Italian banks take off, driving Piazza Affari upwards. It is the delayed effect of the results for the first nine months of the 2024 financial year that emerged from the quarterly reports released in recent days. The experts at Dbrs Morningstar drew an initial assessment: in the third quarter, Italian banks recorded an aggregate profit of 5,2 billion euros, more than double that of a year ago or +86% if provisions for Russia, the badwill for the Carige operation borne by Bper and the impact of the tax burden on the reborn Monte Paschi. “The data for the first nine months of 2023 are affected by the improved performance of industrial activity, costs under control and a more efficient credit allocation” underlines the vice president of the rating agency Andrea Costanzo.
Latest stock market news: DB sends MPS into orbit, BPER and BPM fly
Hence a long streak of increases in the sector. Lead the race MPS Bank +7,5%. Deutsche Bank upgraded the rating to Buy. Fitch raised the rating to BB, stable outlook. According to the agency, the upgrade reflects evidence that the bank has regained customer trust.
Follows with an increase of more than 5% BPER Banca. Carlo Cimbri, president of Unipol, the institute's largest shareholder, reiterated that the group "is not interested in a merger with MPS".
It also advances Bpm bank, up by a generous 4%, thanks also to the promotion of JP Morgan which raised the target price to 6,40 euros.
It also runs Banca Popolare di Sondrio +3%. Intermonte initiated coverage with Outperform.
Piazza Affari leads the rises with the banks
Thus, the banks are leading the advance of the Bull. Especially a Business Square, the leading price list in Europe with an increase of almost one percentage point. Followed by City of London +0,64% after the political upheaval. Prime Minister Rishi Sunak has sacked the Home Secretary, Suella Braverman, and her place has been taken by the Foreign Secretary, James Cleverly. The former prime minister will direct diplomacy David Cameron. The other price lists are weaker.
Bonds were also positive: Bund, BTP and Spread
The sector's rally also reflects the choice of banks strengthen reserves as an alternative to paying the extra profit tax. A behavior in line with the indications that emerged from the advice of ECB Vice President Luis De Guindos who, referring to the weak situation of the European economy, said that countries should not have recourse to discretionary banking reserves. “Macroprudential authorities should preserve releaseable capital buffers to ensure they are available in case banking sector conditions deteriorate,” de Guindos said. Regarding the interest rate outlook, de Guindos said the ECB will have more information at its December meeting “to reassess the inflation outlook and the policy action needed.”
Bonds are also in positive territory: Bunds at 2,70%. BTP at 4,52%. The Spread drops below 180 basis points.
Outside of banks it also shines a light TIM +2%. CEO Pietro Labriola defended in an interview with the Financial Times the board's choice to proceed with the sale of the network to KKR.
It stands out in other price lists Novo Nordisk +3%. The pharmaceutical company that has made headlines in recent years presented data over the weekend showing that the heart-protective benefits of its popular obesity drug Wegovy are not exclusively due to weight loss, providing even more confidence in investors and analysts.
Wall Street futures fall, Moody's downgrades US debt
U.S. stock index futures are pointing to a 0,20% decline, tied to Moody's downgrade of U.S. debt and following Friday's 1,56% rally for the S&P 500.
Ten-year Treasury yields hit a one-week high of 4,668% during the Asian trading session, testing the upper limit of their recent range, after weak nonfarm payrolls data earlier in the month helped fueled bets on rate cuts by the Federal Reserve. They subsequently recovered to 4,632%.
