The European recovery accelerates and Wall Street recovers positions after the crash of a week ago. Surprisingly, the alarm sounds from China. This morning the rating agency Moody's cut the rating of the Dragon to A1 from Aa3. The judgment reflects concern about the progressive slowdown in the growth of the Asian giant's economy, supported only by the increase in debts. The news had an immediate echo on Asian stock markets: Shanghai lost one percentage point, Tokyo dropped by half a point. Australia and the markets more linked to raw materials are also down. But it is, for now, a local crisis, which does not distract the markets' attention from the hottest topics, from Russiagate to terrorism.
FIAT CHRYSLER LEAVES 4% ON THE GROUND IN WALL STREET
The new wave of investigations on the automotive front, which has invested Fiat Chrysler in particular, risks causing more uproar. Yesterday evening it was confirmed that the US Justice Department - on behalf of the Environmental Protection Agency (EPA) - filed a complaint in a federal court in Detroit (Michigan) against the American division of the group led by Sergio Marchionne for having installed, without disclosing, emissions management software on 1500, 2014 and 2015 Jeep Grand Cherokee and Ram 2016 models with three-liter diesel engines sold in the US.
The thesis of US investigators is that almost 104.000 vehicles with three-litre diesel engines have been equipped with software that contains "defeat devices" or special software capable of reducing polluting emissions when the car is subjected to inspection. "If there is a trial, FCA will defend itself vigorously - was the company's reaction - particularly against any accusation that the company has deliberately installed deceptive devices to circumvent the tests".
The market reaction was heavy. The FCA stock, which had come to gain more than 2%, closed in the red (-1,2%) in Milan and then lost 4,13% on Wall Street.
But FCA is not alone in the face of the new wave of investigations that have invested the four-wheeled world. In Germany, the Stuttgart public prosecutor's office ordered the search of various buildings belonging to Daimler (-0,81%) as part of the investigation opened in March against employees of the German automotive group suspected of fraud on polluting emissions from cars. The blanket operation involved 11 group offices. Meanwhile, the French judiciary has presented Volkswagen (-0,4%) with the bill for the dieselgate: Paris is asking for 22 billion.
The auto storm didn't stop Wall Street from closing in positive territory for the third day in a row: the Dow Jones index rose 0,21%, Nasdaq +0,08%. The S&P 500 index (+0,18%) returned to touch 2.400, recovering the losses suffered on Black Wednesday last week.
The administration unveiled its budget proposal: $3.600 trillion in cuts to programs for the poorest, including health care, stipends, college loans, and disability payments. The document proposes a 10% increase in military spending, over 2,6 billion dollars for border security - including 1,6 billion to start the wall with Mexico - a sharp tax cut and 3% GDP growth.
The market paid little attention to the president's intentions, in a crisis of credibility. More attention to the Fed, which today will release the minutes of the FOMC meeting in early May: in the document they will look for any indication of a possible tightening in June, expected by the market.
There are signs of a slowdown in the economy: in April, sales of new homes fell by 11,4% compared to the previous month, against a forecast of -1,8%. There were few surprises from the American PMI indices, substantially in line with forecasts: the composite index, which summarizes the trend of the industrial sector and the services sector, rose to 54 from 53,1 in the previous month, better than the estimates which indicated 53,3. Above 50, the index signals expanding activity, below it signals a slowdown.
Oil moved little after the proposal of the US president, Donald Trump, to sell half of the country's crude reserves. Brent rose to 54,15 dollars a barrel, Wti to 51,47. The expectation for the agreement on cuts between producers that should be signed tomorrow in Vienna prevails for now on Donald Trump's proposal: the White House intends to sell half of the 688 million barrels in storage between 2018 and 2027 for raise $16,5 billion and help balance the budget.
In Piazza Affari Eni closed with a slight drop of 0,2%. Saipem -0,4%.
THE ECONOMIC PUSHES EUROPE, TECHNOLOGISTS AT THE TOP
Positive day for the main European squares on the day following the Manchester massacre. Supporting the bull were the Eurozone's flash PMI data and the Ifo German confidence index, both at six-year highs. We begin to talk about the fate of the European Stability Mechanism. The bailout fund, after helping to stop the debt crisis, could become the first tool for pooling debt. A reform proposal should arrive in the next few days.
Paris and Frankfurt did well, gaining 0,5 and 0,3% respectively, while London closed in substantial parity, at -0,15%. In Piazza Affari, the Ftse Mib index rose to 21.416, in line with the other European stock exchanges at +0,4%. At the continental level, the strongest increases were those of Tech stocks (European Stoxx of the sector +1,3%), of Utilities (+1%) and of Banks (+0,8%).
Tech's rise was led by Nokia, which rose 6,5% after announcing a settlement that ends a legal dispute with Apple. The Finnish company had accused the Cupertino giant of using its patented technologies in the iPhone. Apple has agreed to pay for the use of these technologies. Stm, supplier of Apple and Nokia, gained 0,4%.
BTP, RATES AT THE LOWEST SINCE MARCH. BOOM FOR THE ENEL LOAN
The BTPs strengthened towards the end of the session, digesting the drop linked to the Treasury's announcement of a new exchange operation. In the second exchange operation of the year scheduled for next Thursday, the Treasury withdraws up to 3 billion of the BTP Italia maturing in November 2017 for the maxi amount of 22,4 billion, offering in exchange five BTPs and Ccteu on maturities including between February 2020 and March 2032.
The yield differential between the BTP and the Bund on the 10-year segment stood at 172 basis points after having dropped to 169 basis points, the lowest since the end of January. The ten-year rate closed at 2,11%, a level already seen in recent days but still at its lowest since the beginning of March, from 2,13% at the last closing.
Athens was penalized by the lack of agreement with the Eurogroup on the disbursement of new funds. German Finance Minister Wolfgang Schaeuble said that "hopefully" the agreement can be reached at the next summit in June.
The Treasury announced that in the auction next Friday, May 26, between 3 and 3,5 billion euros of the new CTZ May 2019 and between 750 million and 1,5 billion in total will be offered in the second tranche of the Btpei May 15, 2028 and in the 22nd tranche of 15 September 2041.
Great exploit on the bond market of Enel (+1,1%). The electric company has placed a multi-tranche security intended for institutional investors for a total of 5 billion dollars, approximately 4,5 billion euros. The issue has received requests in excess of about 3 and a half times, totaling orders for an amount exceeding 17 billion dollars, an absolute record for an Italian company.
ON BANCO BPM SHIELDS, INTESA LOOKS AT CHINA
The banking sector was driven by Banco Bpm, which flew to 3 euros with an increase of 5,9%: Barclays promoted the share from equal weight to overweight, with the target price going from 2,9 to 3,3 euros.
Bper closed in substantial parity (+0,04%, at 4,6 euros) on the day it launched a new Tier2-type subordinated bond with a 10-year maturity. Unicredit rose by 0,5%, Ubi +1,6%.
Understanding +0,3%. The CEO Carlo Messina reiterated that in the new industrial plan, which will be presented in the first quarter of 2018, the bank will focus its strategy on wealth management, a sector in which the group wants to strengthen its position in China.
HIGHLIGHTS IN THE INDUSTRY PRYSMIAN
Among the industrial stocks of Piazza Affari, Leonardo (+0,7%), Brembo (+0,1%) and above all Prysmian (+2,5%) rose. Telecom Italia closes down by 1,5%, Mediaset -0,1%.
