There's no denying it: it's really a high-intensity start to the year. On the day that saw the euro fall to its lowest level in 14 years against the dollar: a) German inflation surprisingly rose to 1,7%, approaching the ECB's official targets; b) oil rockets higher, hitting 18-month highs; c) the US manufacturing activity index rises to a year high; d) T bond rates, on the rise, are already pricing in a forthcoming increase in US rates. Meanwhile Clemens Fuerst, president of the German Ifo, calls for the end of European Qe as early as March.
TRUMP EFFECT: FORD CANCEL A FACTORY IN MEXICO
But the first twist of 2017 was guaranteed by Donald Trump himself with a tweet. The new president attacked GM (+0,89%), guilty according to him of not paying taxes on Chevrolet Chevy Cruze cars manufactured in Mexico, threatening imminent retaliation. The company defended itself by arguing that the plant serves South American markets, but the effect was achieved: Ford (+3,79%) announced yesterday that it had canceled its investment in a new factory in Mexico (1,6 $.XNUMX billion). In return, it will upgrade a plant in Michigan.
FCA IN LAS VEGAS PRESENTS PORTAL, ELECTRIC AND SELF-DRIVEN
An "American" news also for Fiat Chrysler (+2%) which, according to various brokers, is once again close to a merger operation on the US market, easier after the start of the Trump era. Tonight at Ced in Las Vegas the group presented Portal prototype, a self-driving electric minivan that paves the way for a new line of products. The car has a 3-metre wheelbase which allows for three rows of seats, which can be accessed through sliding doors. Thanks to the Uconnect system, it will be possible to connect while traveling to a long series of services, including e-commerce.
Meteo Borsa expects a session marked by volatility dictated by tensions on the cost of money: in the evening, the publication of the Fed's minutes could offer new signals of an imminent new increase in interest rates.
TOKYO, RECORD DEPARTURE. OIL BRAKES AFTER THE RECORD
Rocketing start of the Japanese Stock Exchange in the first session of 2017, favored by the new record of the dollar, which rose above 118 yen. The Nikkei index posted an opening gain of 2,1%. Strong growth Takata (+17,5%): the company, indicted for defective airbags, is close to an agreement with the US authorities.
The other price lists in the Pacific area were calmer: Sydney +0,1%, Hong Kong +0,2%. Bloomberg writes that the Beijing authorities are developing a plan to support the Chinese currency. The stock markets of South Korea and India are little moved. Great excitement on the US markets, already focused on the labor market data, due out on Friday.
The Dow Jones index (+0,6%) resumed the hunt at 20.000, barely touched during the session with a maximum of 19.983,53. The rise of the S&P 500 and the Nasdaq was more robust, both +0,85%. The dollar broke the barrier of 1,04 against the euro, the highest since 2003, on the wave of the excellent data arriving from the economy: the index on the expectations of purchasing managers of manufacturing companies calculated by ISM went to December on the highs of the last year at 54,7. Construction spending was also better than expected, rising by 0,9% in November from +0,5% in October.
Many titles in fibrillation: Verizon (+2,25%) was rewarded by the buy of Citigroup, Merck (+2,17) and Gilead (+3,36%) drove the health sector upwards (+1,40 % the sector index). Also lively were Alphabet (formerly Google, +1,96%) and Facebook (+1,57%). Only the utilities are slowing down (-0,30%), weighed down by the prospect of an increase in the cost of debt.
Two-sided session for oil: first a sharp increase (Brent up to 58,3 dollars a barrel, the highest since July 2015) then a drop (-2% to 55 dollars) following the surge in the US currency. Exxon Mobil gains 0,70%, Marathon Petroleum flies (+5,12%) in view of the spin off requested by Elliott Management, an investor activist. At Piazza Affari Eni -0,1% and Saipem +2%.
BREAKDOWN IN THE BUSINESS PLACE, GERMAN “ACHTUNG” AT THE ECB
France is set to launch a 50-year Treasury today. This is how the debt extension strategy launched by the Eurozone countries continues, determined to exploit the trend of monetary expansion dictated by the ECB. Futures signal a bullish start in major markets.
