has so far held up without major shocks: WTI oil has moved little at 73 dollars a barrel. Brent at 78,5 dollars. This is how Antonio Cesarano, chief strategist of Intermonte, explains it. “On Friday 12 January – he wrote – while Brent was trying to break through upwards to 80 dollars a barrel, operators at the same time strengthened their expectations of almost 7 cuts by the Fed. The reaction may appear contradictory: if oil rises, the risks of a return to inflation increase, which should stop central banks from cutting rates."
The apparent contradiction can be explained as follows: if there is no direct clash between the major players in the crisis in sight, one can only hypothesize tensions on prices and supplies to be avoided with a substantial and timely easing of monetary policy.
The Tokyo Stock Exchange overtakes Shanghai
But the geopolitical situation requires maximum alert, starting with China which is unable to emerge from the crisis. Since this morning the Shanghai Stock Exchange, due to the weak performance of the last two weeks, it is no longer in first place in Asia Pacific in terms of capitalisation, the top of the table was taken over by Tokyo Stock Exchange.
The Shanghai stock market was worth 6.260 billion dollars last night, that of Tokyo 6.332 billion. The overtaking occurs on the eve of the publication of the China's fourth quarter GDP data, the CSI 300 index of the Shanghai and Shenzhen lists lost 0,3%. Also complicating the recovery in this case is the risk of a slowdown in international trade due to possible reprisals on chips.
It is no coincidence that Il Kospi of Seoul, together with Taiwan, a point of reference for the semiconductor industry, today marks a decline of 1%: since the beginning of the year the reference index of the South Korean stock exchange has lost almost 6%, it is the worst start of year since 2008.
Opening in the red for Europe, Berlin in recession
In this context, European stock markets opened lower. EuroStoxx50 -0,4%. Ftse Eb of Milan -0,6% after -0,5% in yesterday's session. This morning at ten o'clock the ECB publishes the survey on expected inflation, at 11 o'clock the Zew index on the performance of the German economy comes out.
The Dax of Frankfurt closed yesterday at -0,5%. Since yesterday Berlin is officially in recession: -0.3%. In Germany, December wholesale prices fell more than expected. On a monthly basis, the index fell by -0,6%, against estimates of +0,2% and -0,2% in November. On an annual basis, the decline was -2,6%, lower than the -3,6% recorded in the previous month.
But on the sidelines of the Davos Forum the president of the Bundesbank, Joachim Nagel, he said: “It's too early to talk about rate cuts,” adding that “Inflation coming down is good news in itself, but for me it's too early… the markets are optimistic, sometimes too much so, I have a vision different and I want to see the new data. We'll see at the next board of directors."
In the meantime, let's talk about again consolidation between Northern European banks. Germany said it is evaluating all options to raise funds through the sale of stakes in more than 100 companies it owns. Even if the sale of its remaining 15% in Commerzbank is not imminent, Finance Minister Christian Lindner is open to a sale and would ultimately prefer the government to exit the bank, a person familiar with his views said.
Milan on the eve
In this context, in a session devoid of Wall Street support, European stock markets limited the damage yesterday. EuroStoxx50 -0,5%.
The index is weak FtseMib -0,5%. The managed titles shine: Banca Mediolanum +2,4%, reaching the highest since March 2023. Azimuth + 1%. Snam +0,8%. Goes down Saipem -2,5%. A2A, Monte Paschi, Recordati, they lose about -2%.
In general, the bags came into one consolidation/settlement phase. It is likely that investors, in addition to gauging the tone of the central bankers, will soon begin to pay attention to the quarterly reports to verify the impact of the monetary tightening on the accounts. It has already partly happened on Wall Street with the banks' balance sheets, which provided conflicting indications and led the reference index to close the eighth with a decline of -3,1%.
It also loses steam bond market. 3,99-year Treasury Note at 5% yield, +2,23 basis points. Bund at 5%, +3,79 basis points. BTP at 7%, +XNUMX basis points.
Euro down 0,3% to 1,091.
Gas slips below 30 dollars
Il EU Natural Gas (Amsterdam) it closed just under 30,0 euros/mwh for the first time in over two years and it is already down -8% from the beginning of 2024. The decline is all the more symptomatic considering that at least five ships carrying liquefied natural gas departing from Qatar were stopped on Friday, according to Bloomberg tracking data. After heading towards the Bab el-Mandeb Strait, at the southern end of the Red Sea, three ships stopped off the coast of Oman, one is stuck in the Red Sea and the other is in the Mediterranean, near the Suez passage. For now, traders appear convinced that Europe is sufficiently equipped to manage the risks related to the recent attacks in the Red Sea. The drop in gas prices will definitely contribute to the slowdown in inflation.
The titles highlighted in Piazza Affari
BPM desk: JP Morgan cuts to Underweight, target price at 4,50 euros.
Generali: Citi raises its rating to Buy, target price at 21,97 euros.
Generali Bank: The collection mix should improve during the year, says the CEO in the interview given to the press.
B for Bank and the Gardant group have completed an operation aimed at establishing a strategic partnership for the management of impaired loans owned by Bper Banca and Banco di Sardegna.
Mount Paschi: Zurcher Kantonalbank holds 2,107% of the bank's capital as of January 10th after having risen to 3% the day before, according to the latest Consob findings.
A2A: The mayor of Milan, Giuseppe Sala, said that the municipality is open to a possible reduction of the quota, if development opportunities arise.
Stellantis: The unions told Reuters that the company had laid off some departments at Mirafiori.
Media for Europe: advertising investments in Italy close November with a growth of 5%. January/November: +2,8%
