After 35 years of falling rates, the bond bull market is ending. The alarm was raised by Bill Gross and Jeff Gundlach, the two undisputed gurus of the bond markets. It is not the first time that Gross has launched the sos, hitherto unheard of. But this time there are signs of tension. According to a Bloomberg scoop, China is oriented towards reducing US bond purchases, also to signal to Donald Trump its nervousness about the US president's protectionist moves. Beijing, which is the largest holder of government bonds in the United States, however denied the news agency's rumors: "The news could cite a wrong source of information or it could be fake news," a statement said in a statement. spokesman for the State Administration of Foreign Exchange (Safe), the Chinese administrative agency.
Japan has, albeit with great prudence, begun to reduce purchases on JGB, Japanese government bonds.
CANADA: TRUMP IS ABOUT TO CANCEL NAFTA
Another cold shower also contributed to shaking the atmosphere of the markets: Canada takes it for granted that Trump is about to cancel the NAFTA agreement, the free trade agreement linking Mexico, the USA and Canada itself. Trump's next mission to Davos thus takes on the flavor of an open challenge in the name of protectionism.
WEAK DOLLAR, ASIAN EXCHANGES DOWN
Meteo Borsa records the new tensions: the Bull takes a break. The Tokyo Stock Exchange is down: Nikkei index -0,4%. Yesterday, Japan's currency gained more than 1% against the dollar: the cross is at its six-week high.
Chinese stock markets are weak, even if the first indications of the country's economic growth in 2017 are positive. In a speech in Phnom Phen tonight, Premier Li Keqiang said that last year's GDP rose by 6,9%, an improvement from +6,7% in 2016.
The CSI 300 index of Shanghai and Shenzhen stocks is down by 0,3%. The Hong Stock Exchange, back from 12 consecutive rises, is starting to close down by 0,2%.
The equity markets of South Korea (-0,3%) and India (-0,1%) decreased slightly. The largest negative variation is that of the NZX index of the New Zealand Stock Exchange: -1,4%. The New Zealand dollar is at a three-and-a-half-month low against the US dollar. Sydney's S&P/ASX index lost 0,6%.
FIRST RED FOR WALL STREET
Signs of Chinese disengagement from US bonds (the 2,6-year bond temporarily crossed the critical threshold of XNUMX% at a nine-month high) conditioned the US markets, already worried by the wave of new bonds that could be needed to support the reform Trump tax. No less heavy were the reactions to the disengagement from NAFTA.
In red, for the first time in 2018, the three main indices: Dow Jones -0,07%, S&P 500 -0,11%, Nasdaq -0,14%. The euro-dollar exchange rate moved little, at 1,194.
APPLE UNDER STUDY FOR BATTERIES, TWO DOLPHINS FOR BUFFETT
Financials shine on the lists, awaiting the first results that will be announced tomorrow by JP Morgan. In evidence Berkshire Hathaway (+1,3%) after the promotion of two deputies of Warren Buffett, Gregory Abel and Ajit Jain to possible heirs to the leadership of the colossus created by the wise man from Omaha.
In the viewfinder Apple (-0,64%). The chairman of the US Senate Committee on Commerce, John Thune, asked the Cupertino giant to answer a series of questions on the slowdown in battery performance. In France, the Paris prosecutor's office said it had launched an investigation into Apple for suspected deceptive conduct and "planned obsolescence".
STOCKS DOWN, CRUDE IN FLIGHT
The flight of oil continues, on the highs of the last three years at 69,7 dollars a barrel (-0,2%). It closed slightly higher last night at $69,9. In the United States, oil inventories recorded a decline of almost 5 million barrels: tonight the American Petroleum Institute had anticipated a decline of 11 million barrels. US oil production fell 3% to 9,49 million barrels, the lowest since October. Oil companies down in Piazza Affari: Eni -0,1%, Saipem -1,6%, Tenaris -0,3%.
BANKS AND INSURANCE INDUSTRY PUSH THE PLACE OF BUSINESS
The long wave of rising yields was also felt in Europe. Among other things, the movements in bonds caused the rotation of sectors on the stock markets: the companies that thrive with high rates (banks and insurance companies) are on the rise, while the most indebted sectors (utility and telecommunications) are down.
Positive session for Piazza Affari, the most exposed to the credit sector. The Ftse Mib index rose by 0,66%, to 23.157 points. It was the sixth consecutive session of increases, during which new highs were reached since August 2015. Thanks to the recovery of the last few days, the gain from the beginning of the year of Piazza Affari reaches around 5,7%, against the +3% of the EuroStoxx 50 index and +3% of Frankfurt.
The other European stock markets were down: Frankfurt's Dax -0,8%, Paris' Cac40 -0,4%.
BTP, BOOM REQUEST FOR 20-YEAR SECURITIES
Exceptional response from the bond market to the offer of the new 20-year bond launched yesterday by the Treasury: against an offer of 9 billion, requests for 31 billion arrived.
The political tensions 50 days after the vote do not disturb the performance of the Italian bond, also because the anti-euro rhetoric of the League and the 5 Star Movement is returning at great speed. The BTPs also remain supported by the liquidity guaranteed by the ECB's purchases, despite the halving of the monthly amount of the programme.
