The Brexit hurricane is now relegated to seasonal rain, well contrasted by the umbrella of central banks. And so the recovery of the equity markets continues this morning in Asia. Sale Tokyo (+0,5%), Hong Kong (+1,4%) advances also thanks to the rally of the shares also traded in the English City. Contrasted Sidney after the elections from which a majority did not emerge.
But other geopolitical disasters are looming on the horizon: the Dhaka massacre confirms the dramatic moment of the global economy, under the combined pressure of terrorism and populism. The Austrian decision to rerun the presidential elections is proof that the EU does not lose the ability to harm itself.
In this context Matteo Renzi is ready to play the mother of every battle: to get Brussels to accept a solution to the problem of non-performing loans of Italian banks by the end of July (the date on which the stress tests on EU banks will be published).
FALLING RATES: 41% OF SECURITIES TRADE BELOW ZERO
It will be easy to predict that July will be agitated for the financial markets. But, thanks to the rebound favored by the timely intervention of central banks, the ground seems much more solid than feared after the British vote.
Stock lists recovered most of the losses. Wall Street, thanks to a 3,2% gain in the S&P index, experienced, despite the start in negative ground (-1,8% on Monday), the most brilliant week of the year. In London, the prices of the Ftsie 100 even returned to the levels prior to June 24th. Piazza Affari also closed the week with a gain of 3,6%. Despite the ballast of the banks (-26% since 24 June), Milan has recovered about half of the losses accumulated in the two days following the referendum.
Bond yields fell sharply after the statements by Mark Carney, governor of the Bank of England, on the arrival of new expansionary measures and the measures being studied by the ECB to encourage purchases of public securities. According to Merrill Lynch, June was the best month since 2008 for government bonds, which guaranteed returns of 2,3% thanks to capital gains. According to Bloomberg, 41% of government issues (a total of 25.100 trillion dollars) now trade with a negative yield. Among these, since last Thursday, also the British gilts, which have made a spectacular recovery: 47 basis points against 23 of the ten-year Bund. Positive signals are also arriving on the Eurozone front: Spain, strengthened by the retreat of Podemos, gains 23 basis points on Italian securities, 77 points behind Irish securities.
LONDON COURTS CHINA, MILAN'S OFFER ON THE EBA
Pending the outcome of the negotiations with Brussels, Great Britain has developed plan B. In addition to the stimuli promised by the Bank of England, the Chancellor of the Exchequer George Osborne anticipated an anti-recession plan to the Financial Times: tax relief for business , support for bank loans and new concessions for Chinese investments.
On the opposite side, after Frankfurt, Milan is also wondering about the effects of Brexit on the London Stock Exchange. In particular, Consob wants to understand the consequences on post-trading activities, both as regards the shares traded by Borsa Italiana, but also if not more so for the effects on Mts, the wholesale market for government bonds. Meanwhile, the new mayor of Milan, Giuseppe Sala, is on a mission to publicize the virtues of the Milanese square as the new headquarters of the EBA (European Banking Association) in the event of the institution moving from the City.
BANKS, RECOVERY TESTS . RENZI: "MARKET SOLUTION FOR MPS"
Together with the pound, which is struggling against the dollar (-7,3% in the quarter), the most dangerous hotbed of crisis remains the banks. The situation in Germany is of more than one concern, as confirmed by the alarm of Jens Weidmann, governor of the Bundesbank, on the consequences of Brexit. Even if Deutsche Bank's troubles (derivatives amount to 13 times German GDP) come from afar. But the markets' attention is still focused on Italian banks (-26% since the start of Brexit), considered the first true financial test of the resilience of the 27-member EU, in view of the EBA stress tests at the end July.
Again this morning, the sector's performance will be closely linked to the progress of the negotiations between Rome and Brussels on the granting of public guarantees to deal with emergency situations and start solving the problem of non-performing loans. On Friday, in the absence of positive news, the sector experienced another heavy session starting from Unicredit (-5%), pending the settlement of the new CEO Jean Pierre Mustier.
Intesa (-1,3%), Banca Popolare dell'Emilia Romagna (-4,8%) and Ubi Banca (-2%) were also bad. Today the opposite scenario could occur, with an eye to any speculative ideas on Monte Paschi, at the center of attention of the Minister of Economy Giancarlo Padoan and of Prime Minister Renzi: "For Mps - he said - I hope a market solution". possible, however, only if the knot of the 47 billion non-performing loans that still ballast the institution is resolved.
BANK INCREASES PASS FROM THE BRRD DIRECTIVE
In fact, the confrontation between the Renzi government and the EU Commission continued throughout the weekend, in search of an agreement on the recovery of the system that takes into account the rules on public aid and the rules on bank bailouts. The key to unlocking the negotiations lies in the BRRD directive, which provides for the "precautionary" recapitalization of banks that are unable to pass the stress tests that the EBA will publish on 29 July. At that point the government could recapitalize with public funds without state aid. Deposits would not be affected and bondholders could also be safeguarded. The path is actually narrow. Brussels seems willing to open up to the needs of small investors but Italy, fearing capital flight, wants the window to apply to institutional investors as well.
But time is running out, especially on the Monte Paschi front. However, the Banca di Siena could represent a case in itself, given that the public intervention could be considered the continuation of the one existing since the issue of the Monti bonds.
WALL STREET CLOSED TODAY, US JOBS DATA FRIDAY
Short week for Wall Street, closed today for the July 4th holiday. In the next few days, the spotlights on the Federal Reserve will come back on. The minutes of the central bank's latest meeting will be released on Wednesday, providing a valuable indicator of board members' moods ahead of a possible (but unlikely) rate hike. The most important appointment is set for Friday, the date of the next report on the labor market. After the disappointing figure of the previous month with the lowest growth in almost six years, the creation of 180 new jobs is expected: it should be noted that 35 Verizon employees have returned to work at the end of the long strike. Tomorrow the president of the New York Fed, William Dudley, who is already in favor of tightening interest rates, will speak.
TOMORROW THE NEW ECONOMY IN THE LIGHT, THEN IT'S THE DRAGONS' TURN
No less important, on Tuesday, will be the Sun Valley conference in which the big names in the new economy will all speak together: Apple's Tim Cook, Facebook's Mark, Zuckerberg and Walt Disney's Bob Iger. In the eurozone to follow on Wednesday there will be the intervention of the president of the ECB Mario Draghi and that of the chief economist of the central bank, Peter Praet. The next day the minutes of the last ECB meeting will be published. Among other events, the NATO summit in Poland to be monitored, with the presence of Obama who will then also visit Spain.
RCS AND FIAT CHRYSLERALLA RIBALTA IN MILAN
The reaction to the good sales figures of Fiat Chrysler to be followed this morning in Piazza Affari: in June +13,6%, market share at 28,72% against an increase in the market of 11,9%. As has been the case for 31 months, FCA has been doing better than the average. Still on the automotive front, Mahindra & Mahindr's takeover bid for Pininfarina is approaching, starting on Monday 11th. The corporate calendar for the week is modest: there will be the delisting of Bolzoni and Engineering, already the subject of the takeover bid.
The duel on RCS Mediagroup will take the stage. On Friday evening, Urbano Cairo raised his offer again to 0,17 Cairo Communications shares for one RCS share. The ball now returns to the opponent's front, led by Andrea Bonomi, who will be called by next Friday to evaluate a further raise. International Media Holding, which includes not only the number one of Investindustrial but also the historic shareholders Mediobanca, UnipolSai, Della Valle and Pirelli, meanwhile received the yes of the RCS board of directors to the cash offer, increased last Friday from 0,7 to 0,8 .XNUMX euros.
