DOLLAR SUPERSTAR, EUROPEAN BANKS UNDER STRESS. MARCHIONNE PUSHES FCA WITH A FERRARI ENGINE
The dollar flies to a three-week high at 1,2624 against the euro and 109,12 against the yen. Tokyo rises +0,5%, increasingly dependent on the exchange rate with the US currency. The other Asian lists are down, more sensitive to funding from the USA.
Jakarta -0,5 and South Korea -0,6% fell in particular, together with local currencies. Hong Kong -0,2%. The Brazilian central bank, on the other hand, unexpectedly raised rates to 11,25%, the highest in the last three years. This was the first response of the markets to the expected conclusion of the QE, i.e. the securities purchase program by the Fed. Even Wall Street absorbed the news without any particular trauma: the Dow Jones index dropped by 0,18 %, the S&P 500 about 0,15% and the Nasdaq 0,33%.
MILAN SUFFERS, TODAY THE BTP AUCTION TEST
In Europe it was a day of waiting for the outcome of the Fed summit for most stock markets: London gained 0,8% and Frankfurt 0,2%. Paris little moved. Disturbing signs are emerging on the Eastern front: in the last two days, writes the Financial Times, there have been numerous incursions on NATO territories by Russian planes. The sudden downpour of sales on bank stocks affected Milan -1,6% and Madrid -1,8%.
The spread between the BTP and the Bund fell to 161 basis points and the 2,50-year domestic rate to 6,5%. In the auction, the Treasury filled up with BOTs, placing all the 11,2 billion euros offered, even if demand (0,379 billion) was not exceptionally strong, despite the rise in yields to XNUMX%.
Today the most eagerly awaited appointment, the auction of medium-long term bonds. Good demand is expected but at rising rates. In particular, the Btp 10 should rise to 2,5% (against 2,45% in September), the Btp 5 to 1,27% (from 1,06%).
US JOBS IMPROVE: QE GOODBYE, GDP DATA TODAY
The Federal Reserve has thus decided, after six years of stimuli, to put an end to the purchases of Quantitative Easing to support the economy, already cut to 15 billion a month. And, now reduced to 15 billion a month. The decision was made with nine out of ten members voting in favor, while Minneapolis Fed President Narayana Kocherlakota spoke out against, as he wanted the Fed to continue the program. The latest version of Qe, launched in September 2012, originally envisaged purchases of 85 billion a month. Since last December, the Fed has gradually reduced the amount in seven stages.
No surprises as rates will stay close to zero for “a considerable amount of time”. But the central bank's monetary committee revised the tone of the statement, with a touch of more optimism for employment. In essence, the FOMC underlined the improvements in the labor market, and in the economy in general, played down the decline in inflation expectations, and did not even directly mention the recent volatility on the markets: the increase in the cost of money could be closer than expected.
Today the markets are awaiting the other major appointment of the week: the provisional data of the US GDP for the third quarter which could confirm the recovery of the US economy which emerges from the Fed press release. In the evening there will be a speech by Janet Yellen.
FCA SHINES, MARCHIONNE HAS THE MONEY TO INVEST
Fireworks were in the spotlight yesterday, in Milan as well as on Wall Street Fiat Chrysler Automobiles +12,8% to 8,60 euros after the announcement of the spin-off of Ferrari, the distribution of Ferrari shares among FCA shareholders, except for 10% placed among investors in view of a listing on Wall Street and "at a other European Stock Exchange”. The launch of a bond convertible into shares (which will benefit from the Ferrari bonus) for an amount of 2,5 billion dollars was also announced. The announced operations will make it possible to raise at least 4 billion euros, destined to finance the investment plan in the new models.
The FCA share, suspended for a long time due to excessive increases, closed at 8,60 euros with an increase of 12,8%. Exor, the first shareholder of FCA (and soon of Ferrari) with 30% gained 7%. According to analysts' accounts, the benefit from the operation is around 1-1,5 euros per share depending on Ferrari's valuation: 5-6 billion according to current estimates, while for Sergio Marchionne the value is higher (in the past he spoke of 10 billion). The not excellent data of the quarter have therefore faded into the background. Ebit amounted to 926 million euros, lower than the 937 million indicated by the consensus of analysts. Revenue beat forecasts, reaching $23,5 billion, versus expectations at $22,2 billion. At the end of September, net industrial debt amounted to 11,3 billion euros. The management confirmed the achievement of the targets envisaged for the whole of 2014, with an Ebit between 3,6 and 4,0 billion euros.
EURO BANKS UNDER FIRE. NEW LANDSLIDE FOR MPS
The pressure on banking stocks in the Eurozone continues: the Stoxx sector index for countries with the common currency drops by 3,28%, against 1,6% for that which also includes countries with other currencies. Sales do not spare even institutes that have passed the test of the European exam well. The feeling is that, once the test phase is over, speculation is emptying wallets. The Italian sector is particularly affected, under stress while waiting for the choices of Monte Paschi and Carige.
Mount Paschi, despite the ban on overdrafts imposed by Consob, suffered its worst loss yesterday: -8,2%. The goal of being alone “must be reconsidered. In spite of myself”, Alessandro Profumo commented yesterday, according to whom “nothing is precluded” on the road to mergers. The other banks are also heavy: Unicredit -4,5% Understanding -3,7% Popular Milan -5,7% Popular Emilia -5,8% Where's Banca -4,7%. Among the insurance UnipolSai -3,2% Generali -1,2%.
STM WORST BLUE CHIP, SAIPEM SINKS
Day of suffering for other blue chips too. The worst performance was that of StM -10% after the profit warning on the fourth quarter outlook. Finmeccanica it lost 3,8%. In free fall Saipem -6%, which on Tuesday revised its outlook for the full year 2014 downwards. Negative assessments rained down: SocGen and Citigroup lowered their recommendations to Sell. Credit Suisse reduced the target price from 15 to 12,2 euros, reiterating the underperform rating, Ubs cut it from 13,5 to 13 euros (sell). And again: Deutsche Bank from 16 to 12,5 euros (sell), Morgan Stanley from 18 to 16,5 euros (equalweight), Canaccord Genuity from 16 to 13 euros (hold), Equita from 20 to 17 euros (hold) and Natixis from 17,6 to 14,4 euros (neutral).
The conference call on the parent company's quarterly data is scheduled for today Eni -0,7%. Lastly, among the utilities, there was a slowdown for A2A -3,2% and Enel Green Power -1,8%. Enel -0,1%.
