Judging by the market trend, it seems evident that Donald Trump, already gratified by the Supreme Court sentence which judged legitimate his ban on entry into the USA from countries he considers to be tainted with terrorism, is on the way to winning the challenge of trade against the China. The Chinese Stock Exchanges, with a drop of more than 20% since the beginning of the year, have officially entered a climate of recession. The price paid by Wall Street is much more modest, despite the grumblings raised by the corporate world. Even Canada, anticipates Bloomberg, is preparing to impose quotas on steel imports from China. Meanwhile, Trump insists on his dictates: zero tolerance for countries that will buy oil from Iran after November 4th. But, yet another turnaround, the president eases tension on China. Our goal, he says in yet another tweet, is only to defend our technological leadership, so we will only lift selective vetoes on Beijing's purchases.
YUAN AND SHANGHAI STOCK LOW
Geopolitical moods are reflected in the markets like this:
* China's stock markets fell for the third consecutive day to their lowest levels in the last twelve months, the CSI 300 index of the Shanghai and Shenzen stock exchanges fell by 1,3%. Hong Kong -0,6%. Meanwhile, the decline of the yuan continues, down for the fourth day against the dollar to 6,59, a level not seen since December 2017.
* The Japanese stock market is also down, Nikkei index -0,3%, while the stock markets of India and South Korea are up slightly.
* North Sea crude (Brent) gained 0,4% this morning to $76,7 a barrel, up from +2% yesterday. The positive variation of the reference crude oil for the United States, the WTI, was much larger, yesterday +3,5%, this morning +0,5%.
VOLA GE: THE BAG LIKES THE STEW
* Closing up yesterday on Wall Street thanks to the recovery of tech stocks and the rally in oil stocks (+1,4% the sector index). The Dow Jones index is up 0,12%, S&P 500 +0,22%, Nasdaq +0,39%.
* General Electric leaps +7,8% since yesterday excluded from the Dow Jones 30. The group has begun to dismantle the conglomerate: the sale of assets in the health sector and in the oil services giant Baker Hugues has been announced.
* The euro moved little this morning at 1,166 against the dollar. Spotlights on Italian government bonds: the two-year BTP is close to the psychological threshold of 1%, the 3-year bond is a whisker away from XNUMX% on the eve of the medium-term auction.
GOLD, SEVENTH DOWN IN A ROW
Gold's descent continues, reaching its seventh fall in eight days, on its lowest since December, at 1.254 dollars an ounce. Silver is at its lowest since April, palladium is back to the levels of two and a half years ago.
RECOVER THE EURO, EUROPEAN "CONVALESCENT" PRICE LISTS
European markets recover after Monday's sharp fall. The sword of Damocles continues to weigh on Donald Trump's next maneuvers, enraged after the "desertion" of Harley Davidson, ready to move factories to avoid the increase ($2.200) linked to duties. Tension is rising more closely in view of tomorrow's and Friday's European Council which, in addition to dealing with immigration, will have to examine the draft agreement on the reform of the euro area, starting with the resolution of the bankrupt banks that do not implement any request aired by the government of Rome. But on migrants Angela Merkel can count on a less rigid attitude on the part of the CSU. And, confirming the drop in tension after the "Black Monday", the race of the euro slows down, together with the yen the currency in which, due to the low level of interest rates, speculators prefer to borrow in the single currency, perhaps through Italian securities soon.
Multi-speed performance for Milan. Positive start, a sharp setback after the release of the draft of the basic document of the EU summit, recovery in the afternoon. In the end, Piazza Affari advanced by 0,31% to 21.419 points after trades for 2,09 billion euros, an increase compared to yesterday's 1,97 billion.
Frankfurt does worse, -0,29%; flat Paris -0,05%; moderately positive Madrid +0,2% and London +0,46%.
FITCH: "IMPROBABLE" EXIT FROM THE EURO
The Fitch agency remains of the opinion that Italy's exit from the eurozone is "highly unlikely", but this does not mean it does not highlight the risks and implications on the sovereign rating that the expansive measures of the new yellow-green government could have.
"We do not expect the government to hold a referendum on remaining in the euro or in the European Union - reads a report by the agency - or push for measures to create a sort of parallel currency". “However – he adds – the very presence of similar downside risks could keep the sovereign spread at high levels even if these risks never materialise”. The appointment with the next Fitch assessment is August 31st. The current rating of 'BBB' with a stable outlook — downgraded in April 2017 from the previous 'BBB' with a negative outlook — already incorporates a degree of political instability.
THE SPREAD SPREADS ABOVE 260 POINTS
New leap forward in the spread and yield of Italian government bonds. With a leap of more than 10 points, the Btp/Bund spread reached a peak of 263 basis points at the end of the morning, to then close the session below 260. The rate on the ten-year benchmark rose up to 2,95%.
