Fears of a new wave of coronavirus in the United States and Latin America, accompanied by the Fed’s alarm about the considerable risks facing the US economy, are putting pressure on the lists. And after the collapse of the European stock exchanges, Wall Street also closed down sharply: the Dow Jones lost 6.90% to 25,128.17 points, the Nasdaq yielded 5.27% to 9,492.43 points while the S&P 500 left land 5.90% to 3,001.96 points
Milan remains the heaviest with the Ftse Mib which in closing leaves 4.81% on the ground, burning 21.6 billion. But Paris does not do much better, losing 4.71%, Frankfurt showing a fall of 4.39% and London recording a drop of 4.01%. For the Stoxx 50 the negative balance of 4.53%, a drop that translates into 328 billion capitalization lost in a single session.
Spread rising sharply
The spread between BTP and Bund closed at 190 points with the Italian 10-year yield at 1.48%.
Piazza Affari down: the stocks in Milan
Piazza Affari, as mentioned, had a difficult day. The Milan Stock Exchange, after pushing on the post-Covid highs, started a recurrence phase which on Thursday brought the indexes to a sharp drop, with the Ftse Mib which stopped trading at -4.81% at 18,806 points .
Piazza Affari burned over 26.5 billion in capitalization, with a 4.66% drop in the All Share. Borsa Italiana had pushed itself to adjust the 585 billion capitalization in the past few sessions, but after today the All Share is worth around 545 billion.
Heavy banks, among the protagonists in recent weeks: Unicredit lost 7.81%, Banco Bpm 7.82%, Intesa almost 5%; managed savings are also bad, while Nexi and Generali do slightly better than the index. Tensions among industrialists: CNH lost 11.82%, FCA – on the hypothesis of a postponement of the marriage with PSA due to the need for more time for the European Antitrust analysis – 7.7%. Pirelli sinks and loses 8.54%. Energy and luxury are bad, with strong sales on Ferragamo. Heavy Atlantia (-9.16%) awaiting developments on the Aspi dossier.
Markets blame investor flight after spreading the Federal Reserve’s outlook for the American economy. US central bank governor Jerome Powell on Wednesday admitted that the recovery of the economy after the shock caused by the epidemic will take years. The Fed decided on Wednesday to leave interest rates unchanged at 0.25% at least until 2022 but without announcing additional measures to counter the economic effects of the Covid pandemic19.
The predictions USA
The outlook for the future is black: the US central bank has predicted that the US GDP will drop by 6.5% this year, a sharp cut compared to the + 2% expected in December, before the coronavirus epidemic. According to the Fed, the unemployment rate in the United States will rise to 9.3% in 2020.
Frankfurt is ready for anything to revive the economy
Obviously, the position taken by the ECB chief economist Philip Lane according to which Frankfurt is ready for anything to revive the economy is not enough to lift the markets and a credit crunch must be prevented from worsening the situation, said Philip Lane. We are a modern central bank. We recognize how important it is for small businesses, SMEs and families to have access to credit. We will do everything we can to prevent this crisis from being made worse by the credit crunch, Lane says, saying he is satisfied with how liquidity measures are going (Tltro, Peltro and bridge Ltro).
In addition, Lane underlines the fact that the ECB is the only bank in the world with two ongoing QEs: the PAA program of purchases, traditional and without expiry, to bring inflation into line with the objective of monetary policy, and the program Pepp, emergency and temporary, to face the very strong unprecedented shock of the pandemic and stabilize the financial markets. The two QE have an extraordinary firepower, equal to 1,800 billion new purchases until June 2021: ECB therefore the anchor of stability for Italy and all the euro area states affected by this common shock .