Detente USA-China reassures but the risk Italian persists


by Marc Angrand

PARIS (Reuters) – The main european stock Exchanges opened on Monday have finished the session in positive territory, taking advantage of the progress made by the discussions between the United States and China on the issue of trade tensions, but the risk of Italian politics is far from having disappeared of investors ‘ concerns.

In Paris, the CAC 40 finished up 0.41% (23 points) to 5.637,51 points, its best close since mid-December 2007, and in London, the FTSE 100 has gained 1.03 percent, after having registered a new record of 7.868,12.

The FTSEurofirst 300 was taken at 0.29% and the Stoxx 600 0,30%, but the EuroStoxx 50 has dropped to 0.03%.

The markets in germany and switzerland remained closed on Monday of Pentecost. In Paris, the volumes have not exceeded 60% of their daily average for the last three months.

At the time of the close in Europe, Wall Street evolved into the green, the Dow Jones rising by 1.07%, the Standard & Poor’s 500 by 0.58% and the Nasdaq Composite of 0.41%.

The Dow, which has crossed the bar of the 25,000 points for the first time since mid-march, is taken by, among others, Boeing (NYSE:BA) (+3,29%), Intel (NASDAQ:INTC) (+1,84%) and Caterpillar (NYSE:CAT) (+2,18%) of major exporters who benefit from the statements by chinese and us reassuring on the international trade.

After you have ensured that the trade war is “in brackets” after the discussions of the last days with China, the us Treasury secretary, Steven Mnuchin, said Wilbur Ross, the secretary of Commerce, will travel to Beijing next week.


The entry into force of the new customs duties announced in recent weeks, in the steel industry, among others, is therefore suspended.

These signs of appeasement are a benefit to the oil, which remains tilted to the upside, and the dollar, which has appreciated by 0.14% against a basket of reference currencies, against which it has reached in the session, its highest level since December 13.

The euro, itself, is trading around 1,1760 dollar after a low of five months to 1,1717.

Has Wall Street, the news of the day is also marked by a new series of mergers and acquisitions, for a total amount of 28 billion dollars. Among the large values involved, General Electric (NYSE:GE) takes 2,61% after the announcement of the merger of its business of railway equipment with Wabtec (+3.94 per cent).

The regional bank MB Financial gains for its 13,36% after its acquisition by Fifth Third Bancorp (NASDAQ:FITB).

In Europe, the appreciation of the dollar has benefited, among others, Airbus (PA:AIR), which has gained 3,05%, the largest increase in the CAC.

Other value in view, Ryanair (LON:RYA) has taken 5,14% after its annual results, marked by record net income, even if it should decrease over the current fiscal year.

But the increase as a whole has been more cautious on the us markets, in particular because of the questions lingering over the Italian politics.


The leaders of the Movement 5 stars (M5S) and the League must be received by the end of the day by the president Sergio Mattarella, for him to submit a name for the post of chairman of the Board.

If this unknown seems to be able to be lifted, the markets remain concerned about the intentions of the two parties in budgetary matters and on the european construction.

“If the most extreme elements of the proposals initial policies have been abandoned, the new government seems to be determined to engage in a significant fiscal expansion,” says Exane BNP Paribas (PA:BNPP).

“Even if, ultimately, there are sanctions that Brussels and the ECB can take to restrict the expenditure budget Italian, this may well slow down the process of the completion of the banking union (…) and any initiative budgetary redistribution increased in the euro area”, adds the agent, who sees it as a handicap for the euro in the short term.

The yield on Italian government bonds to ten years has passed 2.35 per cent, the highest in over a year, and that of the titles to two years, 0,277% by the end of the session, is the highest since November 2016; it was negative in the beginning of last week.

The yield spread (the”spread”) between the titles to the ten-year Italian and German at the same time exceeded 180 basis points, back to levels of last October.

The Milan stock Exchange, she gave 1,52%, again leaded by the banking sector (-3,14%). It has fallen from 10,47% over the last ten sessions.

(Edited by Véronique Tison)

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