Hong Kong's protest against the law that will allow the extradition to China of citizens convicted also for political reasons does not stop. These are now the most important events since 1989, with significant effects also on the stock markets. The Stock Exchange, after having suffered a drop of around 1,8%, is starting to close with a drop of 0,9%. The CSI 300 index of Shanghai and Shenzhen (-0,3%) was also in the red. Tokyo loses one percentage point, while the yen, as always happens in moments of tension, gains half a point against the dollar and strengthens against the euro. Geopolitics thus introduces a new element on the eve of the key appointments of the coming weeks: the Fed meeting of 18/19 and the G20 at the end of the month.
OIL DROP BELOW 60 DOLLARS
The sharp fall in oil prices fits into this framework, conditioned by the increase in inventories and, above all, by the expectation of a decline in economic activity. The price of Brent crude oil is back below sixty dollars a barrel, on the lows of the last five months.
Energy stocks are in deep red: Eni -1,7%, Tenaris -4%, Saipem -3%.
Energy and banks also weighed on US markets. Dow Jones down 0,17%, S&P 500 -0,20%, Nasdaq -0,38%
US inflation has practically stopped, a circumstance that makes a rate cut more likely. The White House continues its offensive against Fed leaders: Commerce Secretary Wilbur Ross said the central bank was wrong to raise rates in December 2018.
GERMANY, PUBLISHING TAKEOVER OF THE CENTURY
But Donald Trump reserved the last torpedo for Germany. Berlin, thundered the president, will suffer sanctions and will lose US military assistance if it does not stop the construction of the Nord Stream 2 gas pipeline, intended to bring Russian gas to Central Europe. The threat, which came at the end of a day of declines for the markets of the Old Continent, weakened the euro, which dropped to 1,129 against the dollar yesterday evening, this morning we are at 1,130.
In London (-0,4%) today the selection of candidates to succeed Theresa May begins. Meanwhile, the Commons did not pass (309 votes against, 298 in favor) the Labor motion that would have banned Brexit without an agreement with Brussels.
Frankfurt (-0,36%) is the scene of the most important takeover bid in the history of European publishing. Private equity firm KKR has announced the launch of a 6,8 billion euro offer on Axel Springer, the group that publishes, among others, Bild, Die Welt, Politico and Business Insider. Stocks rallied 11,52%. The main shareholders, including Springer's widow, will remain in the company's capital after the delisting which, said Frau Doepfner, "will allow us to be freer".
FITCH WARNS AGAINST MINIBOTS
Milan, in the red for the second time in June, fell by 0,71%, to 20.463 basis points.
Fitch's warning arrived on time and, pending the rating update scheduled for 9 August, he warned the yellow-green government that further expansionary measures at the budget level would put the sovereign rating under pressure. The possible "large-scale use" of tools such as minibots is also being targeted.
It must be said that, judging by the popularity of "classic" government bonds on the markets, the bizarre hypothesis of launching an autarkic charter seems truly absurd.
BOOM OF OFFERS FOR 20-YEAR BTPs
Yesterday, taking advantage of the hunger for yield of managers from all over the world who are trying to neutralize the probable drop in rates, the Treasury placed a 20-year BTP by issuing bonds for 6 billion euros. The sustained demand, with requests for over 24 billion, made it possible to lower the yield by 4 basis points, initially in the area of 16 basis points above that of the BTP maturing in September 2038. The nominal coupon was set at 3,149%.
On a busy day of issues, Spain placed 6 billion ten-year bonds, against a demand of 31 billion euros.
In yesterday's 12-month BOT auction, 6,5 billion were assigned with a yield down to 0,069%, the lowest in three months, from 0,122% in mid-May.
TODAY IT'S THE TURN OF THE OTHER LONG TITLES
Today the Treasury offers between 5 and 6,5 billion BTPs in three, 7 and 15 years, together with an off-the-run maturing in December 2026 with a residual maturity of seven years.
In closing, the spread on the ten-year Bund stood at 267 basis points from 263 at the start and from yesterday's 255 basis points.
The ten-year rate is in the 2,43% area, compared to 2,39% at the start and after closing at 2,32% the previous session.
Meanwhile, medium-term inflation expectations in the euro area fall to historic lows, at 1,18%, far from the ECB's target of 2%.
EU COMMISSION, ITALY SIDES WITH FRANCE
"We will do everything in our mandate, if the economy were to slow down, we will do more, we have the appropriate operational tools to achieve the inflation objectives". Word of François Villeroy de Galhau, governor of the Banque de France and candidate to succeed Mario Draghi. Reuters writes this morning that Italy would be ready to support a French candidate to lead the ECB. In exchange, Paris would undertake to support Italy's request to have its own representative on the executive council, following the departure of Mario Draghi.
SENARD: FCA, THE BEST DEAL OF MY LIFE
To follow today in Piazza Affari Fiat Chrysler, yesterday -1,4%, after the latest developments in the Renault-Nissan match. “Rarely in my life have I had the opportunity to come across such a well thought-out merger with so many opportunities”. Jean Dominique Sénard, president of Renault, commented as follows before the shareholders, the agreement with Fiat Chrysler vanished, he added, due to the request of the minister of industry Le Maire for a postponement pending an agreement with Nissan. “I tell you frankly – added Sénard – this choice has deeply saddened me”. The president's words, confirmed by the assembly with a 90% majority, suggest that Renault (starting from the public shareholder) has not given up on the merger. But, at this point, the game moves to Tokyo, where the assembly of Nissan will be held on June 25, which promises to be very hard-fought. Sénard is ready to support Saikawa's reappointment in exchange for guarantees on the role of the French.
THE SPREAD HOLDS BACK THE BANKS, MANEUVERS ON THE NETWORK
In Piazza Affari, in addition to the drop in oil prices, the bank setback weighed against the increase in the spread. They accused losses of more than 2% Unicredit, Banco Bpm and Ubi. Intesa Sanpaolo also closed in the red (-1,04%). The CEO Carlo Messina, with regard to the infringement procedure, said yesterday that “it must be absolutely avoided. Not so much because the bad EU commission gives us the infringement, but because investors would draw the conclusions that the country is not reliable”.
The maneuvers on the future of the network continue. Tim (-1%) could take over 50% of Open Fiber currently in the hands of Cassa Depositi e Prestiti, at a valuation of 2,5 billion euros, including debt. The buyer would pay by card. But for now Enel +0,6%, which has the other 50%, doesn't fit, because it values Open Fiber three times more. The electric group would be close to renewing the agreements with Algeria for the import of gas.
Italgas decreased slightly (-0,6%) after the presentation of the business plan in London. The company expects to invest 4,5 billion euros over the industrial plan to 2025 announced this morning, the previous plan contemplated four. The company will allocate 500 million euros to the methane supply of Sardinia. No news on the dividend.
VACCHI SPOSA GIMA AND IMA: "INCREASING EARNINGS FOR 2019"
Also noteworthy are the disputed terms of the merger between Gima TT (+6,4%) and Ima (-1%). The boards of directors of the two companies approved the merger plan by incorporation of Gima TT into the parent company Ima, which had taken it to the Stock Exchange at the end of 2017 at a price of 12,5 euros. The exchange ratio was determined as 11,4 Ima shares for every 100 Gima TT shares. The terms of the transaction provide for only a premium of 8,5% compared to yesterday's price, equal to 7,74 euros: the minority shareholders who participated in the IPO did not get a good deal. But the patron Alberto Vacchi comforted the shareholders: "significantly increasing profits" are expected for 2019.
