Super Thursday did not disappoint expectations. Indeed, the sensational surprise rejection of the electoral law in the late morning, shortly before Mario Draghi's press conference in Tallinn after the ECB meeting, added a yellow note to a script already full of emotions. All that remains is to retrace the chronicle of a day that will affect the fate of the markets for a long time. And not only.
TOWARDS THE RESIGNATION OF THE PREMIER: BREXIT MORE DIFFICULT
The most sensational and disturbing news comes from the United Kingdom: Theresa May, convinced that she can achieve great success, has miscalculated. The Conservatives have lost their absolute majority and will have to find allies to govern. The first victim of the upheaval, unthinkable until a few weeks ago, is the hard Brexit, the workhorse of the Premier, now forced to deal with the Labor (Marxist) Jeremy Corbin and with the pro-EU formations of Scotland and Northern Ireland . But bookmakers are already accepting bets on the Premier's resignation.
With the ballot almost completed, the Conservatives have 307 seats (over 20 fewer than in the previous Parliament) against the 326 needed for a majority. Labor gains 30 seats and rises to 257. A sharp defeat for the Scottish independence activists (-14 seats, to 34), while UKIP has practically disappeared. The pro-Europeans of the Liberal Democratic Party, with 12 seats, go back. Northern Ireland Unionists, the only ones the Conservatives could associate with, are down to 10 seats.
The reaction of the markets was immediate in anticipation of an opening of the City which promises to be difficult: stock futures fall by 1%. The pound lost share against the euro (0,877, -1,4%), the dollar and the yen but also against all other currencies, including the Brazilian real. On the equity front, the stocks most closely linked to the United Kingdom suffer in Hong Kong and Australia (-0,2%).
THEY HOLD BAGS IN ASIA. SOFTBANK HUGE (+7,9%)
However, the impact on the price lists was limited. Tokyo is starting to close on positive ground: the Nikkei index is pushed up by the leap of Softbank (+7,9%) after the announcement of the purchase from Google of Boston Dynamics, one of the leaders in robotics and artificial intelligence.
Chinese markets contrasted: Hong Kong -0,2% and Shanghai +0,2%. Seoul gains 0,5%. The other Asian markets are on positive territory: the Brexit effect has not been repeated.
COMEY PUT TRUMP ON THE ROPES, BUT THERE IS NO KO
“Trump is a liar and I have proof.” The testimony to Congress of William Comey, former head of the FBI, gave more than one joke worthy of a Hollywood spy story. For three hours straight on live TV, the former head of the Federal Bureau of Investigation rebutted Trump's version ("I fired him because he no longer enjoyed the trust of his men") and drew a disturbing picture of the pressures he suffered because did not investigate Russiagate and in particular the ties with Moscow of General Flynn, Trump's trusted man.
Comey also said he was certain of Russia's commitment in the last electoral campaign but had to admit that he was unable to assess whether or not Moscow's activism weighed on the vote. Furthermore, there is no evidence of direct Trump involvement. In summary, Trump was put on the ropes, but there was no knockout blow. There are no extremes for impeachment but, given the president's weakness, the promised reforms (taxation, trade, deregulation) are increasingly distant.
ALIBABA (+13,3%) PUSHES THE NASDAQ TO THE STARS
Here's Wall Street's verdict: Dow Jones +0,04% almost flat as well as the S&P 500 +0,03%. The Nasdaq is more tonic: +0,39% to 6.321,78 points, a new absolute record. The performance of the technological price list is completely detached from the vicissitudes of the White House. The rise is linked to the sensational accounts of Alibaba: +13,3% after the Chinese e-commerce giant announced profit growth of between 45 and 48% in the next fiscal year. Yahoo!, which owns a 15,5% stake in Jack Ma's company, gained 10,2%.
Nvidia also flies (+7,3%) after the promotion of Citigroup on the chip giant. Tensions in the Persian Gulf show no sign of abating, but oil prices continue to slide freely: Brent has slipped to 47,87 dollars, Wti to 45,64 dollars a barrel. These are the lowest prices since last November 29, when the agreement on the ceiling on the extractions of the producing countries was announced: it is unlikely that the agreement will last long, if the diplomatic storm is not overcome.
