Since Mario Draghi's speech in Sintra on 27 June, the euro has appreciated by more than 3%, to its highest level in the last 12 months. In the last two months, European equities have shown that they are being impacted by the revaluation of the euro, with a lower performance than other markets. The market is wondering at this point whether Draghi will do anything to stop the move or continue to set the stage for tapering. The first is good, the operators predict on the basis of solid indications.
French central banker Villeroy de Galhau (his likely successor) said accommodative monetary policy was still needed despite the progress in inflation. Bloomberg, usually well informed on the ECB's moves, anticipates that there should be no particular announcement from the ECB on the end of the economic stimulus season: any changes in economic policy could be announced in early September after the Frankfurt staff have delivered to the Executive Council its post-Qe assessments.
TECHNOLOGY BREAKS DOT.COM BUBBLE RECORD
Meanwhile, regardless of both Donald Trump's ordeal and the shocks in the currency markets, Wall Street broke the latest record of the dot.com bubble season. The S&P index of the information technology sector which includes the big names in the sector (Facebook, Microsoft and Oracle among others) closed at 992,29, above the previous record of 989,49, which had held since March 4, 2000.
Another Toro signal came this morning from the meeting of the Japanese Central Bank: the goal of hitting an inflation target of 2% has been moved forward to 2020. In the meantime, liquidity injections will continue on the market "more or less" 80 billion yen per month while rates remain negative at -0,1%.
After the meeting, the yen fell to 112,10 against the dollar (-0,2%). Tokyo Stock Exchange (+0,6%), Hong Kong +0,2%, Shanghai +0,3%, Mumbai flat. Sydney +0,6%, the Korean Kospi +0,4%.
The Msci World index established a new absolute record thanks to the push of Wall Street, supported by the positive start of the quarterly campaign. The MSCI Emerging Markets index recorded the eighth increase in a row, reaching its highest since May 2015. The Dow Jones index rose by 0,31%, the S&P 500 +0,54%. Best of all the Nasdaq (+0,64%). Better than expected the data on the house. In June construction sites were started for 1,21 million new homes, +8,3% compared to the May figure: the consensus was expecting an increase of 6,2%. The new widespread building permits are also better than expected.
OIL BACK AT 50 DOLLARS. FLY VERTEX (+26,4%)
The main driver of the increase continues to be technology (+22,8% since the beginning of the year). Yesterday, however, the Oscar went to a pharma title: Vertex scored a gain of 26,4% thanks to the positive outcome of the tests on the treatment of cystic fibrosis.
Morgan Stanley (+3,3%) wins the remote challenge with Goldman Sachs. The Bank has decided to move its European headquarters from London to Frankfurt. The financial index (-0,4%) remains weak: the profits of the sector, although positive, have not gone beyond forecasts. The black jersey goes to Ibm (-4,2%): the decline in turnover continues, inexorable, down for 21 quarters.
Oil is on the rise: Brent at 49,64 dollars, Wti at 47.07 a barrel. The strategic reserves of the United States continue to fall: -4,7 million barrels, against an estimate of -3,5 million. Stronger-than-expected declines also for gasoline and distillate inventories. Oil imports from Saudi Arabia dropped last week to a 7-year low. At Piazza Affari Eni -0,4%, Saipem -1,3%, Tenaris +0,9%.
EUROPE, POSITIVE OPENING WAITING FOR THE ECB
Positive session yesterday for the main European markets on the eve of the ECB meeting. The euro faces the day starting from 1.15195 against the dollar. Futures on European stock exchanges anticipate a start up of 0,3%. In Milan, the Ftse Mib index closed trading with +0,57%, at 21.479. Paris gained 0,83%, Madrid +0,60%, Frankfurt registered a slight gain of 0,17% and London finished the session up 0,55%. Reckitt Benckiser is up on the City list (+1,52%) after the sale of the food division to the American McCormick & Co for 4,2 billion dollars.
Closing slightly up for the Italian bond market, which confirms the positive trend already underway since last Friday in anticipation of the ECB meeting. The rate on the ten-year BTP floats in the 2,19% area from around 2,20% at the end of yesterday's session, close to the lows for about two weeks. The Btp-Bund spread in the ten-year stretch is marginally up to 165 basis points from 163 points at yesterday's close.
