The financial markets are advancing in deep red under the pressure of the tariffs threatened by Trump against Mexico, the drop in prices of the Petroleum and, last but not least, the disappointing figure of Italian gross domestic product of the first quarter. Business Square at 13 pm it lost 1,5%, just above 19.500 points. Similar to the decline of Frankfurt, London e Madrid; Paris is down 1,4%.
The projections on the opening of are clearly negative Wall Street in the face of the latest thrust by the President, who has threatened to impose duties of 5% on goods made in Mexico and headed for the United States. The duties could start on June 10. Tariffs may gradually increase if Mexico does not take steps to contain migratory flows. The Mexican peso fell by 2,5% to 19,5 against the dollar, on the lows of the year. Similar loss also against the euro.
It disappoints data on the Italian GDP of the quarter, which fell in the first quarter of 2019 to +0,1% on a quarter and -0,1% on a year. It is the worst drop since 2013. “The large positive contribution of net foreign demand reflects the marked drop in imports, against a limited increase in exports”, comments Istat. The yield of the BTP rises to 2,72%, from 2,65% yesterday. The yield of German bund, more than ever a safe haven, touched new historic lows of -0,21%. The spread fluctuates around 292 points.
Today the Italian government responds to the letter received two days ago from the European Commission. The minister Tria anticipated that there is no need for fiscal adjustments, given that the year will close with a deficit of less than 2,4% of GDP, as agreed with the EU authorities. The 1.100 million euros paid by Kering to close a tax dispute with the Revenue Agency are helping the budget, reports Bloomberg.
The governor Ignazio Visco warned in the final considerations of Bank of Italy is the ratio of debt to national income may be higher than the government's target, which includes "proceeds from privatizations of approximately 18 billion". The high public debt-to-GDP ratio, continued Visco, "remains a stringent constraint" and as such the government can no longer delay "a rigorous and credible strategy" for its reduction in the medium term.
Also drops the Petroleum in fear of a drop in international demand.
Texas WTI crude is at a three-month low at $55,3 a barrel, down 2%.
Tenaris it is the worst blue chip, -5,4%. The company has everything to lose in the event of US sanctions against Mexico. Down too Eni (-1,5%), which will start the buyback on 400 million euro of shares at the beginning of June. Saipem (-2,5%) accused for a contract in Brazil.
Mexico effect on other Italian multinationals. Buzzi loses 3%, Brembo -2,5% Pirelli -2%.
It also misses out Fiat Chrysler (-4%), which produces in Mexico in the plants of Toluca (Jeep Compass, Fiat 500, Fiat Freemont and Dodge Journey) and Saltillo (RAM), with an output that should amount to 13-14% of the group, and mainly destined to export. In conclusion, the impact could be around 1-2% at EBIT level. In anticipation of John Elkann's mission to Tokyo, the news that the CEO, Mike Manley, has sold 250 FCA shares, equal to about 25% of the total held by him in the car manufacturer, is especially striking. The sale was made at a unit price of $13,85, for a total amount of just under $3,5 million.
Bank stocks are also weak. Unicredit -2%. Mediobanca -1,3%. Falls stm (-1,5%), despite the promotion to Buy from Bofa.
Bucking Leonardo (+ 0,5%) and Mediaset (+1%), driven by the opinion of JP Morgan which rose to Overweight from Neutral, the target price was brought down by the analyst Daniel Kerven, to 3,1 euro. Yesterday the stock closed at 2,72 euros.
The best is blue chip though Juventus (+ 1,6%).