THE COMPACT ECB ON THE DRAGHI LINE
The events of a special day partially overshadowed the ECB meeting in Tallinn. But the summit swept away many fears about the future strategies of the central bank of Frankfurt, aligned with the positions of Mario Draghi. The ECB has revised its inflation estimates downwards in the euro area, which will remain low for the next three years. Thus the hypothesis of a revision of the ultra-expansionary monetary policy of the European Central Bank are moving away.
There was no mention of "tapering", ie the cutting of securities purchases by the Frankfurt institute. Which will continue to buy bonds for 60 billion euros a month. Until December, as foreseen in the programmes. Or even further, if "the prospects become less favorable or if the financial conditions" make it appropriate.
As a consequence, the euro lost positions against the dollar, which rose further this morning (1,1198) following the news from London. The Stock Exchanges are doing well: Paris marks an increase of 0,1%, Frankfurt +0,3%. Better Madrid (+0,75%). The best market was the Italian one: Piazza Affari rose by 1,45%, the Ftse Mib index at 21.242.
BTPs FLYING: 5,5 BILLION 3-YEAR AND 7-YEAR BONDS AT AUCTION
The Italian bond market is up sharply, but the push did not come only from Draghi, but from the vicissitudes of the agreement on the electoral law, which removes the risk of an early vote in the autumn.
The Italian 2,181-year rate dropped at the close to 2,281% from 2,158%a, after a plunge to 204%. The spread with the Bund, which went up to 19 basis points on the eve, the highest since April 192th, ended the session at 203 points from 190, after a low of XNUMX bps.
The Ministry of the Economy will offer between 14 and 4,5 billion euros of 5,5- and 3-year BTPs at auction on Tuesday 7th. In detail, between 2 and 2,5 billion of the Btp 3 years June 2020, coupon 0,35% and 2,5-3 billion of the Btp 7 years May 2024, coupon 1,85% will be offered.
VOTE AT RISK: BANKS CELEBRATE
It was the political news that characterized the session of the Italian financial market more than anything else; the torpedoing in the Chamber of Deputies of the new electoral law by some snipers has caused the decline of the hypothesis of early elections in the autumn, an eventuality that the financial markets have never welcomed, because they consider it to be a high risk for the stability of the country.
The novelty has given wings to Piazza Affari, after an uncertain morning. Bank stocks in particular took off: the sector index closed up 2,18%. Unicredit (+3,2%), Intesa (+1,9%) and Bper Banca (+3,7%) are up. Carige is advancing outside the main list (+4,51%) on the eve of today's board meeting in which the confrontation between the majority shareholder Malacalza and the top management will take place after the recent disagreements.
Asset management stocks also made clear progress: Anima +4,5%, included by Kepler-Cheuvreux among his favorites on Piazza Affari. Banca Generali +3,4%, Azimut +3,8%.
RECORD PERFORMANCE FOR ENEL
Enel takes off (+3%) which on 24 July will issue a dividend of 18 cents (yield 3,8%). Appreciations on the group's management came from Moody's analysts, according to whom "the progress of the Enel group on the 2017-2019 strategic plan and capital discipline strengthen the credit profile". The agency also estimates that “Enel's debt will grow only slightly over the course of the plan and expects the Italian energy supplier's credit reports to stabilize, despite an increase in dividends paid with fund operations/net debt in the range of 21%-22% and maintaining cash flow/net debt in the range of 15%-16%.
FERRARI ACCELERATES. FCA PAYS FOR THE HOLDING OF THE US MARKET
Ferrari leapt among the industrial stocks, reaching a new all-time high of 82,90 euros. Since the beginning of the year, the share has recorded +47%. This morning Kepler-Cheuvreux adjusted the target price to 90 dollars (about 80 euros) from 84 dollars. Judgment unchanged Hold.
Fiat Chrysler, on the other hand, was weak: -1,13% to 9,62 euros. The stock was put under pressure by a report by Morgan Stanley which negatively revised the sales forecasts of the US car market. According to the US bank, a total of 2017 million cars will be sold in the United States in 17,3, one million less than expected. Morgan Stanley confirms the previous estimates for 2017 for Fiat Chrysler, but cuts those for 2018 and 2019. It confirms the Overweight positive opinion and lowers the target price to 14 dollars (about 12,50 euros) from 15 dollars.
FERRAGMO FLOP, STM ON THE SHIELDS
Leonardo stands out among the industrialists who earned 2%. Stm (+1,13%) received an increase in target p by Ubs (14,8 to 15 euros, neutral rating). The fall of Ferragamo continues (-3,5%), downgraded by MeinFirst.
