Waiting for President Xi's ambassadors, from today in Washington to negotiate on duties, patents (and resolve the conflict over Huawei) Wall Street has acknowledged that Apple is better off than feared after the January 2 profit warning linked to the sales crisis in China. Of course, the accounts confirm the drop in global turnover (84,3 billion dollars -5%) and in the iPhone in particular (51,98 billion -15%), but profitability remains at record levels: profit per share, year-over-year, is close to twenty billion dollars (1997 billion -0,5%), last quarter EPS, 4,18 dollars, is an all-time high. And so Wall Street, despite the absence of indications on dividends and buybacks (but the 130 billion in cash are an excellent guarantee) has regained confidence: after the stock market, Apple shot up by 6%, an excellent mortgage for the day of today.
THE STERLING RISES BACK: HARD BREXIT CLOSER
Unfortunately, at least in Europe, the effect of the Apple will be balanced by renewed fears about Brexit. The British Parliament (317 votes against 301) mandated Theresa May of re-discuss the agreement with the EU to review the backstop, i.e. the guarantee of keeping the border with Ireland open, despite the fact that Brussels has already said that the request is inadmissible. On the other hand, the hypothesis of a postponement of the deadline, March 29, for the divorce was rejected. The risk of a hard Brexit becomes concrete. The pound rose again in the morning to 1,3095 against the dollar and 0,874 against the euro, slightly moved against the US currency, traded at 1,1438.
CHINA UP SLIGHTLY. RATES LAY OUT HARLEY DAVIDSON
Amidst hopes and fears, a crucial day thus begins awaiting the decisions of the Fed.
China's stock exchanges are slightly up, Japan's is modestly down and South Korea's is flat, awaiting communications from the US central bank and the start of Liu's mission to the US, President Xi's right-hand man to the trades.
The dollar weakens against the Chinese yuan for the sixth consecutive day, the exchange rate is at its lowest level since July.
Little move Wall Street: Dow Jones +0,21%, S&P 500 -0,15%. Nasdaq down 0,81% ahead of Apple announcements.
The sharp decline of Harley Davidson (-5,05% after the accounts) should be noted: Trump's protectionism damages the icon of the stars and stripes industry.
Oil closed up 2,3%, this morning Brent traded at 61,7 dollars a barrel, +0,6%. Rising yesterday Eni (+0,6%) and Saipem (+0,9%).
MILAN +0,48% TODAY COUNT IN THE BUSINESS SQUARE
Brexit, tariffs, Apple. Many unknowns accompanied the session of the European markets. But the nervousness overseas has not inflicted too much damage on the markets of the Old Continent which have closed with discrete progress (with the exception of the German Dax, which is at stake). Attention was focused on the excellent performance of the bond markets, including the Italian one in full recovery, according to the auspices of Economy Minister Giovanni Tria who, from the Peterson Institute in Washington, states: "There is no economic reason for justify this level of the spread”.
The Milan Stock Exchange ended the day with an increase of 0,48% to 19.702 points. Today Prime Minister Giuseppe Conte, visiting Milan, will stop in Piazza Affari.
Good for Paris (+0,81%). Lvmh's accounts came out after the stock exchange was closed: the fashion battleship recorded revenues of 46,8 billion euros (+18%), profits of 6,5 billion.
Madrid +0,64%; Zurich +0,88%. Flat Frankfurt (+0,03%). London (+1,25%) drove the markets pending the vote of Parliament. The stock markets thus bet on the postponement of Brexit. And, once again, market forecasts have proved to be wrong.
NEGATIVE YIELD FOR AUCTION BOTS
Falling inflation estimates, combined with the slowdown in the economy favoring lower market rates has sparked the run on bonds. Above all, the Italian “card” benefited on the day of the Bot auction.
The Treasury placed six-monthly bonds for 6,5 billion euro with the yield falling back into negative territory to -0,025% from +0,215% in the previous auction. Since the new government took office, there have never been any auctions with negative yields on this maturity.
The "fever" has infected the entire eurozone: the overall demand for the 12,5 billion euro of long and very long-term bonds issued today by Belgium, the Netherlands and Greece, has received requests for 65 billion euro.
In particular, for the five billion euros of Belgium's thirtieth anniversary, requests for 27 billion euros have arrived.
The ten-year BTP last night yielded 2,62%, a level not seen since July 2018. Spread with the Bund at 242 basis points, the lowest since September. About 50 billion euros of Italian government bonds are due to mature this week, while overall, in Europe, the supply of paper is modest, about 20 billion. The auctions in the next few days, especially today's Italian one on medium-long term securities, should go well.
THE ECONOMY SUFFERS. IL REF: ZERO GROWTH FOR ITALY
Long-term inflation expectations in the euro area continue to fall: a market indicator monitored by the ECB, based on five-year expectations, falls to 1,51%, its lowest since the end of 2016.
The other side of the coin concerns the worsening of the European economic situation. Italy, according to the Ref analysis, is traveling towards zero growth in 2019. Today the German government could announce a downward revision of the estimates on Germany's GDP, to +1%, from the previous +1,8%.
RACE TO THE UTILITIES, TERNA AT AN HISTORIC HIGH
Falling rates, rising risk aversion: this is the mix that has given wings to utilities across Europe.
The Eurostoxx sector index (+1,5%) has shot up to its highest level since October 2017. In the last 12 months, the sector has advanced by 7,7% against the 13% loss of the global index.
The sector patrol advances compactly in Piazza Affari. Snam (+1,8%) reaches the maximum for the year. Terna (+1,5%) instead marks an all-time high. Enel (+1,5%) and Italgas (+2%) also performed well.
Atlantia is back on track (+2,5%). Goldman Sachs has restarted hedging with a Buy rating. Moody's confirms the Baa3 rating.
AZIMUT'S RACE CONTINUES, PAUSE FOR JUVENTUS
However, the best stock on the list was Azimut (+2,9%), supported by the buy promotion, target price of 15,5 euros by Deutsche Bank. The stock is in the spotlight after the announcement of the adoption of a new method for calculating performance fees in recent days.
Weak are the banks which do not benefit from the drop in interest rates. The Italian sector index dropped by 0,42% against approximately +0,2% for the European one. Under fire Ubi (-1,9%) and Unicredit (-1,2%).
Profits are coming on the Juventus share (-6,75% to 1,479 euros) after the long run: since the beginning of the year the gain is 39%.
The automotive sector was down, awaiting news on US duties: the highest price is paid by Pirelli (-2,3%), the most sensitive to the Chinese market. Brembo follows (-1,4%). Stm was also down (-1,6%).
VIVENDI COMPLAINED IN CONSOB AGAINST ELLIOTT
Vivendi has confirmed, as anticipated by Les Echos, that it has sent a complaint to Consob against Elliott guilty, according to the indictment, of pointing downwards in Telecom shares: the collar contract entered into with Jp Morgan allows the fund the right to sell from 5 February at the pre-established price of 0,74-075 euro much higher than the current quotation of 0,49. Elliott could then, according to the French shareholder, strengthen the current stake with the profits from the collar.
ASTALDI HOPES IN THE TURKISH THINGS
Astaldi leaps by 17,5% on expectations for the sale of the Turkish GOI motorway.
Strong It Way which closes the fifth day of intense purchases with an increase of 16,25%.
D'Amico +1,01%: Kepler Cheuvreux confirmed the buy rating by raising the target price to 0,24 from 0,2 euro.