The Milan Stock Exchange held back yesterday in the final, closing just above parity. The Ftse Mib index gained 0,1% to 19.573 points. By early afternoon, the blue chip index had risen to 19.810 points. Frankfurt lost 0,2%. Better Paris (+0,4%) and London (+0,5%).
In the evening, the number one of the German economic institute Ifo, Clemens Fuest, spoke again according to which the European Central Bank should end the bond purchase program "already in March 2017" if the reading of German inflation, which turned out to be stronger than expectations, is reflected in the rest of the euro area. December euro zone inflation data is on the agenda today, with expectations of a 1% reading likely to be revised upwards, according to a Reuters poll.
Negative session for the Italian bond market which, together with the entire sector of government bonds in the Eurozone, is discounting the rise in German inflation and the impact it could have on the monetary policy of the European Central Bank. The Italian 1,88-year rate rises to around 1,75%, revising the highs reached in mid-December, from 161% yesterday evening. The spread with the similar maturity of the Bund widens to 156 basis points from 46 basis points at the end of yesterday's session. The risk premium paid by Italy on the Spanish paper also rose, rising to 43 basis points from XNUMX on Monday.
SKIP BASEL 4, EUROPEAN BANKS ON THE RISE
The European banking sector is still lively: the Euro Stoxx sector index rose by 2,7%. A postponement of the decisive meeting for the adoption of the directives was announced yesterday new Basel 3 rules. The council of central bank governors, the entity that must approve the adoption of the rules on the calculation of the capital ratios of credit institutions, communicated that the meeting, scheduled for 8 January, was postponed to a generic near future.
European regulators fear that the demand for more stringent capital requirements for banks could curb loans, the primary source of funding for companies. Sources familiar with the situation told Reuters that the main stumbling block is identifying the minimum level of capital needed by banks regardless of the individual models used by each. Deutsche Bank, for example, uses its own models, not the standard one, to determine the required capital buffers.
BANCO BPM FLIES, INTESA FINANCES GLENCORE AND QATAR
Banco BPM adds another +7,20% to the gains recorded yesterday, the debut day after the merger. The stock is helped by the prospect of a short-term sale of a 642 million euro non-performing portfolio, already anticipated by Banco Popolare CEO Pier Francesco Saviotti in recent months and included in the plan.
Among the other banks, Unicredit +0,1%, Ubi Banca +4,4%, Mediobanca +2,9%. Intesa Sanpaolo +2,2%. The bank is preparing to launch a bond whose yield is linked to the performance of the Common Equity Tier 1. The institute supports the acquisition of 5,2% of Rosneft by the consortium formed by Glencore and Qatar Investment Authority (Qia). Unipol Sai +19,5% and Azimut +2%.
NATIXIS PROPOSES AGREEMENT BETWEEN MEDIASET AND VIVENDI
Mediaset loses hits on the Stock Exchange (-1,2%), but Vivendi's diplomacy is on the move. A report by Natixis, the investment bank that assisted Vincent Bolloré in his takeover of 29,77% of the Berlusconi group's television channels, outlined a possible agreement yesterday. Vivendi could launch a friendly takeover bid by Mediaset and in Madrid on Mediaset Spain. In a second step, the company will hand over control of free-to-air TV to Fininvest, retaining only control of pay TV, Medusa and the production companies.
The agreement should provide for a call option in favor of the French company on the rest of the group to be exercised in 3-5 years. At the end of the operation (estimated cost 2,8 billion) Canale 5 and the other free-to-air networks will be 51% controlled by Vivendi, 49% will remain with Fininvest. Probably the no of the Italian group.
FINCANTIERI CLOSER TO THE SEOUL SHIPYARDS
The Seoul court promoted Fincantieri's offer (+3,50%) for the Saint Nazare shipyards, where, among other things, aircraft carriers and other French warships are born. Now we need to find an agreement with Paris, which has a blocking minority in society: after the many French purchases in Italy, a no would taste like a joke.
Utilities penalized by the rise in bond yields: Enel -1,2%, Snam -1,3%.
