BAGS UNDER FIRE AGAIN. NEGATIVE MILAN
TENSION RETURNS ON THE BOND FRONT
Difficult morning for the European stock exchanges, all in the red after Wednesday's strong recovery. In Milan, the FtseMib index, at 15.431 points at mid-day, nevertheless reduced the initial losses to 0,8%. London stands at -0,6%, Paris at -1,4%, Frankfurt at -2,2% and Madrid at -1%. Investors are also waiting for the ISM manufacturing sector index to be released this afternoon in America. According to forecasts by economists, the index should drop to 48,5 from 50,9 in July. Quota 50 is the watershed between expectations of expansion and expectations of contraction. In the meantime, the descent of the European Stock Exchanges is driven by the sectors that gained the most yesterday: automotive (Stoxx -3,5%) and construction (-2,2%).
OK THE AUCTION OF THE BONOS. BUT THE SPREAD GOES UP
AND ON BTP THE YIELD RISES TO 5,16%
But the most worrying note concerns the tensions on the bond market. This morning, in fact, the auction of the Bonos was scheduled. A little while ago the Spanish Treasury released data on the auction for the new 5-year bond, which closed successfully. The amount placed was 3,6 billion, in the upper part of the offer range of 3-4 billion, with a yield of 4,489%, kept under control by the ECB's purchase programme. The bid-to-cover, ie the ratio between supply and demand, is 1,8, significantly much higher than the bid/ratio, 1,27 times, recorded by the Italian auction on Tuesday. But after the auction, pressure returned to the bond market: the Italian ten-year yield rose by 4 basis points to 5,16%, the Spanish one by seven basis points to 5,08%. The Btp-Bund spread widens to 299 basis points, dangerously approaching the psychological threshold of 300 basis points.
NEW FAILURE FOR FIAT (-4,9%)
BETWEEN THE BANKS IT ONLY KEEPS UNDERSTANDING
Fiat drops by 4,9%. This morning Citigroup cut its rating on the Turin company's stock to hold from buy and lowered the target price to 4,5 euros from 8,4 euros. Bernstein also reduced the target, bringing the target price to 6 euros from 7 with a market perform judgement. Since last July 4, when the share had reached its highest level since the beginning of the year at 7,71 euros, the share has fallen by 44,4%, underperforming compared to the Ftse Mib which lost 23,9% in the same period. In the meantime, today the Lingotto will host the first meeting of the 22 managers of the Group executive council, the body that deals with the group's strategic decisions. Also down were Fiat Industrial -3,3%, Pirelli -5% and Prysmian -3,2%. According to the English newspaper DailyTelegraph, no negotiations have started between Mediaset (-1,41%) and the English network ITV which, according to rumors from the Daily Telegraph itself, is interested in buying the Endemol group. ITV is reportedly considering the possibility of taking control of the group by itself, fully accepting its current debt. Endemol's current shareholders (Mediaset, John De Mol and Goldman Sachs, each with 33,3%) have not provided any comments on this hypothesis. Banks are also down: Unicredit loses 1,3%, MontePaschi -1,7%, Banco Popolare -1,3%. Intesa limits the reduction to 0,1%. Little moves Among the energy Enel -1,3%, Eni -0,9%.
THE MARCH OF DE LONGHI CONTINUES
+ 29,5% IN JUST ONE WEEK
On the De Longhi shields, which rises by 3,6% to 8,04 euros. It is the sixth consecutive day on the rise for the stock, which has gained 25% since August 29,5th. The positive results released on Monday contributed to the good performance of the share: the group closed the first half-year with increasing revenues and margins and expects to continue to grow in the second half-year as well. The stock also benefits from a note released this morning by Bank of America, which maintained the buy judgment and cut the target price by 13% to 10 euros. However, the new target implies a potential upside of 25%. As forecast, the expected meeting between the Minister of Development, Paolo Romani, and the managing director of EDF, Henri Proglio, has been postponed to Monday to find an agreement on the guidelines for Edison's restructuring. Yesterday Romani met the top management of Iren, a partner of Delmi who is very critical of the hypothesis of an agreement between A2a and EDF, which would damage the interests of him and of other partners on the Italian side. Today the A2A Board of Management is held to give a final acceleration to the Edison reorganization
