Rates are rising on both sides of the Atlantic and the Pacific. Yields on the Bund are at their highest since December 2015 at 0,70%, the US T-bond goes to a yield of 2,70%, never seen since May 2014. The two-year bond reaches 2,15%, the lowest level high since 2008. Peripheral bonds are doing better for now: the BTP, despite having risen to 2,03%, reduces the spread towards German bonds, supported by the strong demand for credit from industry across the Rhine. But it is clear that the The season of near-free money is winding down.
The phenomenon is holding back the rise in share prices, which is certainly not a drama, given the strength of the rally in the stock prices which characterized January. Against this backdrop, the markets are preparing to bid farewell to Janet Yellen who will chair the last meeting of her brilliant management of the Fed today. As of February 3, the baton of command passes into the hands of Jerome Powell, who will have the difficult task of riding the liquidity freed up by the tax reforms and spending announced by Donald Trump who tonight could reserve some surprises in his first message to the Union scheduled for tonight.
TOKYO DOWN 1,4%, APPLE BURN 14 BILLION
Asia is no exception. This morning Japan's 2016-year bond is at its highest since June 0,08 at a yield of 0,07%, from 1,4% yesterday. The Tokyo Stock Exchange, on the other hand, is starting to close down by 0,8% - All the stock markets in China and Asia Pacific are down. Hong Kong -300%, CSI0,7 index of Shanghai and Shenzhen stock exchanges, -1%. Seoul -0,7%, Mumbai -XNUMX%.
For Wall Street yesterday was the worst session since the beginning of the year. The Dow Jones lost 0,67%, as did the S&P 500, which experienced the biggest declines in the last five months. NASDAQ -0,52%.
Apple (-2,1%) left 14 billion in capitalization on the ground. The latest rumors, two days after the budget data, speak of a sharp cut in the production of the iPhone X. But the data shouldn't affect Apple's profits: Trump's tax reform should allow for higher profits of 18 billion dollars.
OIL BELOW 70 DOLLARS. ENI -1%
Oil drops below $70. North Sea Brent crude is trading at 68,9 dollars a barrel this morning, down 0,6%, after losing 1,5% yesterday.
Eni is down (-1,07%). According to CEO Claudio Descalzi, gas projects in Egypt, Cyprus and Israel could help Europe diversify gas imports. Furthermore, the group aims to expand into Algeria, including offshore fields.
On the foreign exchange market, a slight recovery of the dollar is underway, against the major counterparts. The euro weakened to 1,283 from 1,242 at the close. The German HICP will be released today at 14pm.
EUROPE CONTRASTED, MILAN -0,23%
The week opens with a minus sign for European lists, despite the slight recovery of the dollar after six weeks of declines against the euro (-3% since the beginning of the year). The German HICP inflation data will be released today at 14pm.
In Piazza Affari, the Ftse Mib index leaves the ground 0,23% more than the other stock exchanges of the Old Continent (with the exception of Madrid) but above 23.800 (23.801). Paris (-0,14%) and Frankfurt (-0,12%) also fell. London is the only market to close in positive ground against the weak pound, damaged by new tensions over Brexit.
Of note in Amsterdam ArcelorMittal (+1%), potential buyer of Ilva. The world's leading steelmaker, together with Japan's Nippon Steel, is preparing a joint bid to take over bankrupt Indian steelmaker Essar Steel ahead of its next auction in February.
THE TUNE OF IRON ON QE RETURNS AT THE ECB
The ECB will stop bond purchases only when it is confident that inflation will be on target even without monetary stimulus, according to the central bank's chief economist Peter Praet. "Once the Governing Council judges that the three criteria for a sustained adjustment (in inflation) have been met - he said - the net asset purchases will end, in line with our guidance."
The opinion of Klaas Knot, the Dutch central banker, is in the opposite direction: "The ECB - he said - should make it clear that Quantitative easing will not be further extended beyond September".
THE GERMAN FIVE-YEAR RETURNS TO POSITIVE SOIL
The week opened with new tensions on government bonds in the Eurozone. The yield on the German 0,70-year German government bond rose to +2015%, reaching its highest level since December XNUMX. The five-year bond returned positive for the first time in more than three years.
Sales also on the thirty-year maturity, where the yield reaches 1,35%, the highest since July 2017 (annual top at 1,37%) and on the 2-year maturity, whose yield has risen to -0,52%, a new high since June 2016. The average performance of German government bonds since the beginning of 2018 is negative between -0,7% and -1,4%.
Despite the fact that even on BTPs, in line with the rest of the European sector, the weight of expectations on the forthcoming disengagement of the ECB is felt, the spread between Italy and Germany is 140 basis points (against 145 on Friday).
The 2,026-year reference rate trades at 2,005% from 0,417% at the last closing. After yesterday's offer of the six-monthly Treasury, in which the rate rose to -0,475% (high since October) from the all-time low of -7% at the end of December – the medium-long Treasury auctions will be held today (offers 9- XNUMX billion).
