The intensity of the storm on the financial markets does not abate. Losses on the stock markets since last Friday have risen to more than 3 trillion dollars. Sterling falls again after Standard & Poor's rating cut (AA from AAA, negative outlook). Sales hit European markets, Italy in particular, fearing that the centrifugal forces unleashed by Brexit could put the euro and the very existence of the Union at risk. Hence the collapse of bank stocks. A black picture, in short, which requires robust action by the authorities, starting with the central banks.
In this regard, the speech that Mario Draghi will give this morning in Sintra, Portugal, in an event organized by the ECB which should have also hosted Mark Carney, number one of the Bank of England, and Janet Yellen, president of the Fed, will be fundamental. bankers have given forfeits. And it wasn't a good sign. This morning David Cameron will try to explain to his European partners his intention to proceed with Great Britain's exit from the EU "with a constructive spirit". Courage, monsieur Cameron, limited himself to commenting on the Financial Times
THE STERLING BOUNCES THIS MORNING. BUSINESS PLACE IS THE WORST
In this framework the target practice of speculation continued undisturbed. Wall Street closed in deep red: the Dow Jones index fell by 1,5%, the S&P 500 by around 1,7% (below 2) and the Nasdaq by 2,4%. Only utilities and telecoms closed the day with modest gains. Merrill Lynch have decided to cut US GDP growth estimates by 0,2 percentage points while the hypothesis of a rate hike in 2016 is dismissed.
Like Friday, the reaction of the Asian markets was more moderate: Tokyo +0,4%, Hong Kong and Sydney -0,8%. Stable Shanghai. Futures signal a timid upward start for European markets. But no one has any illusions after Black Monday. Piazza Affari, for the second day in a row, was the worst stock exchange: -3,94%, at 15.104 points, ahead of Paris (-3,07%) and Frankfurt (-3,05%). Less losses in Madrid, which celebrates the electoral setback of Podemos (-1,62%).
Better, only in appearance, London (-2,58%), which is weighed however by the drop in the pound which lost 3,7% against the dollar to 1,316, the lowest since 1985. This morning the British currency is recovering positions ( 1,329 on the dollar). The euro also loses out against the dollar (-0,7% to 1,103).
OIL ALSO UNDER FIRE: SAIPEM -5,80%
The race for safe havens continues. Gold, marks a rise of 0,4% to 1.321 dollars an ounce. Meanwhile, the decline in the yield on the German Bund is accelerating: the 0,1-year bond has fallen to a new all-time low of -10%. Thanks to the ECB's shield, the debt market is holding up: the yield on the BTP 1,50 stands at 5%. The Treasury announced that on Thursday 10 and 5,25-year BTPs for an amount between 6,75 and XNUMX billion will be auctioned.
The specter of recession, on the other hand, weighs on the fate of oil which is once again on the decline: Brent at 47,1 dollars a barrel (-2,7%), Wti at 46,3 dollars (-2,7%). Oil & gas stocks are under pressure. In Piazza Affari Saipem lost 5,80%, Saras -5,57%. Tenaris was also down (-2,81%): Goldman Sachs revised the target price upwards, confirming the Buy judgment. Eni unchanged.
BANKS DOP: BARCLAYS -17%, CITIGROUP -5% FROM FRIDAY
At the center of the financial tsunami is the banking sector, hit by the perfect storm: risk of recession, falling interest rates, the prospect of moving from the City so as not to lose one's financial passport, alarm over non-performing loans in Italy. The result is a dramatic bulletin of losses.
English institutions fell: Barclays -17%, Royal Bank of Scotland -15%. It didn't go much better in the rest of Europe: Deutsche Bank -6,1%, Bnp Paribas -6,3%, The European index closed with a fall of 7,7%.
US banks are also bad. Merrill Lynch closes with a drop of 6,3%, JP Morgan -3,3%. Goldman Sachs reduces losses in the final (-1,6%), after having touched the minimum of the last three years during the session. The company generates a significant portion of its income from bond trading. Citigroup shoulder -4,52%: on Friday it closed with a drop of 10%.
