The gathering of the world's mighty is set for 13 pm, Italian time, when a conference call will be held between the finance ministers of the G7 plus the most important central bankers, led by the Fed and the ECB. Then the world will know what financial measures (rate cuts and more, probably) will be taken to deal with the consequences of the coronavirus. In the meantime, the markets have already mobilized.
Yesterday evening Wall Street recorded the most robust rise in recent years: Dow Jones +5,09%, S&P 500 +4,65, Nasdaq +4,6% under the impetus of Apple (+9,3%), which recovered half of last week's losses.
The rally continued this morning, albeit in a more moderate form, on Asian stock markets. Shanghai (+1,3%) consolidates Monday's gains (+3,3%). Hong Kong +0,8%, the Kospi of Seoul +1,4%. S&P Sydney also made progress (+0,8%): the Australian central bank cut the cost of money by a quarter of a point.
The Tokyo Stock Exchange does not participate in the chorus (-0,7%), held back by the rise of the yen against the dollar (107,99). The governor of the BoJ has said that, if necessary, the Bank will buy stocks on the stock exchange. The dollar-yuan cross is recovering slightly, at 6,97, after three consecutive days of decline.
The dollar weakens against almost all currencies on the planet in view of the Federal Reserve's next moves. Traders are certain to give a half percentage point cut at the next Fed meeting.
The growth of the euro against the US currency slows down, this morning at 1,115 against the maximum of 1,118 yesterday. Even the ECB said it was ready to act. Among the possible interventions is a new cut in the deposit rate, to be brought to -0,6% from the current -0,5%, at the meeting of the executive committee on 12 March. But Frankfurt's room for maneuver is limited.
To what extent, analysts ask, can a rate cut be effective in the face of an epidemic? “The Fed can cut as much as it wants – points out a report by Charles Schwab – but it cannot restart an assembly line if the workers are in quarantine”. The damage inflicted on globalization by the virus (it suffices to say that there is a shortage of antibiotics because a large part of world production is located in an area of China blocked by quarantine) are many and difficult to heal. But the injection of liquidity, while not sufficient, is undoubtedly necessary to avoid a very dangerous chain of defaults. Without emergency interventions, the path to decline is marked: tonight Goldman Sachs cut its US GDP estimates for the first quarter of 2019 to +0,9%, in the second quarter growth will be zero. Others calculate that world growth risks halving from 3 to 1,5%. In this context, the battle against the epidemic is also being fought on other financial fronts.
Yields on 1,12-year Treasury Notes continue to fall (3%, -34 basis points, to the lowest level in history), but there are signs of stabilization in the movements of the curve. The two-year to 10-year spread, which had risen to XNUMX basis points, is trying to settle XNUMX basis points lower.
Gold recovers, overwhelmed on Friday by sales started by central banks, determined to obtain ammunition in view of the offensive that is about to start.
No less important is the oil front. The OPEC+ summit will be held in Vienna on Thursday. Russia appears ready to accept calls for a drastic cut in production.
Sharp drops yesterday for oil stocks in Milan: Saipem -3,3%, after Morgan Stanley lowered the target from 6,3 to 5,8 euros.
PIAZZA AFFARI REDUCES THE RED IN THE FINAL
The hope of central bank intervention yesterday saved the lists from a new deluge of selling. Only Milan, despite clinging to the comforting news arriving from the US markets in the finale, suffered further hellish pains for a good part of the session before reducing the deficit in the finale. But the news from the front of the epidemic, at the origin of the cut in OECD estimates than for the Bel Paese. The manufacturing indices are no better, with negative growth for 17 months. The latest data, moreover, was detected on the morning of February 21, before the announcement of the emergency.
IN EIGHT SESSIONS LOST 17%
Piazza Affari, back from last week's 12% loss, suffered a drop of 1,5%, to 21,655 points, but reacting in the final from the lows of the last four months reached this morning at 21.113 points, in the wake of Wall's rebound Street.
In eight sessions we went from the highs of the last 12 years, reached on Wednesday 19 February at 25.493 points, to today's lows at 21.113 points, the beauty of 4.380 basis points lost in less than two weeks (-17%).
