Kim's missiles? They are scary but not too much, also because the Pyongyang radio was vague in announcing the outcome of the launch, fueling the suspicion that something did not work properly. Trump's tone, on a mission to Texas devastated by the hurricane, then left no doubts: "Every option is open".
The catastrophe in Houston, the fourth largest city in the United States and home to 125 companies in the S&P500 index, has "a local dimension", according to the prevailing opinion on Wall Street, which is already thinking of profits for reconstruction. Meanwhile, today, presidential adviser Gary Cohn and Treasury Secretary Stephen Mnuchin will relaunch tax reform, the president's last card to regain credit. And so the markets, comforted among other things by the good data on American confidence, seem to have already absorbed the bad news.
On the Asian price lists, close to the epicenter of the geopolitical crisis, moods turn to the beautiful. All indexes are positive. In Tokyo, one hour after the close, the Nikkei index gains 0,55%. The Seoul Stock Exchange also recovered (+0,1%), Sydney stable. Positive Shanghai (+0,2%) and Hong Kong (+0,7%).
GOLD DOWN TO 1307, NASDAQ AND DOW JONES +0,3%
The dollar gained a few positions: +0,5% against the yen (109,78) and against the Swiss franc (0,9550), still at record levels. This morning the euro slipped below 1,20 (1,1970 after a high of 1,2069, the highest since January 2015). Markets are increasingly convinced that the Fed will forego another rate hike in 2017.
Gold, after having touched a peak at 1,325,94 dollars, retreats to 1307,80. However, the yellow metal has gained 8,6% since the beginning of July, when the first rumors spread about Janet Yellen's exit from the Fed in February.
After a start in the deep red (-100 points for the Dow Jones at the beginning) the American lists have recovered positions, thanks in particular to the push of the technological ones. The indices thus closed in positive ground: Dow Jones +0,26%, S&P500 +0,08, Nasdaq +0,3%.
Under pressure are insurance companies (-0,6%, to a two-month low). The damage caused by Harvey could amount to up to 100 billion dollars according to an initial calculation.
22,5 billion wedding in the aeronautical sector. United Technologies (+2,9%) is in talks with Rockwell Collins (+2,2%) to create the industry's number one supplier to both Boeing and Airbus.
Nike slips (-1,9%) after Morgna Stanley cut the target to $64 (-3). Thump also for Best Buy (-11,9%). The company acknowledged that recent progress does not look sustainable in the coming quarters.
OIL IN DECLINE. TENARIS AND SAIPEM SUFFER
Wti oil continues to suffer (-1,3% to 45,95 dollars). The spread against Brent (51,60) rose to almost 6 dollars, the highest for two years. Tenaris suffers: -1,34% to 11,07 dollars, on the lows since May 2016, expanding the loss since the beginning of the year to -35%.
The group closed several plants in Texas as a result of the impact of Hurricane Harvey. In particular, all the plants in Houston, Freeport and Bay City are closed. Tenaris "asked all employees to take precautions and stay off the streets". Little move Eni (-0,15%), sharp decline Saipem (-3,66%).
Saras was one of the best performers with a gain of 2% to €1,98. The stock of the refining company benefits from the forced closure of some plants in Texas following Hurricane Harvey, which caused a temporary decrease in global refining capacity. Refining margins in the Med area remain at high levels and at their highest levels for the year.
However, the underlying picture of the sector remains complex above all due to the growing tensions in Libya, Iraq and Nigeria, which could cause some supply difficulties for European refineries.
EUROPEAN FUTURES IN RECOVERY, MERKEL FOR A NEW EU GOVERNANCE
The sales affected all the main European stock exchanges, which however partially recovered in the end compared to the lows of the session. Futures anticipate a start up 0,4%. At the bottom of yesterday's ranking is Milan: in Piazza Affari the Ftse Mib closed down by 1,46%, at 21.406, with declines for all 40 stocks in the main basket. The losses of the Star index were more contained (-0,64%).
Similar decrease for Frankfurt (-1,46%). The strength of the euro canceled out the effect of German consumer confidence, which grew more than expected, to its highest level since October 2001. Angela Merkel, in a press conference, said she was in favor of a finance minister of the eurozone and the proposal to transform the ESM (the European stability mechanism) into a sort of monetary fund for the countries of the euro area. The German chancellor added that she is in favor of creating a budget for the euro, "but not hundreds of millions, but small amounts to start making reforms when there is no margin due to the Stability Pact and growth".