ITALIAN INSTITUTIONS IN THE BURST: -9% THE SECTOR INDEX
The impact on Italian banks is even more devastating (-9% sector index). The sales have raged on the Bigs, a favorite target of international speculation. Unicredit lost 8%, slipping to 1,908 euros, below 2 euros. In the morning it reached a new all-time low of 1,892 euros while downward revisions by brokers rained down: JP Morgan reiterated the Underweight recommendation and cut the target price to 2,1 euros from 2,8 euros; Barclays confirmed the Underweight judgment and lowered the target price to 2,5 euros from 2,7 euros.
Even worse is Intesa (-10,9%) which closed at its lowest level in the last three years despite a heartfelt interview by CEO Carlo Messina. Citigroup cut recommendation to Neutral from Buy. The list of losses does not end here: Monte Paschi -13%, Banca Popolare di Milano -7%, Banco Popolare -6%. Ubi is also down (-6%): on the day of the presentation of the new business plan, Barclays downgrades recommendation to Equalweight from previous Overweight. The target price is 3,54 euros. Only Bper (-1%) was saved from the massacre thanks to the news that the ECB authorized the use of internal models in the measurement of capital requirements on risk credits. A green light that should bring "significant benefits".
RENZI PROMISES: WE WILL RUN FOR REMEDY
Facing the landslide the government tries to run for cover. “Italy – Prime Minister Matteo Renzi said yesterday – is ready to support its banking system affected by the post-Brexit market turbulence in compliance with European regulations which, however, are more complex than in the past”. Italy in particular is studying guarantees on bank bonds for 40 billion and is aiming for EU intervention. According to the Treasury spokesman, possible options are being evaluated to protect its banks but no decision has yet been made.
DOUBLE-DIGIT DROP ALSO FOR POLICIES AND MANAGED
The storm has not spared the rest of the list. Heavy losses in the insurance sector: Generali fell by 8% below 10 euro. Bank of America Merrill Lynch downgraded rating to Neutral from Buy. Unipol -10%. The asset management sector did not fare better. Double-digit losses for Azimut (-11,84%) and Anima (-10,82%). Banca Generali -9,36%, Fineco Bank -8,03%.
VOLKSWAGEN MAKES PEACE IN THE USA. FCA IN THE SIGHT OF EXANE
The news of the great peace between Volkswagen (-7,1%) and the US authorities arrived in the evening: the Wolfsburg house agreed on compensation for 15 billion dollars, the most gigantic class action in history, which involved, in addition to federal authorities, 475 US customers of the group. The news is unlikely to reassure the sector, which is among the hardest hit by the Brexit effect.
Fiat Chrysler also paid the price (-6,22% under the fire of analysts). In particular, Exane lowered the target price on FCA by 6% from 5,4 to 5,1 euros and on Ferrari by 3% from 36 to 35 euros, with the ratings on both remaining underperforming. The downgrade also came from Goldman Sachs: the investment bank removed the FCA stock from its Conviction List, maintaining the buy rating, but bringing the target price from 11,3 to 7,1 euros (-37%).
Prysmian (-5%) and Leonardo (-6,5%) also down among the industrialists, despite the prospect of a new contract with the Japanese navy for the supply of over a dozen AgustaWestland "AW101" helicopters worth 1,2. 1,5-XNUMX billion euros.
LUXURY IN THE SIGHT: ONLY RECORDATI, CAMPARI AND TERNA WELL
In the rest of the price list, the difficult day of luxury should be noted. Still down Ynap (-9,59%) one of the companies most exposed to the English market. Luxottica (-2,36%) and Safilo (-5,86%) also down: Banca Imi cut the target price from 10,3 to 9 euro. Today the accounts of Prada are expected.
Few titles in positive territory: Rcs +4,99% in the wake of the new offer from the Bonomi consortium. Recordati (+0,94%), Campari stable (+0,06%), the traditional safe haven in times of turbulence does not stop. Terna defends well (+0,09%). Snam is also among the most resistant (-0,3%). Equita Sim reiterated the target price of 5,2 euros in view of the update of the business plan up to 2020.
