With the stress tests coming out in days and the wait for the solution of the problems of the Italian banks, today's ECB meeting takes on a new flavor. Barring improbable surprises, the Frankfurt agenda does not envisage interest rate interventions. However, interventions to increase the effectiveness of Qe cannot be ruled out, in the face of inflation that is struggling to recover.
Also for this reason, the markets await Mario Draghi's intervention with increasing anxiety, which inaugurates the season of interventions by central banks: the Fed (June 24-25) which could rekindle the hypothesis of a rise in US interest rates by December; the Bank of Japan, which a few days later (July 29) should start a new, vigorous expansionary action (between 10 and 20 billion yen according to newspaper forecasts) and the Bank of England, which should cut the cost of borrowing to counter the Brexit recession.
Many signals, in part conflicting, did not slow down the markets, supported by better-than-expected quarterly results. Wall Street reaches new records: the Dow Jones index rises for the ninth consecutive session (+0,24%); the S&P 500 does even better (+0,47% to 2174,05 points); the Nasdaq also rose (+1,13% to 5.093,22 points).
The Asian Stock Exchanges are also in great turmoil: Tokyo (+1,2%) and Hong Kong (+0,8%) are up, while Chinese stock markets are also in positive territory. The central bank of New Zealand, which will meet in mid-August, announced in an official note that "it will continue to follow an expansionary policy".
Dollar in great evidence after an article by Jon Hilsenrath (the always well-informed "voice" on the Fed) in the Wall Street Journal: given the strength of the recovery of the US economy, a rate hike as early as September cannot be ruled out.
MICROSOFT GALVANIZES WALL STREET, INTEL BRAKING
The quarterly reports have taken care of pushing the US price lists. It was Microsoft's day (+5,3%), boosted by the excellent results recorded on the cloud. The financial honeymoon continues: Morgan Stanley advances by 2,5% after the accounts. American Express +0,7% after the Stock Exchange: profits rose by 37% due to the sale of Costco. After the Stock Exchange, Intel retreats (-3%), despite the positive results. Instead, Ebay shines (+6%).
EUROPE, THE QUARTERLY CAMPAIGN STARTS WELL
A cautious opening is expected in Europe, in view of the ECB meeting. But the company accounts could support the price lists. Today the data of Abb, Daimler, Roche, Unilever, Easy Jet, Sab Miller, Hermès will be communicated.
VOLKSWAGEN AND SAP DRAG EUROPE
The European first quarterly results pushed up the stock markets of the Old Continent yesterday, driven by the Tech and Auto sectors. Frankfurt jumped 1,8% under the impetus of Volkswagen and Sap. Paris and Madrid also performed well (+1,1%), London +0,47%. In Piazza Affari, the Ftse Mib, after a session with low trading volumes, closed up by 0,5%, at 16.764 points. The debt market moved little: the yield differential between the BTP and the Bund on the 10-year segment stands at 125 basis points.
The season of German quarterly reports has begun brilliantly. Volkswagen released first-half operating profit data that exceeded analysts' estimates. The company announced that the first half of 2016 closed with an operating result of 7,5 billion euros, significantly higher than analysts' forecasts, despite the impact on the accounts of the Dieselgate scandal. The Wolfsburg house (+6%) will communicate the complete results for the first half of the year on 28 July.
FIAT CHRYSLER CLEARS LOSSES
Fiat Chrysler also made progress (+4% to 6,23 euros), recovering Tuesday's loss (-3,3%) due to investigations underway in the US on a possible alteration of sales data. Cnh Industrial +1,8%: for Banca Imi (hold, Tp 7,1 euro) the impact of fine that Iveco received it is already discounted in the current stock exchange prices. The Eurostoxx index of the Automotive sector was the best of the day with an increase of 2,7%.