Paris also closed in the red (-0,94%). France's GDP grew by 0,5% in the second quarter, in line with expectations. This is the third consecutive quarter of growth. Madrid was also down (-0,57%). According to the Expansion newspaper, the Spanish group Acs is probing the willingness of some Chinese funds based in Hong Kong to join the offer on Abertis to counter that of Atlantia (-1,30%). The article mentions Ying Zhan Investment Limited which bought Urbaser from ACS last year. Outside the euro area, London loses 0,87%, Zurich -0,57%.
THE SPREAD AT 174, THE MEDIUM-LONG-TERM AUCTION TODAY
The Italian secondary closed flat, recovering the decline linked to the climate of risk aversion triggered by geopolitical tensions, on the eve of the medium/long-term auctions. The yield differential between the BTP and the Bund on the 10-year segment stood at 174 basis points, up from 172 at the end of the session but down from the day's high of 178 points. The ten-year rate fell slightly to 12,07% from 2,08% at the last closing, after a peak of 2,10% in the session. The medium-long auction will be held today, the first since the end of July. The Treasury will offer up to 7,25 billion in 5- and 10-year BTPs and Ccteu.
In the final session, the yield on the five-year August 2022 auction today was worth 0,89%, a fractional increase compared to the 0,88% of the placement in July and that of the ten-year August 2027 stood at 2,14%, down from 2,16% of the last auction. Yield rose yesterday to the highest since April in the six-monthly Bot auction. The Treasury has placed the expected 6 billion euros against the 6,15 billion due. Portugal will today carry out an exchange operation in which it will offer government bonds maturing October 2022 against the repurchase of bonds maturing June 2018, June 2019 and June 2020.
MEDIASET UNDER FIRE, TELECOM DOWN TOO
The black shirt of Piazza Affari is the turn of Mediaset (-3,6%) . The securities of the sector (the second worst in Europe) were penalized by the slide of the German Prosiebensat (-14,7%) after yet another warning on the trend of advertising sales, seen as weak in the third quarter. The collapse of the Spanish subsidiary Mediaset Espana also weighs heavily, as it lacks the support of the treasury share buyback program that has just been completed.
Telecom Italia also fell sharply (-2,7%). The absence of news on the fronts that could create value weighs heavily, starting from the spin-off hypothesis of the network. Bernstein lowered the rating to "neutral".
HARVEY WEIGHTS ON EXOR'S ACCOUNTS. BRAKING FCA
The drop in the dollar contributes to the slowdown of Fiat Chrysler (-1,53% to 12,24 euros, but the gain is 42% since the beginning of the year). Donald Trump's administration is ready to take the field to stop any advances by Beijing companies, starting with the Great Wall Motor, against Fiat Chrysler Automobiles or its US-made brands such as Jeep.
Heavy Exor (-2,6%) on the eve of the quarterly scheduled for tomorrow. The market wondering about the impact of Hurricane Harvey on Partner RE, the reinsurance company which represents 34% of the group's NAV. According to Equita, the negative consequences should be limited, "also because we understand that catastrophic events represent less than 10% of the reinsurance company's portfolio". For another leading Italian broker, the cost per Partner RE would be equivalent to around 3% of Exor's current market capitalization, with negative implications in the short term on the payment of dividends by Partner RE to the controlling holding.
FINANCE, HEAVY BANK GENERALS AND SOUL
The Italian banking sector dropped more than 2% against a European sector which lost 1,5%. The stocks that shone in the last few sessions were heavy: Banco Bpm fell by 3,8%. Banca Generali -3,26% . Citigroup has decided to cut the judgment to Sell (sell) with a target price of 26 euros. Anima is down by 2,74% (+30% since the beginning of the year). Citigroup has restarted coverage of the stock with a Neutral rating and a target price of 6,7 euros.
Under pressure Banca Intermobiliare (-9,4%) which reached its lowest level since 19 October last year at 1,13 euro after the incoming offers are said to be lower than forecasts. The sale of Bim and Farbanca should ensure revenues of much less than 150 million euros, a sum that seemed to be the price of the only Turin private bank, listed on the stock exchange.
BANCA IMI PROMOTES ENEL. TODAY THE ACCOUNTS OF CUCINELLI
Enel -0,98%. Banca IMI's analysts have promoted the opinion to Add (accumulate) from Hold. The target price was raised to 5,70 euros from the previous 4,50. Brunello Cucinelli +0,13% in view of today's publication of first half results.
Elica goes against the trend, +3% after operating results better than forecasts and the sale, surprisingly, of the loss-making German subsidiary. According to Equita, "the good momentum and the review of the portfolio deserve a 15% increase in the target price" to 2,2 euros.
