"We have to find an agreement this week simply because we don't have extra time." Thus the president of the Eurogroup Jean Claude Juncker on the eve of the final rush for Greek peace. Another Eurogroup will meet today. Tomorrow the leaders should put their final signature during the EU summit. In this way, the Greek Parliament and the German Bundestag could seal the agreement by the weekend.
Difficulties abound. Both in Athens where Syriza's left contests a plan which, according to Deutsche Bank, will have a 3% recessive effect on GDP, and in Germany. Above all, the Monetary Fund does not spare its criticisms. But the markets remain optimistic.
The series of increases continues in Tokyo (+0,5%), in positive ground for six sessions. The Nikkei index is at its 18-year high, ie since 6 December 1996. The yen's decline is favoring the rally. Still strong volatility in Chinese stock exchanges. Today Shanghai (+1,6%) is recovering thanks to the push of expansive measures by the central bank. Positive, but cautious, the US lists, held back: Dow Jones +0,13%, S&P500 +0,06%, Nasdaq +0,12%.
EUROPE IN RECOVERY. AND THE EURO CELEBRATES DOWN
The most relevant data comes from the currency markets. The dollar strengthens again, rising to 1,117 against the euro from 1,134 at the close. The phenomenon is linked, in part, to expectations of a rise in interest rates in the United States, as early as September. Fed Governor Jerome Powell yesterday did not rule out the possibility of a double hike between September and December. The reaction of T-Bonds was also immediate, rising to 2,43%.
But, even more, the positive evolution of the European economy contributed both to the prospect of an agreement in Greece and to the positive signs of the economy (Pmi indices at their highest levels for 4 years). But why do positive signals contribute to the decline of the euro and not vice versa to its strengthening?
This is how Giuseppe Sersale, Anthilia's strategist responds: “The single currency is largely dominated by portfolio flows. The particular situation in Europe (recovering economy, negative rates and QE) sees investors dismantle positions on various assets financed by borrowing in euros in the phases of risk adversion, and reassemble them in those of risk appetite. In other words, today's session shows that, with the Greek situation in rapid progress, the QE trade (I borrow in euros to buy other assets) which characterized the first quarter, and suffered a lot during the second, is making a comeback”.
MILAN +0,4%. NEW FIREWORKS IN ATHENS
During the day, the torpedoes launched against the Greek peace slowed but did not cancel the animal spirits of the markets. In Piazza Affari, the Ftse Mib index reduced gains to 0,4%. Frankfurt (+0,7%) and Paris (+1,2%) did better. Madrid +0,3%. Outside the euro area London +0,1%. The Btp/Bund spread closed at 128 basis points, bringing the Italian 2,15-year yield to 0,05%, up XNUMX% from Monday.
The Athens Stock Exchange flies (+6,11%). Compared to last week's lows, the recovery is 20%. The balance sheet from the beginning of the year is still 5% at a loss. They also recover the Hellenic bonds. The yield on the 2-year bond (19,80%) falls below 20% for the first time since mid-May, last week it touched 30%. The 50-year Greece/Germany spread contracted by another 930 basis points to 10,20, the lowest level since early March. The yield (12,5%) is also at its lowest point since March. It hovered around XNUMX% on Friday.
GOLDMAN AND BARCLAYS PUSH BPM, UNICREDIT BRAKES
The go-ahead from the government arrived yesterday for the decree law which contains measures to accelerate the enforcement of credit guarantees and introduces a more favorable tax regime on value adjustments, allowing banks to tackle the problem of gross non-performing loans that has never been so heavy: in April 191,5 billion, equal to 10% of loans, while total non-performing loans exceeded 350 billion euro. Even before the launch of the provision, the measure was examined by two reports, by Barclays and Goldman Sachs, dedicated to the credit system.
Banca Popolare di Milano passed with full marks (+2,5%) which reached its highest level since November 2010 at 0,9940 euro. Goldman Sachs reiterated the Buy recommendation, adjusting the target price to 1,13 euros from 1,12 euros. Barclays has raised the recommendation to Overweight from Equal Weight. Target price at 1,10 euro from 0,90 euro. Rating up to Ba3 also for Moody's. The Piazza Meda institution is the best banking stock in the Eurostoxx sector index with +79%, the index only +18%.
Also in evidence was Intesa Sanpaolo (+0,9%), after having reached a new high since October 2008 at 3,4480 euros during the session. Moody's upgraded the bank's long-term rating to Baa1, confirming the "stable" outlook. SocGen reiterated the Buy recommendation and the target of 3,65 euros. The stock gains 44% since the beginning of the year and is the third best blue chip in the Eurostoxx 50 index (+16%).
Conversely, Unicredit slows down (-0,88%). The CEO Federico Ghizzoni has announced a fine tuning to the 2013-2018 business plan to take into account the new economic scenario and low interest rates. “At current prices we remain positive on the stock. The targets of the industrial plan contemplated revenues in the core bank which appear rather optimistic at the moment”, comments Luca Comi of ICBPI in the daily commentary.
Ubi Banca (-0,8%) and Banco Popolare (-0,7%) also corrected downwards. Monte Paschi + 0,5%. In asset management, Azimut did well, gaining 2,91%: Icbpi started hedging the stock with a buy rating and a target price of 30,5 euros. Mediolanum also bought well, picked up with a buy from BofA-Merrill.
FCA, GIULIA ARRIVES. BUT ALSO NEW NO FROM THE GM FRONT
For Fiat Chrysler, the day has finally arrived for the presentation of the Giulia, the Alfa Romeo sedan with which Sergio Marchionne plans to launch his ascent into the premium category of the market. In Piazza Affari, the stock gains 1,2%. GM's activist funds and other major shareholders are cool about the prospect of a merger with the Italian-American group, Reuters reports.
Meanwhile, the board of PartnerRe, increasingly determined to reject the takeover bid launched by Exor (+0,43%) raises the risk to the shareholders that the Turin-based financial company could be involved in a future financial intervention in support of the subsidiary in the car sector , if the merger with Gm fails. The reply from Turin is dry: the board of the reinsurance group is conducting an "irresponsible" campaign to confuse its shareholders.
Pirelli -0,65%, with shares that closed at 15,37 euros (still above the level of the next tender offer) communicated in the evening that the advisors of the transaction will be Deutsche Bank and Goldman Sachs. The independent directors will use Citigroup.
ORDERS PUSH SAIPEM AND TENARIS
Enel Gren Power advances (+ 3,5%), best blue chip of the day. Enel -0,2%, Snam +0,7%. Atlantia (+2,12%) benefited from Bank of America – Merrill Lynch upgrading its rating from neutral to buy. Among the oil companies Eni +0,1%. Saipem shines: +2,5%, which adds up to yesterday's +6%. The title returns above the psychological threshold of 10 euros. Positive closure also for Tenaris (+1,3%) which signed an important contract with Statoil. Saras (+4,72%) driven by the increase in refining margins to +5,60 dollars/barrel, the highest level since the beginning of the year.
Positive Telecom Italia (+0,51%) despite the exclusion from Nomura's list of favorite TLC stocks.