STM SUPERSTAR, FERRARI SPRINT
Techs have also come to the fore in Europe. Stm rose by 2,6%. The Dutch ASML, one of the world's major manufacturers of chip making machines, recorded a 6% jump in Amsterdam. The company presented quarterly data that beat analysts' estimates. Sales are up 20%.
The rise in the dollar translated into increases for the companies most exposed to the US currency: Ferrari leads the race (+3,38%), ahead of Luxottica (+1,76%) and Exor (+1,49%). Fiat Chrysler (+1,36%), Cnh Industrial (+0,77%) and Salvatore Ferragamo (+0,38%) were also positive.
GENERALI LEAVES COLOMBIA
Generali (-0,33%) announced yesterday evening the sale of the 905 of Generali Colombia to the German insurance company Talanx for approximately 30 million euros. The company has also instructed Rothschild to sell the assets in Ecuador and Panama, while in Europe it has put the assets in the Netherlands up for sale and is considering exiting Portugal and Belgium.
After a sluggish morning, the banks found some strength in the second part of the session thanks to results beyond Morgan Stanley's expectations: the basket rose by 0,15%. Unicredit grew above all +0,9%, while Intesa Sanpaolo (-0,49%) and Ubi Banca (-0,51%) remained negative. Bank Bpm unchanged. Mediobanca Securities, with regard to the possible sale of non-performing loans for another 2 billion euro writes: "We think that the sale was agreed with the ECB, and according to our calculations, unsecured NPLs are sold at about 5% of the book value gross".
FINCANTIERI TOWARDS AGREEMENT ON SAINT NAZAIRE
Fincantieri also unchanged on the eve of the perhaps decisive agreement on the Saint Nazaire shipyards. Le Figaro writes that a "50-50 arrangement between the Italians and the French" has been worked out. Macron and Prime Minister Paolo Gentiloni will call each other "in the next few hours" to "ascertain whether or not there is an agreement on the future of the Saint-Nazaire shipyards", concludes the newspaper.
CONSOB INSPECTION OF TELECOM, ATLANTIA NEAR ABERTIS
Telecom Italia is advancing (+1,03%), regardless of the inspection by Consob in the Rome and Milan offices to verify the possible influence of Vivendi, the group's main shareholder, in management. The French media group had notified the EU of the possibility of "de facto" control of the Italian company before the shareholders' meeting. On May 30, the EU gave the go-ahead for control subject to the sale of Persidera, a broadcasting company that owns 5 national digital multiplexes, controlled 70% by Tim and 30% by the publishing group Gedi.
Atlantia (+1,2%) took a step towards control of Aberties. Spain's Aena has announced that the board of directors of Abertis' first shareholder, Enaire, has rejected its offer. Abertis, on which Atlantia is in the process of tender offer, will return to negotiation this morning.
Weak Astm (-1,19%) and Sias unchanged despite the publication of the plan to 2021 which, according to Equita Sim, highlighted Ebitda and dividend targets higher than expected.
The utilities were positive: Terna +1,95%, Snam +1,6%, Italgas +0,79%. Enel +0,12%: in the first half of 2017, the electricity group sold 138,6 tWh (tera Watt hours) of electricity with a 5,6% increase in quantities compared to 131 tWh in the same period of 2016.
A2A went against the trend (-0,14%) after Banca IMI reduced the recommendation from add to hold, with a target price of 1,55 euro. The Montenegrin authorities have called into question the exercise of the put option that the Lombard utility enforced at the beginning of July to transfer the 41,75% stake it holds in the capital of Epcg to the Podgorica government.
THE RAIN OF FRESHMAN ON AIM CONTINUES
Finally, the flurry of IPOs continues on the Aim Italia market, which records one debut per day. After the sharp rise of Culti Milano on Monday and Pharmanutra on Tuesday, yesterday it was the turn of Glenalta +4,1%, the Spac which raised 98 million in its IPO. Today it's the turn of Sit, who will make his debut on the Aim after the merger with the Industrial Stars of Italy 2 spac. Finally, the Sprint Italy spac promoted by Fineurop, Gerardo Biagiotti, Matteo Carlotti and Francesco Pintucci will close the week tomorrow.
