There is a certain optimism in the skies of global finance. Tokyo (+0,1%) is preparing to close a positive week with a modest rise. Wall Street, flat, is waiting to see if Trump will finally be able to snatch a positive vote from the Senate on health care reform. Europe applauds the historic understanding between partners on common defence, the first concrete effect of Macron's election.
Good news also for Italian banks: Intesa's offer on Veneto banks could be accepted as early as the weekend. Even if the operation will have to obtain the far from obvious assent of Brussels, the prospect has put the market in a good mood. The unknown factor of weak oil remains but, all in all, everything seems to be going in the right direction. Almost. The pebble that threatens to jam an almost perfect engine is the investigation by the Beijing authorities into the "systemic risk" represented by some large Chinese investors.
The authorities have scrutinized the foreign shopping of various groups, however well connected with politics, which in the last year have bought a bit of everything, from the Waldorf Astoria to 10% of Deutsche Bank. Targeted are entertainment giant Dalian, ; the conglomerate Hna and the giant Fosun (Club Med) and Anbang, already in business with Jareed Kushner, Donald Trump's son-in-law. But also Rossoneri Sport, the vehicle created for the purchase of Milan, an operation that had already raised the concerns of Pan Gongsheng, the deputy governor of the People's bank of China.
THE FED PROMOTES THE BALANCE SHEETS OF THE BIG BANKS. ORACLE SUPERSTAR
This morning the Japanese Stock Exchange showed little movement in the final session, the Nikkei index rose by 0,1%, the week closed with a gain of 0,9%. Shanghai loses 0,5% with about an hour to go before the end of trading, Hong Kong +0,1%. Seoul +0,3%, Mumbai +0,2%.
Weak Wall Street. The Dow Jones (-0,06%) closed in the red after erasing early gains. The S& P 500 was also negative (-0,05%). Slight progress for the Nasdaq (+0,04%). The health sector shines (+1%), rising for the fifth consecutive session pending the vote, however uncertain, on the health reform developed by the Republicans in the Senate.
There is no shortage of news on the corporate front. Oracle soars (+9%) above 50 dollars, a price not seen since the days of the Internet bubble in 2000 on the wave of data from the quarter "the best ever" according to co-CEO Mark Hurd.
Tesla sales (+1,6%): the electric car giant is in talks with the municipality of Shanghai to open a factory in China.
Debut with a bang for the American branch of Altice, the giant of the Frenchman Patrick Drahi. The stock, the first telecommunications IPO in 17 years, was placed at $30 for $1,4 billion raised.
Unsolicited offer on American Airlines (+3,14%) by Qatar Airways. The Gulf company has made it known that it intends to make a significant investment in the American airline, i.e. a stake of approximately 10%.
After the close of the markets, the Fed announced that the 34 major US banking groups have passed the stress test: US finance is able to withstand nine consecutive quarters of recession with potential losses of 383 billion dollars. The largely positive outcome of the stress tests could give more political strength to an easing of the rules that limit the more speculative activities of banks, one of Donald Trump's fortes.
OIL, THE LANDSLIDE STOPS. DOWN SAIPEM
The energy sector is still down -0,1%, but sales pressure is decreasing (-3,1% in the three previous meetings). Crude oil is up slightly in New York after hitting its lowest since August 2016. WTI closed at 42,74 and Brent at 45,21 dollars a barrel.
In Piazza Affari, Eni (-0,3%) and Saipem (-0,9%) are slowing down, despite Morgan Stanley confirming the Overweight opinion, however cutting the target price to 5,50 euros from 6,0 euros. Despite the deterioration of the macro scenario, US analysts consider the stock undervalued at 4,8 times 2018 Ev/Ebitda compared to a historical average of 8 times. Tenaris +0,5%.
THE SPREAD IS STILL DOWN. 3,5 BILLION CTZ AND BTPEI AT AUCTION
Contrasted session also for the main European stock exchanges. Milan stops at the bottom of the list with a fall of 0,67%, to 20.952 points. At the end of the day, Madrid lost 0,29%; London -0,11%; Paris +0,15%; Frankfurt +0,15%.
Eurozone growth is stronger than expected. And it is expanding, thanks to domestic demand, writes the European Central Bank in its monthly bulletin. This is why further cuts in interest rates are ruled out. But the securities purchase program - at a rate of 60 billion a month - will continue at least until December. Compliance with the Stability Pact, warns Frankfurt, is insufficient and slow reforms and budgetary adjustments are holding back growth.
President Emmanuel Macron, at his first European summit at the helm of France, announced a "historic" step forward by European countries towards a common defence. Thus he takes shape the hypothesis of a risk of European companies in the sector. Leonardo's possible alliances are in the front row (-1,03%).
