"In the absence of improvement, to the point where a return of sustainable inflation to desired levels is threatened, further stimulus will be needed." As Mario Draghi has relaunched the Quantitative Easing plan which "still has considerable space". And again: “Further rate cuts and measures to mitigate any side effects continue to be part of the tools at our disposal”. Dragons never disappoints. This morning, for the umpteenth time, Super Mario used the forum at the ECB symposium in Sintra to relaunch the challenge of too low inflation.
The banker's whipping, justified by the collapse of derivatives on the price trend, has produced the desired effect on the markets.
– Piazza Affari gains more than one percentage point over the 20.800 mark. Similar effect in Paris, Frankfurt +0,8%. Outside the Eurozone London +0,5%, Zurich +0,8%.
– The euro fell to 1,118 against the dollar (-0,3%).
– The yield of the BTP plummets, to 2,16% (-13 basis points), new low for 12 months, spread at 216 points. Speaking to fixed income investors in London, Minister Giovanni Tria attempted to reassure the international financial community, explaining that Italy did not intend to violate European debt rules. “This year - he said - we will compensate for the non-compliance (last year) with the (European) budgetary rules. We aim for a deficit of 2,1% (of GDP). We will do better than we agreed last year."
– The prices of all bonds in the euro area strengthen. The Bund reaches new all-time lows of yield at -0,30% (-5 basis points).
The change of pace of the markets provoked yet another tweet from Donald Trump who went on the attack: “Mario Draghi has just announced the possible arrival of other stimuli, immediately causing the euro to fall against the dollar, and unfairly making it easier for them (Europe, ed) compete with the United States. They have been doing it for years, together with China and others".
Draghi's announcement had a discounted effect on the sectors most sensitive to the trend in the cost of money: utilities are running, sales on financial stocks.
Avanza Enel +3,6%. Kepler Cheuvreux raises the target price to 6,8 euros. Up too A2A +1,8%. Italgas +2%. Snam+1,5%. Mediobanca increases the target to 4,5 euro. Terna+2,7%.
Hera +1,6% and Ascopiave +4%, have announced the establishment of a joint venture for the distribution of electricity and gas to retail customers in the north-east of Italy. The new entity, of which Hera will hold 52%, will have a total value of 864,5 million euro and over one million customers.
Eni is up by 1,3%. Saras unchanged: refining margins are slightly improving,
Opposed banks: Bper Bank +0,06%. Unipol + 0,7%, reaching 18,5% of the share capital. Unicredit -0,3%. The bank has placed a senior note maturing in 2025. The issue has already recorded demand for 3,25 billion euro. Institutional investors' hunger for yield is not appeased.
Ubi Bank -0,9%, is looking for a partner for activities in the insurance sector, in view of the expiry of the industrial collaboration agreement currently in force.
Among the industrialists the chips suffer after the profit warning of the German Siltronic which warned that the revenues of the second quarter will be much lower than already indicated due to the clash between China and the United States. Stm leaves 1,9% on the ground.
Sale Fiat +0,5%. Ferraris +1,5%. Car registrations in Europe show a stable trend in May for the first time in 8 months (since the introduction of the WLTP in September 2018) and bring the year-to-date trend to -2,0%. As regards FCA (where Europe represents around 21% of group volumes), registrations fell by 8%, a trend in line with that observed since the beginning of the year despite the slight signs of improvement in April (- 3%);
On positive ground, luxury: Moncler +1,5%. Ferragamo +1%.
