The first half of 2016 ended with a mixed session, one of the most volatile and tormented in recent years. The last act lived up to the script, agitated and full of twists and turns on the banking sector (in Italy), on the pound, down again, due to the convulsions of English politics. But finally the markets took the road to recovery for the third day in a row. Thanks to Mark Carney, governor of the Bank of England, who confirmed the imminent easing of monetary policy.
Carney spoke at the end of a chaotic day for British politics, marked by the renunciation of Boris Johnson to run for David Cameron's succession. Carney said that, after the Brexit vote, the central bank intends to proceed "with some easing" of its monetary policy, to counteract the worsening economic outlook. In particular, the board of the BoE at its meeting on Tuesday 5 July will take "the necessary initiatives to support stability", while an initial balance sheet on the economic damage linked to the abandonment of the EU will be announced in the course of July. For a complete assessment of the damages and a new estimate of growth and inflation, concluded the banker, it will be necessary to wait until August. Only then, according to observers, will a cut in interest rates, currently at 0,50%, be triggered, together with other expansive measures. But Carney warned of the drawbacks of negative yields.
However, the news that the European Commission has temporarily authorized Italy to use the state guarantee to be able to provide emergency liquidity (up to 150 billion euros) to banks solvents, a measure that one hopes never to have to apply. In reality, the decision dates back to Sunday and has nothing to do with a bail-in exemption (curtly rejected by Germany) or with the search for investors willing to put between five and ten billion euros in the Atlante2 fund.
MAXI-OFFER (23 BILLION) ON HERSHEY CHOCOLATE: REJECTED
The markets are thus on their way to closing the week under the sign of a comeback. Thanks to the final push back, the S&P 500 index (+1,90% yesterday at 2098,84) closed the quarter in profit for the third consecutive time. The Dow Jones also did well (+1,38%), the Nasdaq fell (-0,56%). The US stock markets were able to count on two propellants: a) the prospect of the arrival, between dividends and buybacks, of 96 billion dollars from the banks, around thirty, which passed the US stress tests with flying colours; b) Mondelez's mega offer for the Hershey chocolate empire (23 billion dollars), already rejected.
Asian stock exchanges rose again this morning: Tokyo +0,8%, Sydney +0,6%, Shanghai also positive (+0,2%). The increase in natural gas prices also confirms the recovery, driven by the increase in consumption. The yuan hit a six-month low against the greenback in offshore trading.
OIL DOWN: IRANIAN EXPORTS ALREADY AT THE HIGHEST
Oil prices dropped sharply, down 2,4% with Brent at 50 dollars a barrel and Wti at 48,33. The latest data on the sale of Iranian oil to the Asian powers show that exports to these countries have returned to their highest values since 2011. According to the Irna agency, in May the Asian countries bought 1,62 million and 620 thousand barrels of crude oil from Iran, a record not recorded for five years. It is the confirmation that, after the end of the sanctions, Tehran's return to the market has been faster than expected.
MILAN DOWN 10% IN JUNE, STERLING AND EURO UNDER PRESSURE
Thanks to the words of the English governor, the rally in London continued (+2,27%) much better than Frankfurt (+0,71%), Paris (+1%) and Madrid (+0,6%). Milan, after a day characterized by strong volatility (minimum at 15.629, maximum at 16.213) closed the session up 1,57%, at 16.198 points. The June balance remains negative (-10%) as well as that of the semester (-24%).
The medium-long term auctions were positive for the Treasury, which assigned 6,75 billion between bonds at 5,10 and Ccteu. the maximum of the foreseen fork. The 5-year BTP has reached a new historic low in the first medium-long term placement after Brexit.
The pound fell again against the dollar to 1,323 (-1,4%). The euro slipped against the dollar to as low as 1,1080 on news that the ECB is considering easing rules for bond purchases and after the release of US data on weekly jobless claims.