However, the best sector was Tech (+3,5%). Sap +5,7%: the software group recorded an operating profit of 1,52 billion euros, well above market expectations, thanks to its strategy oriented towards the sale of cloud-based applications. Revenue for new software licenses, an important figure for predicting the profits that can be generated by subsequent support and maintenance contracts, rose 10% in the quarter to 1,04 billion euros, better than the 984 million estimated by analysts . In Piazza Affari Stm gained 2,1%.
TERRORISM AND CRISIS: LUFTHANSA LAUNCHES THE PROFITS ALARM
But there was no shortage of negative notes and the most alarming always comes from Frankfurt. Lufthansa has revised downwards its Ebit estimates for 2016, which "will be lower than last year due to growing political and economic uncertainties, also in the light of the recent attacks". The first half closed with revenues of 15 billion euros (against 15,4 a year ago) and an adjusted Ebit of 529 million. The effect on the S&P 500 airlines index was immediate, down 1,3% last night.
OIL CRUSHES BUSINESS PLACE: TENARIS DOWN, SAIPEM RISES
Piazza Affari was held back by the drop in oil stocks despite the EIA data on weekly crude oil stocks in the USA, which fell slightly beyond expectations: Brent rose this morning by 1,5% to 47,3 dollars a barrel.
Eni fell by 0,9%. Yesterday evening it was announced that the arbitration initiated by Eni against GasTerra, the Dutch gas supplier, for a revision of the contractual supply price had no positive outcome: the arbitration board which did not accept the request of the Italian major to price review.
Tenaris fell sharply (-2,2%), the worst blue chip of the day, after Goldman Sachs cut the recommendation to Neutral from Buy. The target price is set at 13 euros. The stock returned from a prolonged rally, supported by the recovery in commodity prices, which pushed the year-to-date performance to +15%, one of the best within the FtseMib.
Saipem, on the other hand, continues to march (+1,8%), confirmed in the Goldman Sachs Conviction Buy List with a buy rating and target price that goes from 0,62 to 0,52 euros.
BANKS, THE MPS ALARM CONTINUES
While waiting for signals on the system's non-performing front, analysts are practicing the scenarios that will open up after the stress tests. Yesterday Crédit Suisse took the field, which promoted Intesa San Paolo (+1,25%, outperform rating with a target price of 2,5 euros) and Ubi +0,86% (the bank denied interest in Antonveneta) . Neutral opinion on Unicredit (+1,7%). The sore points concern Monte Paschi (-1,9%): "Our stress tests show" that in the worst case the bank could have "a potential capital shortfall of 0,6-3,5 billion euros". The bank, the report concludes, "may need state aid". According to Moody's, the turmoil in the Italian banking sector is putting a strain on the framework of the new EU rules.
Positive day for insurance companies and asset management: Generali +1,3%, Anima +2,2%, Azimut +1,6%. Poste Italiane gained 1,53%, to 6,29 euros. Banca Akros confirmed the accumulated recommendation on the share and the target price at 7,9 euros.
TELECOM IS NOT CONVINCING, AXIS WITH ENEL IS GOOD FOR TISCALI
Telecom Italia falls (-0,9%) on the day of the parliamentary hearing of Flavio Cattaneo. The manager anticipated that "further investments in the mobile part that we will connect with the fiber part will be announced at the next Board of Directors". Analysts are skeptical about the effectiveness of these new investments.
Strong increase for Tiscali (+9,9%), which yesterday announced a partnership with Enel Open Fiber for the creation and marketing of the ultra-broadband TLC network in Italy.
LUXURY RAISES ITS HEAD. RCS, DELLA VALLE DOES NOT RESIGN UP
Robust rise for the luxury sector. Moncler leads the race (+4,5%) ahead of Luxottica and Yoox, both +2,1%. Ferragamo +1,8%. Tod's also rose (+1,7%). Diego Della Valle has raised doubts about the correct conduct of the public offers on RCS and asks for reassurances about the competent authorities: only later, he says, will he decide what to do with his share package equal to 7,3%. It is a "personal initiative", the other members of the consortium defeated in the race for control of via Solferino have announced.