THE BTP TRAVELS OVER 2,1%, ALSO OFFERED FOR 50 YEARS
In particular, the new 2028-year February 2 (coupon 2,134%) will be offered which, at the end, on the gray market of Mts saw a yield of 1,86% compared to 5% at the end of December. The rate of the 0,75-year BTP also rose, which at the end was quoted at 0,60% from 50% in the last auction. This morning the 2025-year BTP and the April XNUMX CCTEU will also be offered.
The supply of other Eurozone countries is also abundant. In addition to tomorrow's German placement on the 5-year bond (4 billion), Spain (5 billion) and France will take action on Thursday. Madrid will offer up to 5 billion euros in total on January 2021 maturities. Paris between 8 and 9 billion.
STM SUPERSTAR, WAITING FOR LEONARDO'S SHOW
In Piazza Affari it was the day of Stmicroelectronics (+2,36% to 19,52 euros), among the protagonists of the semiconductor rally triggered on Friday by Intel's results and fueled yesterday by the rise in the forecasts of the Austrian competitor Ams. Socgen has raised the target of Stm, the best blue chip of the day, from 32 to 33 dollars.
In the industrial sector, analysts are expecting today's presentation of the Leonardo's industrial plan 1,58% signed by CEO Alessandro Profumo. On the eve of Banca Akros reiterated the buy rating and the target price of 14,25 euros: the group will benefit from the increase in military spending allocated by the Trump administration.
GOLDMAN AND BARCLAYS PUSH FCA, TODAY THE ACCOUNTS OF CNH
The Board of Directors meeting on the accounts of CNH Industrial (+0,74%) will also be held during the day: yesterday the US competitor Caterpillar fell by 2,66% after the results.
In January, the Automotive sector was the brightest sector in the Eurostoxx (+9%). Fiat Chrysler (yesterday +0,2%) was among the great protagonists of the month with a leap of around 31%, but Goldman Sachs believes that there is still room for further increases: the broker has revised the target price upwards to 31 19,42 euros to 31 euros with a potential increase of 56,5% compared to the current price. Barclays also raised its target price from 21 to 23 euros, confirming the overweight recommendation, reassured by the prospect of a significant improvement in cash (net cash is expected to reach 4,5 billion euros by the fourth quarter).
CREDIT SUISSE PROMOTES UNDERSTANDING, THUMP OF CREVAL
The prospect of a rise in market yields in Europe is favoring the recovery of the sectors most sensitive to the dynamics of the cost of money. In January, Banks (+6,7% the sector index), Financial Services (+6,2%) and Insurance Companies (+5%) grew.
Yesterday was an adjustment day for credit stocks. The basket of Italian bankers is up by 0,2%; the European Stoxx was weak (-0,13%) conditioned by the accounts of the Spanish Bankia (-4,31%). The industry report from Crédit Suisse took the lead. Among the awarded stocks Intesa Sanpaolo (+0,6%), the highest since October 2015, on which the broker raised the target price to 3,40 euro from 3,20 euro. Outperform rating confirmed.
On the other hand, the target (3,5 euros from 4,28) of Monte Paschi was cut (-1,12%). Yesterday the minister Pier Carlo Padoan, candidate in the next elections in the constituency of Siena, declared: “I will tell a reality that is there for all to see. Monte dei Paschi is a success story and will be an element of strong growth for Siena and for the entire Italian reality”.
Positive, but well below the highs of the day, Banco Bpm (+0,74%): in an interview, CEO Giuseppe Castagna did not rule out participation in the process of consolidating the sector and announced a strong recovery in profitability. Closing in red for Unicredit -0,5%. Ubi Banca -0,5%.
Out of the main basket, a crash by Creval (-4,70%), after a positive morning awaiting the definition of the guarantee consortium for the capital increase.
BENEFIT TAKES SINKING CATTOLICA
Final in deep red in the Cattolica insurance sector (-5,16% at 10,1 euro) on the day of the presentation of the expected business plan which triggered profit-taking after the significant gains of recent months. During the session, the stock scored, before the final crash, the new high at 10,96 euros. The company expects a 50% dividend increase to exceed €0,50 per share in 2020. The company announced it will put governance changes to a vote, including revised limits on voting rights for legal entities, raised to 5% of the capital.
Positive for Generali (+0,1%) and Unipol (+0,4%). Negotiations on the merger of Unipol Banca with Bper Banca (+0,5%) could start in the second half of the year.
BLACK SMOKE FOR FOOTBALL RIGHTS. WEAK MEDIASET
Mediaset is down (-0,7%). Barclays reiterated the Underweight judgment, but adjusted the target to 2,90 euros from 2,75 euros. In the meantime, the procedure for the sale of pay TV rights for the 2018-2021 seasons reserved for media operators was completed without assignment. It starts again with a negotiation with Mediapro but in parallel the League will reformulate a tender for media operators, such as Sky and Mediaset in case the negotiation with the Spanish company is not successful.
Utilities are down, penalized by the rise in interest rates. Enel -0,8%, Italgas -1%. Snam -0,7%
FUNDS IN MANEUVER ON SAFILO
In evidence Safilo (+3,12%), in the sights of some private equity funds. New leap for Poligrafici Editoriale: the stock went from 20 to 33,5 cents in one week.
