Is there a “Trump put”? Some of the operators believe it. The US President is careful not to hurt too much the mood of the stock market which has so far guaranteed him strong support, invaluable in view of the autumn electoral deadlines. The confirmation comes from more accommodating tones towards China. But the markets, stressed by Washington's aggressiveness, don't trust that much.
Asian markets are about to close the month in the red, having slipped to a nine-month low. The JP Morgan emerging market index is also at its lowest level in nine months.
This morning in Asia the stock markets of Japan (-0,3%), South Korea (-0,7%), India (-0,1%) and Taiwan (-0,2%) fell. The CSI 13 index of the Shanghai and Shenzhen stock markets rebounds from the lows of the last 300 months: +0,3%. Hong Kong also recovers (+0,5%).
YUAN DOWN, WORRY ABOUT CHINESE COMPANIES' DEBT
The yuan continues its descent against the dollar, up for the seventh consecutive day at 6,61, the highest since the end of last year. Thus the risk of an unsustainable growth in financial costs is growing for the many Chinese companies which have become heavily indebted in dollars in recent years.
The US markets are also under stress: the Dow Jones falls by 0,68%, the S&P 500 index by 0,86%. The decline of the Nasdaq was heavier (-1,54%). The index of small businesses, the Russell 2000, also lost ground (-1,7%).
TECH USA SUFFERS, BUT ALSO MC DONALD'S
Worst blue chip was McDonald's, down more than 2%. Surprisingly, Harley Davidson is advancing (+0,8%), despite being affected by the wrath of Donald Trump after the decision to move production from the USA to escape retaliation on tariffs.
In view of today's and tomorrow's very delicate meeting of the European Council, the euro is being crushed by the dollar, cross at 1,156, slightly recovering after yesterday's -0,8%.
A few hours after the start of the summit, the news arrived that Donald Trump had invited Italian Prime Minister Giuseppe Conte to the White House on July 30th.
OIL AT HIGHEST SINCE NOVEMBER 2
Dominating the lists is the sharp acceleration in oil prices: US crude, the WTI, shot up to a maximum of 73,06 dollars a barrel, the highest quotation since 28 November 2014 (+3,16%) and then settling this morning at 72,50. Brent trades in Asia at 77,5 dollars. Various factors are supporting the increase, nullifying the effect of the increase in production wanted by Saudi Arabia and Russia. The fuse was triggered by the sharp drop in US inventories, which fell by 10 million barrels compared to last week (against a forecast of 3 million), also due to the drop in imports from Canada. But it was above all the prospect of a squeeze on Iranian crude oil, anticipated by the Wall Street Journal, that drove prices up. Washington intends to apply sanctions to countries that will buy Tehran's crude starting November 4, in violation of the embargo. Finally, the increasingly confused situation in Libya contributes to complicating the picture.
SAIPEM AND TENARIS TAKE FLIGHT
The result was a strong increase in energy-related stocks, both on Wall Street (sector index +1,3%) and on other listings. In Piazza Affari the best share was Saipem + 5,34%, also driven by the news of the unblocking of the Anadarko LNG plant in Mozambique in which the Italian company participates (for Equita a benefit could be worth up to 1,5 billion dollars) . Eni (+2,76%) and Tenaris (+5,11%) also made strong progress.
OILS SAVE BUSINESS PLACE (+0,65%)
The flare-up of oil prices has allowed European price lists to close in positive territory on the eve of the European Council which today and tomorrow will offer many food for thought (and conflict). The weakness of the banking sector, however, indicates that the markets are harboring few illusions both on the agreement on migrants and on the eurozone reform dossier. In particular, as Prime Minister Giuseppe Conte anticipated, Italy will pronounce itself against the transformation of the ESM state-saving fund into a European Monetary Fund that "ends up forcing some countries towards predefined restructuring paths".
But the soft tones of the White House thought about spreading a note of optimism. Trump seems (a mandatory conditional) to have embraced Steven Mnuchin's line, entrusting the protection of US high-tech companies to case-by-case examination by the CFius, the Committee which must scrutinize foreign acquisitions of US companies without imposing a specific veto on Chinese operations. Tension falls, the euro weakens according to the script of the period.
Milan (+0,65%) closed the session at 21.557 points, accelerating upwards to a maximum of 21.726 points (2,7 billion euros the value of trades). The day started in heavy red (minimum at 21.157).
The same climate of confidence can be felt in the rest of Europe: Frankfurt +0,93%, Paris +0,87%, Madrid +0,22%, London +1,17%.
SOS DI CONFINDUSTRIA: A MANEUVER OF 9 BILLION WILL BE NEEDED
According to the Confindustria Study Centre, Italy will slow down to 1,3% this year from 1,5% in 2017 and 1,1% in 2019. The forecast for 2018 does not include a possible encore maneuver to correct the trend of the accounts during the year. The forecast is affected "by the global slowdown and in particular by Italian exports and private investments, by a labor market that is no longer as vigorous as before, by the increase in the spread", said the new chief economist of Confindustria Andrea Montanino. According to the new forecasts, Europe will soon knock on the doors of the Ministry to ask for a corrective measure worth 9 billion euros already this year.