Government bonds are still positive: after a drop to 160 basis points, a record since 11 January, the gap between the Italian ten-year rate and the equivalent Bund returned to 165 cents at the close, one tick higher than yesterday evening: 8 June last year, the date of the last ECB directive on interest rates, the Italy/Germany spread had once again exceeded 200 basis points.
The trend in crude oil prices has an influence on the gap between European peripherals and German paper, closely linked to inflation expectations on which the ECB calibrates monetary policy.
On the occasion of the auction on Tuesday 27 June, the Ministry of the Economy will make available to investors up to 3,5 billion euros between indexed Ctz and Btp. On the plate for 2/2,5 billion the third tranche of the Ctz 30 May 2019 together with an amount between 500 million and one billion on indexed maturities 15 May 2022 and 15 September 2026.
VENETIAN BANKS, D-DAY IS AT THE DOOR. ADVANCE UNDERSTANDING
The next few hours will be decisive for the resolution of the crisis of the Veneto banks. The government, called upon to provide the "definitive legislative framework" requested by Intesa Sanpaolo to proceed with the offer, has only a very few days to finalize at least three measures: the compulsory administrative liquidation of Veneto Banca and Banca Popolare di Vicenza , the appointment of commissioners, the enlargement of the possibility of using the 20 billion euros allocated at Christmas to manage the banking crisis.
The total cost of the operation, adding the 9 billion euro of gross non-performing loans and doubtful loans to the fund for redundant employees, should be around 20 billion euro. Everything must be closed by the weekend, so that the new decree can arrive at the Quirinale by Sunday evening.
Meanwhile Intesa Sanpaolo +0,7% yesterday defended its positions on the Stock Exchange after the announcement of the offer at the symbolic price of 1 euro on Popolare Vicenza and Veneto Banca. But there is no shortage of opposition. Forza Italia and Movimento 5 Stelle have spoken of a gift to the bank. Analysts, on the other hand, are wondering whether and to what extent the European authorities will give the go-ahead to an operation that requires major government intervention.
STILL STORM ON CARIGE, UBI (AND BAZOLI) IN THE SIGHT OF THE PROSECUTOR
Meanwhile, Ubi (-0,9%) must acknowledge the request for indictment by the Bergamo Public Prosecutor's Office against CEO Victor Massiah, the chairman and vice-chairman of the supervisory board Andrea Moltrasio and Mario Cera, the former chairman of the management board Franco Polotti, the former chairman of the CDG of Banca Lombarda e Piemontese Giovanni Bazoli, and 25 other people.
Banca Carige is still in the sights, down by 4,63%: the hypothesis of a capital increase that could reach up to 800 million weighs heavily. Unicredit -1,7%, Banco BPM -2%, Bper Banca -0,2%. A decision on participation in Arca is expected to be made within three weeks.
There is no shortage of positive signals from international operators. Scott Mather, of the giant Pimco, said yesterday that "the rescue plan for the Italian banking system will work even if it is taking too long". The manager recalled that other countries had greater difficulties but attacked more quickly. "The problem of Italian NPLs is not a very big problem if you compare it with the size of its economy".
Meanwhile Banor Sim, a business boutique very close to major international houses (including Goldman Sachs) is so optimistic about the prospects of the Italian banking system that it bought, following the positive outcome of the Unicredit increase, senior bonds from Mps and Popolare di Vicenza . For CEO Massimiliano Cagliero, the banking sector will be the one most likely to attract US investor flows.
“We hear from American investors that the variable of banks weighs more than that of elections in the perception of Italy's risk. If emergencies are resolved, the banking sector could be the sector in Italy where Americans would be interested in investing because multiples are very interesting”, underlined Cagliero.
STM BLACK JERSEY. ACCELERATE THE AUTOMOTIVE
The worst title is Stm (-2,2%) which yesterday launched a bond for 1,5 billion euro. Spotlight on Italgas (+0,8%). The auction for Gas Natural will be held today. Italgas has expressed interest in Italian assets. The automotive sector was positive (sector index +0.9%). Fiat Chrysler rebounds +2,5%. The Stoxx index of automotive companies gains 0,9%. Ferrari gained 0,69% to 80,4 euros. Mediobanca Securities confirmed the outperform recommendation and the target price of 83 euros on the stock, declaring that the interest of various subjects in Ducati is another demonstration of the strong interest in global brands. The attention for the Bolognese house also favors the increase of Piaggio +4%.
Carraro shines (+3,7%) after signing for a joint venture in China.
ROME SCORE GOALS. JUVE BOUNCES
Football still in the spotlight. The Juventus stock regains its share (+3,5%). Rome is in the spotlight. Yesterday evening the property signed a 175 million loan agreement with Goldman Sachs International and UniCredit completing the renegotiation of the terms and conditions of the transaction concluded on February 12, 2015.