The Italian ten-year rate stood at 2,036% from 2,037%, the spread at 156 basis points. The offer of 7,5 billion 12-month BOTs (out of 7,7 maturing), closed at a new all-time low yield of -0,420%.
Today will be the turn of medium-long auctions, with only the reopening of 3- and 7-year BTPs for an amount between 5 and 6 billion. An increase in yields compared to the last November auction is expected, when the three-year BTP was assigned at -0,02% and the 7-year BTP at 1,21%.
Portugal also recorded yesterday a record demand for the new ten-year anniversary: 19 billion requests against an offer of 4 billion. Lastly, Germany placed over 4 billion of the new 2028-year February 0,5 coupon at auction with a XNUMX% coupon.
THE DECLINE IN BAD LOANS PUSHES CREDIT
It was a record session for Italian banks: the Italian sector index closed up 3,6% against +2% for the European sector.
Various factors have contributed to bringing good mood. The drop (-13% to 173 billion euro) of gross non-performing loans in the balance sheets of Italian banks certified by the Bank of Italy's "Banche e moneta" bulletin. In December there should be a further contraction thanks to the closure of some NPL transactions by important institutions (Creval, MPS).
The growth of loans to the private sector (+1,4% also in November) accelerated compared to the previous two months. The rise in market yields on bonds: the ten-year Bund reaches 0,50%, the highest level since last March, on the thirty-year maturity it reaches 1,33%, the highest level since October.
INTESA, AT THE TOP OF EUROPE, CONFIRMS THE RECORD DIVIDEND
Intesa Sanpaolo, with a leap of +4,58% to 2,95 euros, was the best stock in the Eurostoxx 50. The bank announced that it is considering "the sale of a portfolio of non-performing loans of the group, under the next business plan”. The commitment to distribute 3,4 billion euros of cash dividends for the year 2017 remains.
The potential merger with Credit Agricole hypothesized by Mediobanca Securities in a recently published report contributed to supporting the stock. The merger would have been outlined in the business plan that Carlo Messina should present in February. The combination, according to Mediobanca, would create the first bank in the eurozone, among the top three in the world in asset management, with a billion euro in synergies, a 28% increase in earnings per share and a tangible return on capital ( Rote) of 12% in 2020. The Cet1 of 13% will make it possible to offer a return above 7,5% through a payout of 70%. However, this operation is excluded by the Bank led by Carlo Messina.
Well bought Banco Bpm (+4,8%) and Bper (+4%). Unicredit (+2,9%) also stands out.
PIRELLI LEAVES MEDIOBANCA, MPS SHINES
Pirelli (-2,45%) announced last night the sale of 1,78% of Mediobanca (+2,35%) through accelerated book building. The proceeds of the operation amount to 152,8 million.
Out of the main basket, Mps shines (+3,3%). Quaestio announced that it has closed, through the Italian Recovery Fund, the operation in the mezzanine tranche of the 25 billion euro securitization of MPS with an investment of 95 million euro for 805% of the tranche.
GENERALI LAUNCHES BLOCKCHAIN FOR POLICIES
Effervescent day also for the insurance companies. Generali, +2,21% to 15,74 euro, was the best of the big European companies (+0,5% the Eurostoxx Insurance index). The Lion of Trieste, together with Unipolsai (+1,8%), Aig, Aon and Willis Towers Watson and the consultancy support of Capgemini Italia, has created a platform with blockchain technology to improve risk assessment.
FCA DOESN'T STOP, CNH IS ON THE RISE
The European auto sector is slowing down after the recent increases. But not Fiat Chrysler (+0,6%) after cues above 19 euros: since the beginning of the year it has achieved an increase of more than 24%.
Cnh Industrial on the rise (+1,26) after the signing of two new contracts by the Iveco Defense Vehicles brand. The first concerns an order for a new fleet of multipurpose 4×4 medium military vehicles for the German Army, while the second was signed with the Romanian Ministry of Defence, which ordered 173 military logistics vehicles.
Leonardo (+0,6%) is worth mentioning among the industrialists: UBS has cut its target price from 16 to 13 euros, a level that still remains above the current stock market prices. The recommendation remains buy instead. Experts maintain a positive outlook in view of the new industrial plan which will be presented at the end of January.
UTILITIES SUFFER
The most indebted sectors are suffering, faced with the prospect of more expensive money. The Stoxx index of utilities lost 1,3%, Stoxx of telecommunications companies -1,8%.
Enel, which yesterday launched a 1,25 billion euro bond with an 8-year maturity, lost 1,8%. Snam -1,9%, Italgas - 2%. Sales also on Hera -3%, which yesterday illustrated the objectives of the industrial plan for 2021. Telecom Italia was also in the red -0,3%.
THUD OF CUCINELLI, GODDESS CAPITAL RESCUES ZUCCHI
Brunello Cucinelli sells 6,6% after the placement of 6% by Fedone, the founder's holding company.
Zucchi up (+3,9%): the IdeA Ccr fund dedicated to 'dip financing' transactions was set up by Dea Capital Alternative Funds and will also concern Zucchi.
Astaldi's run continues (+2,7%), with very lively volumes. The stock has jumped 2018% since the beginning of 46 but has maintained a 12% decline in the last 45 months.
Highlights were MutuiOnline (+7,75%), which has been performing well since the beginning of the year, and Gima TT (+5,63%), which benefited from the Kepler Cheuvreux buy promotion.
