THE ECB'S PARACHUTE TAKES BODY
ASIA POSITIVE, BUT CHINA IS CONCERNED
After mid-August rally the markets are looking for a confirmation of the recovery. Among many unknowns, as demonstrated by the first session of the week on the Asian markets. There Tokyo Stock Exchange records a growth of 0,77%, followed by Hong Kong, half a percentage point. But Shanghai hits its lowest since 2009 while in Hong Kong the "VIX or fear index" (i.e. the default protection contracts of Chinese companies) soars to new highs. A pessimism to which the boom in property prices contributes, the first consequence of the stimuli to the economy. The fear is that Beijing, faced with the risk of a bubble, will freeze its aid policy for the economy.
While waiting for Ben Bernanke's speech in Jackson Hole (August 31), the positive signals from the USA are multiplying. Wall Street's Vix index fell 6% on Friday, to a month-low. The 10-year US government bond trades at a yield of 1,81%, up 2 basis points compared to yesterday: from the record levels of 24 July at 1,39%, the yield has risen by 42 basis points.
Hopes and fears also dominate the European scene. According to “Spiegel” the ECB intends to enforce a ceiling on yields on Eurozone securities with unlimited purchases of securities. The decision will be made at the next summit in Frankfurt on 6 September. The ECB, according to the weekly, expects to publish the list of securities purchased on the market to strengthen the announcement effect.
The product of these messages, supported by Angela Merkel's pro-Draghi stance, was the recovery of the stock markets.
La Milan Stock Exchange rises for the third consecutive day and cancels the losses since the beginning of the year: the Ftse Mib index closed up by 1,3% at 15.124 points, on the levels of the beginning of April, in the last week it gained 3,1% . The index of the main European stock markets reached their highest levels in the last thirteen months, extending the best streak of positive weeks in the last seven years.
Risk appetite caused the spread between XNUMX-year bonds and German Bunds to plummet. In one week, the yield differential between the two securities fell by 60 basis points, going from 557 at the beginning of the week to 497 at the end. According to a report by HSBC, the yield on Spanish biennials could fall to 2% if the ECB were to start buying sovereign debts of countries in difficulty.
Meanwhile yesterday a spokesman for the Spanish Ministry of the Economy confirmed that the Rajoy executive will present "in a short time" the request for payment of the first tranche of the European aid envisaged for the banks.
Decreases the appeal of “safe ports”. The yield on the Finnish two-year bond moved up to par. The two-year government bond of Switzerland, Denmark and Germany remains negative.
Lo 10-year Bund Btp spread at the end of the day it widened by 5 basis points to 429 basis points. On the other hand, on 2-year maturities, the spread narrows to 308 basis points (-11 basis points).
The positive climate is disturbed by new clouds on the Greek front. In fact, it will be a crucial week of meetings between the Greek government and European leaders, starting with the president of the Eurogroup, Jean-Claude Juncker on Wednesday, up to Chancellor Angela Merkel on Friday, before traveling to Paris to meet François Hollande. Objective? A postponement to 2016 of the commitments made with the EU.
There is no opening on the German side. Also because a new "hole" of 1,5 billion has emerged at the troika mission in Athens. The parliamentary group leader of the CDU, Volker Kauder said: «The Greeks must keep what they promised. There is no room for manoeuvre, neither in terms of time nor of content». Even stronger sentences from Finance Minister Wolfgang Schaueble. Eurozone governments "would be stupid" if they didn't think of a contingency plan in case initiatives to resolve the crisis were to fail.
The moment of exit from the crisis "is a moment that in some ways I see approaching" he declared Mario Monti at the CL meeting who, however, adds: "We hoped that all the reforms would lead to a reduction in interest rates more rapidly than is happening".
Two issues on the limelight of Wall Street: Apple's assault on Microsoft's record which in 1999 reached a capitalization of 618,9 billion dollars. The peak is near: Apple, traded at $643,48, is now worth $603,38 billion. But expectation for new products is growing on the market, starting with a new iPad and new TV products.
No less followed the landslide of Facebook. On Friday, after the end of the lock-up on a part of the shares (the free float increased by 60%), the value of the shares fell to 19,05 dollars against a price of 38 during the IPO.
I management of Moody's and Standard & Poor's they will have to defend themselves in US court against charges of fraud for assigning inflated ratings to securities sold by Morgan Stanley and guaranteed by sub-prime mortgages. This was established by District Judge Shira Scheindlin, according to reports from Bloomberg, rejecting the appeal of the two rating agencies to liquidate the case and thus accepting the request of institutional investors, including the Abu Dhabi Commercial Bank, launched in 2008.
In Milan continued the recovery of banks, even if many of them have reduced the profit at the end of the day. Unicredit +1,5%, Entente +1%.
In the Monte Paschi rally +17%, driven by the declarations of Alessandro Profumo which foresees a further reduction of the stake held by the Sienese Foundation. Ubi Banca +7,1%, Mediobanca +6%, Banca Popolare di Milano +6,5%.
- credit institutions benefit from the decline in the Bund Btp spread and the reopening of the capital market on which they can return to raise funds: during the week Unicredit placed a 750 million euro bond and yesterday the French Bnp Paribas placed one for 1 billion euro.
Mediaset has risen by 2,9%, since mid-June the stock has gained 36%, in the last sessions it has risen with very strong volumes. Industrial companies are on the rise. It took off Finmeccanica +11%, one of the stocks most penalized in the last period: the rise of these days brings the quotations back to the levels of mid-April.
Fiat gained 2,3%, Fiat Industrial 1,5%. Pirelli rose by 2,9% and the parent company Camfin of 6,5%. Prelios it rose 3,2% after three sessions of declines. In the newspapers this morning there are other confirmations of the tense climate between the Tronchetti Provera family and the Malacalza family, the two subjects who share control of the society galaxy.
Among the few stocks in decline A2A -2,1%. Luxottica -0,1%, Ferragamo -1%, Lottomatica -0,4% and Saipem -0,2%.
Rest rose by 2,7%. Between mid/small cap Italcementi +9%, Geox +6,7%, Eems +16%. Going against the trend is Brunello Cucinelli -2,5% who on Thursday had marked the record high since the quotation at 13,77 euros.