The situation in the rest of Euroland is not dramatic. Frankfurt (-0,3), Madrid (+0,12%) and Paris (+0,44%) closed in positive territory.
Around one percentage point are gains outside the euro area: London +1,17%, Zurich +0,97%.
ATHENS -6,5% OVERWHELMED BY IMMIGRATION
Athens collapses (-6,5%). But the coronavirus is not the worst emergency: tens of thousands of refugees and immigrants are pressing at the borders from Turkey.
OECD: ECONOMIES AT RISK, ITALY ZERO GROWTH
The OECD has revised its forecasts for world GDP growth in 2020, brought to +2,4%, from the previous +2,9%: in an extreme case it could drop to +1,5%. “The global economy is at risk”, underlined the Parisian institution, opening its studio with the image of an empty airport. The entire Eurozone suffers a 2020 GDP cut of 0,3 points, to +0,8%. In the case of Italy, the OECD has forecast zero growth this year, or 0,4 percentage points less than last November's World Economic Outlook estimates.
Faced with the worsening situation, the tones of the ECB change. Christine Lagarde and Jens Weidmann had ruled out extraordinary measures in recent days. Vice-President Luis de Guindos today signaled instead that in the last few hours there have been contacts with other central banks.
THE EU TASK FORCE HAS BEEN STARTED
There is no shortage of opportunities to get a common emergency plan off the ground. There will be a conference call of G7 finance ministers today and an extraordinary G-20 meeting is also planned later. The president of the European Commission, Ursula von der Leyen, has launched the task force of the European Union to respond to the growing spread of the coronavirus.
The euro dollar moves to 1,11, +0,8%. Today de Guindos said he does not expect further appreciation of the euro.
THE SPREAD BREAKS THROUGH 180, THEN FALLS BACK
The BTP closed again in negative territory, diverging from the eurozone government bonds.
The spread with the bund widened by 20 basis points during the session, to return below 180 at the end, after the declarations of the WHO on the fact that Italy can still contain the epidemic.
In closing, the spread was 178 basis points from 174 on Friday, with a minimum of 167 points and a maximum of 188, the highest level since the end of August.
The 1,15-year rate stands at around 1,13%, after closing at 6% the previous session (+1,23 basis points). During the day, the yield reached XNUMX%, the highest since the end of January.
BANKS IN THE FOCUS: UBS LAUNCHES THE ALARM FOR BAD LOANS
The credit sector is down sharply. In addition to the surge in the spread, the prospect of a strong weakening of customer health weighs heavily. In a report, Ubs underlined the risk of a flare-up of non-performing or non-performing loans, the sword of Damocles from which the institutions seemed to finally re-emerge.
Banco Bpm leads the declines (-6%), on the eve of the presentation of the business plan. The duelists are slowing down: Intesa Sanpaolo (-3%) has completed the selection of consultants for the public offer on Ubi Banca (-4,5%), indicating JP Morgan, Morgan Stanley, Ubs and Equita who will work alongside Mediobanca. The "prey" Ubi responds with the appointment of Goldman Sachs, in addition to Credit Suisse. Unicredit also fell sharply (-4,2%). Also penalized Bper Banca (-5,4%), Pop. Sondrio (-5,6%) and Creval (-5,91%).
NEXI, THE BEST BLUE CHIP
Nexi returns to positive (+1,87%), best blue chip of the day
FCA -3,6%. THE SHARE IN ITALY RISES UP
Industry is in the red: Buzzi -5,77%, Prysmian -4,77%, Pirelli -3,6% as well as Fiat Chrysler. The February registration data came out in the evening. Last month, the FCA group registered over 41.300 cars, with a decrease of 7,34% compared to February 2019. On the other hand, the market share increased, rising to 25,4% from 24,8% a year ago .
Football also loses momentum: Lazio -6,96%, Juventus -5,2%.
Only anti-cyclical stocks such as utilities were positive: Terna +1,37%, Enel +0,85%, Hera +0,72%, Snam +0,56% and Italgas +0,51%.
Some ideas also on luxury with Brunello Cucinelli which jumps by 3,1%.