SOROS: ALARM ON BANKS. THE ATLANTE 2 SITE OPENS
The usual George Soros, yesterday in the European Parliament, took care of curbing the enthusiasm. "The crisis - he said - is developing in slow motion, but Brexit will speed it up, reinforcing the deflationary tendencies that were already prevalent". The banking system of continental Europe, which had not yet fully recovered from the crisis, will now be put to the test: “Everyone knows what needs to be done, but unfortunately the ideological and political disagreement within the Eurozone has sideways” on the use of the European Stability Mechanism as a security measure.
The dry call no to the revision of the bail rules against the Italian government is transparent. The executive is now looking for fresh means to solve the knot of non-performing loans which are choking a large part of the credit institutions. In particular, the availability of new investors is being tested to increase the resources of the Atlante fund by 3-5 billion, more than halved after the rescue of Popolare Vicenza and Veneto Banca. The goal is to involve the social security funds and pension funds but also the Sga, the corporate vehicle used to rescue the Banco di Napoli which has almost 500 million in cash and cash equivalents, and the Cassa depositi e prestiti, already present in Atlas 1.
The Ministry of the Economy is also working on forms of public guarantees on bank bonds and does not exclude direct injections into the capital of credit institutions through innovative forms of Monti bonds, the financial instruments issued at the time in support of Banca MPS. But before an intervention, to be negotiated in any case with the European Commission, the executive decided to wait for the outcome of the stress tests by the ECB.
UNICREDIT, THE MUSTIER ERA BEGINS: DISPOSAL AND MORE CAPITAL IN SIGHT
However, yesterday the public lifebuoy allowed the final recovery of the banking sector, already affected during the day by the negative assessments of Kepler Chevreux and Morgna Stanley as well as by the negative effects of Deutsche Bank's rejection of the US stress tests. At the end, the Italian sector index rose by 2,17% against the +0,18% of the European one thanks to the driving force of Intesa (+3,2% after having reached a maximum of +6%).
However, the headline of the day was Unicredit: +2,3% after the institute has appointed Jean-Pierre Mustier as new CEO in place of Federico Ghizzoni (who will receive a liquidation of 10 million), who will resign from the Board of Directors on 11 July. The appointment took place unanimously after a series of meetings during the night between shareholders and directors and the explicit solicitation of Prime Minister Matteo Renzi: the awareness of not being able to disappoint the market with a postponement led to more lenient advice from the shareholders, from 24 May divided over the choice. And so the international profile prevailed over the desire of a part of the shareholder base to bet on an Italian or on an internal appointment.
Mustier entrusted his first jokes on the bank to a note, speaking of a new industrial plan and the need to strengthen capital and economic results. The relaunch of the Bank should go through a capital increase that most consider inevitable and the identification of non-strategic assets to be disposed of. Among the possible disposals Fineco, Pekao and Pioneer, the latter possibly in a different form from the operation configured with Santander and currently stalled.
Positive closing yesterday also for Bper (+2,76%), Mediobanca (+1,7%) and Bpm (+2,31%) in contrast with Banco Popolare (-0,19%). Down also Ubi (-1,04%) and Monte Paschi (-2,44%). Banca Carige lost 2,71% after the publication of the industrial plan for 2016-2020, considered too optimistic by the analysts of Equita Sim. Among other financial assets, Generali did well (+1,5%). Unipol sells 1,8%. In asset management, Banca Mediolanum flies (+5,2%), Fineco does well (+1,3%). Azimuth -2%.
BMW PUSHES STM, BROADBAND GIVES PRYSMIAN ENERGY
In the spotlight StM (+2,9%). According to Reuters, today the Israeli Mobileye should announce the start of a partnership with BMW for the self-driving car. Mobileye, which uses chips from StM, is the world leader in camera-based sensors that form the basis of the most advanced anti-collision assistance systems fitted to new generation cars. Unfortunately, the announcement comes the day after the first fatal accident of a self-driving car involving a Tesla.
In great evidence Prysmian with an increase of 6,45% to 19,64 euros. The title benefited from the go-ahead from the European Commission to Italy's plan for ultra-broadband for 2016-2022. The utilities and oil companies supported the rise in Piazza Affari: Eni +1,5%, Enel +2%, Saipem +1,5% and Snam +2,7%.