DEALOGIC: OPERATIONS OF CORPORATE ITALY DOWN
The economic situation has already produced an evident slowdown in the request for credit by corporate Italy. According to Dealogic's analysis, Italian borrowers placed €2018 billion in syndicated deals in the first six months of 45, 36% less than twelve months ago. The financial institutions of the Bel Paese sold 21% of debt compared to 2017. Public area operations also fell sharply, except for the Treasury auctions, which are however very prudent, according to Dealogic, to avoid nasty surprises. The decline in activity on the Italian debt market caused a 12% drop in volumes at the continental level.
On the eve of the medium/long-term auctions, the Italian secondary market nevertheless allowed itself a positive session, despite the difficult day in the banking sector.
SPREADS DOWN. BTPs SEEN AT AUCTION AT 2,8%.
Today the Treasury will auction securities between 5 and 6,5 billion maturing in 2023 and 2028 plus the September 2025 Ccteu. A relatively light offer although slightly higher than that of the end of May.
At the end of the session on the secondary market, the 5-year coupon in March 2023 was 0,95%, at auction for 1,5/2 billion, hovering around 1,90% from the 2,32% of the placement at the end of May. The 2,82-year yield is indicated at around 3% from XNUMX% at the last auction.
Purchases fell in the late afternoon, coinciding with the recovery of German government bonds. Starting at 253 basis points from 257 last night, the spread closed at 251 after a peak at 263 cents.
At yesterday's BOT auction, the weighted average rate dropped by one point and 121 cents compared to the end of May to return below 1%, the lowest since the end of April.
INDUSTRIAL RECOVERY. USA CONTRACT FOR LEONARDO
A recovery day yesterday for industrial stocks, already stressed by the tariff dispute. Cnh Industrial (+2,83%), Stm (+1,12%), Buzzi (+1,21%) and Fiat Chrysler (+1,08%) recover. Breath of fresh air for Leonardo (+1%). Drs, the subsidiary, has been awarded a contract with the US military, worth 193 million dollars, for the supply of active protection systems for tanks, with related support and maintenance activities.
Prysmian raises its head again (+1,91%), penalized this week by the matter of provisions due to Western Link problems. According to the declarations of the CEO, Valerio Battista, the provisions made by the company to cover the penalties linked to the delays in the project should be sufficient.
BANKS IN RED, SHARPEN NUVO WATERS IN CARIGE
The banking sector did worse than the rest of Europe, although the spread between BTPs and Bunds remained stable. The Italian basket lost 1,61%, while in Europe the sector finished practically unchanged -0,07%.
Especially bad Unicredit (-1,8%), Ubi Banca (-2,21%), Banco Bpm (-1,8%) and Mediobanca (-1,53%). Bper Banca -1,42%: the managing director Alessandro Vandelli confirmed that the industrial plan will be presented in September. Troubled waters again in Carige (-1,27%): after the resignation of the president Giuseppe Tesauro, those of the independent director Stefano Lunardi arrived yesterday.
LIMPS THE MANAGED. GENERALI SALTS IN INDIA
Remaining with financials, managed savings are lagging behind. In May, the Italian industry in the sector recorded a negative collection of 6,91 billion euros according to the preliminary data by Assogestioni. In reality, over 3,67 billion euros derive from a shift in scope from managed savings to insurance. Banca Generali -3,23%.
Among the brilliant insurance companies Unipolsai +2,6%. General -0,17%. The company grows in India. In a move that fully fits into the ongoing geographic repositioning, the Lion rose from 25,5% to 49% in the insurance partnership with Future Group.
CAMPARI GOOD, THE WORLD CHAMPIONSHIP PUSHES MEDIASET
Campari +1,97%. The group headed by Lagfin, the Luxembourg holding company of the Garavoglia family which controls Campari, recorded net profit in 2017 that more than doubled to 92,7 million from 41,8 million in 2016 .
The World Cup is good for Mediaset (+1,34%). Pier Silvio Berlusconi stated that “the collection from the World Cup was very very positive, above our expectations.
Tod's -1,49%: JP Morgan reduced its target price from 56 to 55 euros, confirming the "neutral" recommendation.
MASI TOASTS WITH BELUGA CAVIAR
Brinda Masi Agricola (+3,9%). The company famous for its Amarone, has reached an agreement with Beluga Group for the export distribution and distribution of its wines in Russia.
Among peak mid caps, Gima TT-7,85%: Kepler cut its rating to hold.
Energica Motor Company flies over Aim +18,25% thanks to the results of the first half.
