Japan is not changing course, but is sharpening its weapons to make its battle against deflation more effective. The reaction of the Stock Exchanges was immediate: the Nikkei index, previously weak, rose by 1,3%; the Topix index was even more lively (+1,9%). Above all, banks and financial companies are on the rise, the first beneficiaries of the line of action on the yield curve.
The sales have started on the bond market: the yield on 30-year bonds rises by 5 basis points, to 0,53%, close to the highest since March. The yield on the 10-year bond rises to -0,017%, five basis points more than yesterday. The yen weakened against the dollar by 0,8% to 102,5. The other stock exchanges in Asia are up moderately: Hong Kong +0,2%, Seoul +0,2%.
But what, exactly, did the Bank of Japan do? He announced this morning a change to the stimulus plan, defined as "quantitative and qualitative easing". In summary:
– interest rates remain negative at -0,1%;
– the bond and other securities purchase program (the amount of 80 billion yen per month unchanged for now, but changes during construction are not excluded) will be oriented towards controlling the bond yield curve;
– the expansion of monetary policy will continue until inflation has stably reached a level of +2% per year;
– a target has been set for ten-year bonds.
A WALL STREET RECORD OF BIOTECH TOBIRA (+750%)
The US markets are flat awaiting tonight's Fed verdict (appointment at 20pm for Janet Yellen's press conference). The Dow Jones closed up +0,05%, S&P 500 +0,03%, Nasdaq +0,12%.
The health sector is in great turmoil, driven by Allergan shopping. The pharma giant has completed 5 deals for a total of 2,5 billion dollars. From the Guinness Book of Records, the leap of biotech Tobira, a producer of treatments for liver disease, acquired for 1,7 billion dollars: +750%.
Wells Fargo closes +1,2% on the day of the Senate hearing of CEO John Stumpf, under fire for the scandal of the accounts opened by the bank without the knowledge of customers. Senator Warren has called for the resignation of the banker, "who must go to jail".
In August, data on applications for building permits and the start of new residential construction sites were worse than expected. Lennar, the leading construction group in America, loses 3%.
PETROBRAS CUT INVESTMENTS. SAIPEM -3,2%
Little moved oil: Brent is traded at 45,9 dollars a barrel (-0,1%). Sector stocks are under pressure (-0,8%) due to the opening of an inquiry by the SEC into the valuation of stocks in the balance sheets of Big Oil.
Petrobras, the Brazilian oil company, has drastically revised its business plan to 2021 downwards, cutting investments to $74,5 billion from $98 billion. The announcement is destined to weigh on Saipem (-3,3%). Tenaris yesterday -2,7%, Eni -1,8%.
EUROPE IN SLEEP, PLAZA BARGAIN HAS NIGHTMARE
For the European Stock Exchanges, yesterday was a day of low emotions and boring waiting in view of the Fed's decisions. Madrid (-0,34%) and Paris (-0,13%) fell slightly. In positive territory, however, Frankfurt (+0,29%) and London (+0,30%). Piazza Affari, on the contrary, experienced a day of suffering, with the FtseMib index which closed down by 1,17% at 16.207, bringing up the rear among the Old Continent stock exchanges.
The Italian secondary closed a tonic session on the upside which saw the spread drop to 126 basis points. Long-dated bonds, in particular, appear stronger, resulting in a flattening of the yield curve.
Deutsche Bank continued to suffer (-3,8%), now in its third consecutive downturn with a cumulative loss of 14%. Having rejected the hypothesis of a merger with Commerzbank (which is not faring much better), CEO John Cryant relies on securitization: a large part of the pending items will be transformed into as many CDOs to be assigned to creditors.
MPS SINKS: NOW IT'S WORTH ONLY 550 MILLION
Once again, sales were fierce on Monte Paschi (-6,4%). The trigger was the news that the institution's capitalization plan could be postponed by a few weeks (or months). In the morning, the share reached a new all-time low of 0,1833 euro, bringing the loss since the beginning of 88 to -2016%. The market capitalization was reduced to around 550 million euro.
Banca Carige did even worse (-6,83%). The Popular banks are also under fire: Bpm -5,89%, Banco Popolare -4,54%, Bper -4,27%. Down Intesa Sanpaolo (-2,7%) and Mediobanca (-2,7%).
HOLDS UNICREDIT: MANY OFFERS FOR PIONEER
Unicredit, on the other hand, limited the loss to -0,8% pending developments on the valuation of the subsidiary Pioneer and thanks to the promotion of Mediobanca to Outperform from Neutral. Yesterday the Bank received 7-8 bids for Pioneer, its asset management company which was auctioned this summer. In particular, Poste Italiane (-0,57%) joined forces with Anima (-0,69%) and CDP.
Expression of interest also by Generali (-0,27%). The lot of participants is completed by offers from Amundi, Axa, Allianz, Natixis, Aberdeen and Macquarie. At this point Thursday's Unicredit board of directors should skim the offers by identifying a short list of up to five subjects. The Bank's strategic plan, including capital strengthening measures, will be presented by the end of November.
LOANS FALL AGAIN, THE ABI: THE "GOOD" DEMAND IS LACKING
In August, the stock of outstanding loans to households and businesses decreased by 0,3% on a year-on-year basis, after -0,6% in July. Total loans to the economy, which also includes public administration, are down fractionally by 0,2% year on year.
Gianfranco Torriero, deputy director general of ABI, presenting the monthly report, said that there is still a lack of demand for financing for investments and for extraordinary operations, such as mergers and acquisitions, and the flows are mainly fueled by restructuring and renewals of the existing credit stock. “There is plenty of supply available that the banks have every interest in not leaving unused, given that it would be remunerated at negative rates in the ECB,” he explains.
Eurozone lenders are expected to request and obtain a net amount of €22,8 billion in the European Central Bank's second TLTRO operation, the outcome of which will be announced on Thursday.
DIASORIN AND PRYSMIAN SHINE, FINMECCANICA BAD
The industrialists with the highest capitalization are slowing down. Fiat Chrysler fell 2,3%, Leonardo lost 3%: prosecutors have asked for a 16-year sentence for CEO Mauro Moretti in the context of the trial for the 2009 train accident in Viareggio.
Positive Prysmian (+1,32%) and Fincantieri (+0,99%) while Atlantia limited the declines to 0,1% following the purchase of a minority stake in Save for 174 million euros, a figure believed fair by analysts, which corroborates the hypothesis of a spin-off of investments in the airport sector (there is also Adr in the portfolio) of the Benetton company.
Among the best stocks Diasorin (-1,76%) and Saras (+1,53%), supported by the rise in the average refining margin in the Mediterranean area.
