Stock markets, Asia in rally. Bond fever is rising

The words of the New York Fed president have given a jolt to the markets which are now looking at expansionary decisions on both sides of the Atlantic – Waiting for the ECB – Oil prices under tension – Microsoft soars – Generali shopping in Portugal

"Better to act in time with preventive measures rather than waiting for the disaster to arrive". These words by John Williams, president of the New York Fed, have given a jolt to share prices, confirming that the US central bank is ready to provide fresh oxygen to growth, in line with what Mario Draghi is about to do next week.

HIT AN IRANIAN DRONE, THE OIL FLAMES

The rise is supported by oil prices, which rose sharply this morning after Donald Trump revealed the downing of an Iranian drone near a US ship. Tehran has announced the seizure of the crew of a ship in the Strait of Hormuz, guilty of smuggling. The new scenario could favor the rebound of Saipem (yesterday -2%) and Eni (-0,7%).

TOKYO RUNS, TRADE WAR WITH SEOUL

The price lists are thus approaching the appointments with the ECB (July 25) and the Fed (July 30-31).

Williams' words allowed Asian stock markets to close the week higher. Leading the race is the Topix of Tokyo (+1,8%), ahead of the Csi index of Shanghai and Shenzhen (+1,1%). Hong Kong gains one point, Sydney +0,8%. The Korean Kospi also rises, while the crisis with Japan worsens: more than 200 supermarkets, including the main chains, have joined the boycott of Japanese products, from beer to fountain pens.

Closing around parity last night for the Dow Jones (+0,01%). After three days of decline, the S&P 500 index (+0,36%) and the Nasdaq Composite (+0,27%) recovered.

After the data for the quarter, the abrupt descent of Netflix (-11%) was broadcast.

NETFLIX COLLAPSES, BUT TECH FLY

Instead, Microsoft's prices rose to all-time highs (+2,65%, over $140 after the Stock Exchange). The company ended the latest quarter with earnings per share of $1,37, well above analysts' estimates of $1,21. EBay (+6%) and Ibm (+4,6%) are also on the rise.

Morgan Stanley +1,5% after reporting net profits down 10% in the second quarter on low market volatility.

Philip Morris +8,2%: the tobacco giant has raised its forecasts for 2019 thanks to the IQOS electronic cigarette.

Gold extended its rally on US rate cut prospects to a six-year high of $1.452,60 an ounce before falling back to $1.442. Tensions in the Middle East also contribute to strengthening the safe haven par excellence.

EUROPEAN FUTURES IN FLIGHT WAITING FOR THE ECB

Also in Europe the expectation for the action of the central banks will be felt at the beginning. Williams' words push up futures both on Wall Street and in Europe by about half a point.

Yesterday afternoon, Bloomberg's "bomb" had already thought of warming up the atmosphere (and cooling down the euro/dollar exchange rate): the ECB, according to the US website, is studying an upward revision of the inflation target , currently close to 2%, to boost growth with a robust stimulus injection to boost its monetary policy. At the news, which according to analysts strengthens expectations of a rate cut by the ECB in the short term, the euro touched a low for the session at 1,1205 dollars. This is how expectations are growing for next Thursday's bankers' meeting in Frankfurt, the penultimate under Mario Draghi's management.

ONLY MILAN CLOSES ON POSITIVE SOIL

In the meantime, however, the European stock exchanges closed in the red, with the exception of Piazza Affari (+0,05% to 22.090 points), supported above parity by the performance of banks and utilities.

Milan +0,05%, at 22.090 points, is the only European Stock Exchange to have closed yesterday with a modest positive sign.

The worst place was Frankfurt (-0,92%), weighed down by a new disappointment: Sap, the software giant, dropped 5,61%, after lower-than-expected profits. Changing of the guard at BMW: Oliver Zipse, a veteran of the Munich company, takes the helm.

Also in red were Paris (-0,38%), Madrid (-0,64%) and London (-0,62%).

BOND FEVER: GERMANS AND AUSTRIACS QUEUE AT DESIO

The race for Italian paper is so impetuous as to surprise the Financial Times, which dedicates an article to the success of the Banca di Desio e della Brianza issue: the 500 million 7-year covered bond has literally been snapped up, attracting offers for 1,9 0,77 billion to then be priced at 80%, below the level of government bonds of the same duration, to then end up at least a third in Austrian and German portfolios. The exploit of the Desio institute, the Brianza poster that gave birth to Pope Pius XI, has nothing miraculous about it. On the contrary, notes the City newspaper, the yield is attractive, given that at least 40% of European covered issues (including XNUMX% of Italian ones) trade in negative territory.

BTP YIELD AT THREE YEAR LOW

Against this backdrop, the BTP filed another crackling session, with the 1,5-year yield at a new low for almost three years, at 1,56%, before closing at XNUMX%.

The rally peaked in the morning after the question and answer between Salvini and Di Maio on the fate of the government. "The vote in Italy would be positive for the BTP - wrote Rabobank strategist Richard McGuire - because investors believe that the League without the ballast of the 5 Stars could give life to a more business-oriented government".

The spread between Italy and Germany fell to 187, a new low since May 2018, to go back up to 192 at the end of the session.

The other securities of the periphery also fell sharply: the yields of Spanish and Portuguese ten-year bonds lost between 5 and 8 points during the session.

GENERALI SHOPPING IN PORTUGAL

In Piazza Affari two Big names in finance could shine today.

Unicredit, +0,8% yesterday, was rewarded by Moody's, which raised the ratings on junior senior unsecured debt and on subordinated debt respectively to Baa2 and Baa3.

Generali has acquired 100% of the Seguradoras Unidas company and the AdvanceCare services company in Portugal from two holding companies controlled by Apollo.

The consideration is equal to 510 million for Seguradoras Unidas and 90 million for AdvanceCare, but the price is subject to adjustments at the time of closing.

The decline in the spread and expectations of "unconventional" measures allowed the banks to rise in the afternoon. Ubi Banca +0,1%: the binding offers for the bancassurance must arrive by 20 September, favored by Cattolica Assicurazioni (-1,04%). Bper Banca +0,90%: the Antitrust has given a conditional green light to the acquisition of control of Unipol Banca, now controlled by UnipolSai, by the Emilian bank.

FALLING RATES MAKES UTILITIES RUN

The drop in market rates continues to be a panacea for utilities: A2A, Enel, Terna, Snam are all up by more than 1%. Italgas (+0,1%) announced the pricing of a new 600 million euro fixed-rate bond, maturing in April 2030 and with a coupon of 0,875%.

LUXURY SHINES: SAFILO +11%

Luxury also shines: Richemont +1,13% in Zurich closed the quarter with sales up 12%, driven by online commerce and Asia, with the exception of Hong Kong. In Europe, sales decreased by 1% in volume.

Moncler is on sale in Piazza Affari (+0,5%): Mainfirst raises its target to 45 euros. Ferragamo (+0,5%): Exane raises the rating to Neutral from Underperform. Brunello Cucinelli +1,5%. Tod's was stable after the sales in the first part of the session on the wave of the underperform cut by Exane Bnp Paribas.

Safilo has taken off (+11%): the Hal fund, the largest shareholder of the Veneto-based company, has confirmed the talks for the sale of the controlling stake in GrandVision to EssilorLuxottica.

Sales on industrials: Pirelli and Prysmian -2,5%.