The start of the Italian auction round and two syndicated operations in Spain (amount of 7 billion) and France (4 billion) weighed on the market.
The Italian Treasury has placed Ctz and Btpei for the entire amount offered of 3 billion; the CTZ rate rose to 0,917% from the previous 0,350%, the highest since January 2014.
TODAY 6,5 BILLION SECURITIES IN SIX MONTHS
This morning it's the turn of the offer of 6,5 billion 6-month BOTs. At the end of the session on the Mts gray market, the stock today in auction was trading at 0,121%, well below the peak of 1,213%, the highest since February 2013, reached in the auction at the end of May.
The forecasts on the eve were positive: "I see no problems for the Bot auction, the 'carry' is very attractive" an operator explained to Reuters. "For the medium-long term it should be noted that 5 and 10-year bonds are both short on the market , therefore the auction could be an opportunity for cover-ups, which the Treasury could accentuate if it decides, as at the beginning of the month, to cut the amount with respect to the maximum offer”.
The MEF will make available to investors up to 6,5 billion in total of 5- and 10-year BTPs and Ccteu.
FLY FCA +2,8%. MARCHIONNE: I UNDERSTAND TRUMP
Yesterday Fiat Chrysler supported Piazza Affari by +2,8% on the wave of the promotion by Morgan Stanley which reiterated its overweight opinion (target 23 euros). The house reiterated its commitment on the Latin American market that 3 billion investments have been planned with the aim of bringing sales in Brazil to one million units in 2020 (700 cars sold at the end of 2018). The rule, in a world characterized by the customs barriers that Trump is about to apply, is to produce the cars to be sold on site.
“I understand Trump's position, politically I understand it”. Thus the CEO of FCA, Sergio Marchionne once again confirms himself as a discordant voice. "Duties - he adds - are not the signature of the world, but a problem to be managed: everything is manageable". In short, Marchionne confirms himself as "the nicest manager in the sector" in the eyes of Donald Trump who undoubtedly appreciated his departure on the day Harley Davidson announced its intention to move production outside the USA while GM has confirmed that its latest model will be produced in Mexico. Meanwhile, the Alliance of Automobile Manufacturers, which includes among others GM, Toyota and Volkswagen, has calculated that the increase in duties on cars to 25% will lead to a higher cost of 45 billion dollars (or 5,800 dollars per vehicle) for American customers.
STM AND BUZZI RECOVER. PRYSMIAN FATIGUE
Fiat Chrysler's drive was only partially transmitted to the rest of the industrial sector. Prysmian is struggling to recover +0,34% after losing 10% on Monday in the wake of the profit warning linked to the Western Link project.
Better Stm +2% on both recoveries of US chips. The German competitor Infineon also recovered +1,4%. Buzzi is also recovering, returning to yesterday's levels with an increase of over 2%.
Leonardo remains under pressure -2,3%, bringing up the rear of the list.
TELECOM ITALIA LOSES 11% SINCE THE BEGINNING OF THE YEAR
The negative note of the day, however, concerns Telecom Italia, which fell by 2,89% to its lowest since July 2016 on the day of the board meeting. There was no showdown between Amos Genish and some of the councilors. The fracture was recomposed thanks to a partial backtracking by the CEO. But the malaise goes beyond governance issues: the rumors anticipate a disappointing half-year also due to the pressure of Iliad's landing on the market. From the beginning of the year, the decline is 11%.
WEAK BANKS. CARIGE PAYS THE EXIT OF TESAURO
The banking sector was negative: the Italian sector index marks -0,87%, compared to +0,1% of the European Stoxx. The worst stock is Banco Bpm -2,3%, against the trend of Bper +0,5%.
Worth noting is the decline in Carige - 2,5% after the resignation of the president Giuseppe Tesauro.
SALES ON FINCANTIERI, AMPLIFON AND BIESSE
There was no lack of movements in the rest of the price list and on the Aim:
- New leap forward by Reno de Medici +5%.
- Ascopiave +2,5%, was the best among the Mid caps.
- Fincantieri -1,7% with significant trading volumes. It risks being sidelined in the maxi tender for Australia's navy: according to the Australian press, the political authorities want local companies to have a greater weight in the supply. Sales also on Biesse -4,1%. The company has announced that it has withdrawn the application to Consob for the publication of the IPO prospectus of the subsidiary HSD.
- Amplifon also down -1,6%: Exane Paribas reduced the rating to neutral.
- Safe Bag +8% on the news of the anticipated closing of the purchase of 51% of the two main companies of the Russian group PackandFly.
- Triboo +8,4%. Borsa Italiana has arranged for the ordinary shares to be admitted to trading on the MTA for the stock so far traded on the AIM.
