After four days at a gallop, the Bull has given itself a break in anticipation of the first big decision by central banks after Brexit. Today the Bank of England board will proceed to cut rates by a quarter of a point (the most likely option) to tackle the risk of recession. The choice, which coincides with the first day in Downing Street of new prime minister Theresa May, will have a great impact on the markets: beyond the immediate effects on London, because the move will also serve to understand the orientations of the Fed and other central banks, now prisoners of cheap money: in October 2008, British rates they were at 5% and then fell, at the height of the great crisis, in 2009, to 0,5%. Today it goes down again.
SPOTLIGHT ON JP MORGAN'S QUARTERLY
Waiting for a decision to finally arrive on the measures to be adopted for European banks (not just Italian ones), the attention of the markets will focus today on Wall Street. With the publication of JP Morgan's quarterly, the US quarterly season will come into full swing. Forecasts speak of an average drop in profits of around 5%, but the markets are also expecting positive signs on the recovery front, as evidenced by the stability of the Stock Exchanges at their highs.
The US markets, despite slowing down, allow themselves new records. Both the Dow Jones (+0,13% to 18.372,12 points) and the S&P (+0,01% to 2.152,43) updated their recent records. The Nasdaq (-0,34%) is still above 5 thousand (5.005,73).
The prices hold despite the sudden slide in oil, overwhelmed by a wave of sales: the WTI lost 4,4%, to 44,75 dollars a barrel, similar to the descent of Brent (this morning it recovered slightly). The decline picked up speed after the publication of the US weekly inventories data. In particular, American shale oil is making a comeback: thanks to technological innovation, the cost of extraction has once again fallen significantly.
TOKYO RISE CONTINUES, CHINA WEAK
The Asian markets also slow down this morning. Tokyo, awaiting the Central Bank's moves (D-Day is set for the 29th), nonetheless scores the fourth consecutive rise (+0,6%), accompanied by a modest drop in the yen. Contrasted by the other Stock Exchanges in the region, with declines of less than 1%. Surprisingly, Malaysia cut rates by a quarter point.
MILAN -1,15%, THE WORST SQUARE. INFLATION -0,4%
After four bullish sessions yesterday the time for profit-taking struck in Europe as well. Piazza Affari has paid the price most of all, closely linked to the crux of the restructuring of the banks. In Milan, the Ftse Mib index lost 1,15%, to 16.528, the worst performance in the Old Continent. In the previous four sessions, the benchmark of Piazza Affari had achieved a gain of almost 9%.
On the macroeconomic front, the inflation data released this morning by Istat also weighed on the Milanese price list, numbers that show how the consumer price index, which stood at -0,4% on an annual basis, continues to travel on values below zero.
However, the other European Stock Exchanges also contrasted: Frankfurt -0,33% and Madrid -0,38%, while Paris resisted (+0,09%). London was also down (-0,15%). The pound lost ground against the dollar, closing at 1,314. In the new government team, Philip Hammond leaves his Foreign Minister seat to become the new Economy Minister in place of George Osborne, while the seat vacated by Hammond is taken by Boris Johnson.
The percentage of Deutsche Boerse shareholders in favor of the merger with the London Stock Exchange exceeded 50% yesterday. LSE controls Borsa Italiana, MTS, Monte Titoli and Cassa di Compensazione e Garanzia. The emergency is not over yet, judging by the performance of some "safe havens". Gold is growing again at 1343 dollars an ounce (+12 dollars).
YIELDS FALLING FOR BUND AND GILT, THREE-YEAR BTP BELOW ZERO
Operators are betting on the domino effect triggered by the drop in British rates. Thus, the yield on German and American government bonds also rose. The 1,47-year T-Bond slips to 4% (-4,038 bp). Germany sold 0,05 billion euros of the new 20-year Bund, the first offered at zero coupon. The stock posted a negative return of XNUMX%. Meanwhile, the British Gilt is once again approaching historic lows. Since January, the UK index-linked bond market has generated a XNUMX% return – a result that no one had predicted.
Full success of the mid-month auction of medium-long term bonds: yesterday the Italian Treasury placed 7,5 billion BTPs at 3, 7, 15 and 20 years, with yields falling and at historic lows on all maturities with the exception of the three-year period (-0,04%). The Italian 1,12-year bond remains close to the recent low of XNUMX%, the lowest level since March last year.
FROM THE BUNDESBANK A BREAKDOWN ON THE BANKS
After Tuesday cleared up, another storm. The ups and downs of statements on the subject of Italian bad debts, so popular these days in Germany, yesterday saw the exit of the hawkish Andreas Dombret, member of the board of the Bundesbank, who warned that Brexit "cannot become the excuse for dribble the rules on financial stability that we have recently introduced in Europe”. Dombret is responsible for banking supervision. Another halt came directly from the ECB: for Ignazio Angeloni, one of the supervisors of the banks, the existing rules, including the bail in, "should not be suspended but rather applied in their entirety".
MPS, THE ATLANTE-JP MORGAN SOLUTION IS NEAR
The braking coming from Brussels (and Frankfurt) did not prevent Monte Paschi from taking a new, significant step forward: +6% to 0,33 euro, the best blue chip of the day. Among not a few difficulties, the securitization of non-performing loans with a nominal value of 10 billion on which a form of state guarantee could be applied is looming. The operation will be led by a new Atlante fund dedicated solely to the purchase of NPLs, in alliance with the Cassa Depositi e Prestiti and the Asset Management Company (Sga).
The presence of private shareholders is essential because the mere contribution of public contributors would make the action of the new fund state aid. The operation could thus also involve JP Morgan, which should take care of both the general structure of the operation and the placement of the securities to investors. Mediobanca, which is looking for other investors, could be chosen as financial advisor. The plan should have received the unofficial endorsement of Angela Merkel, willing to tolerate an exception to the general architecture of the Banking Union.
Difficulties for the other banks, which, with the exception of Carige (+4,2%), retraced after Tuesday's strong progress.
IS UNICREDIT HOLDING DOWN TOWARDS THE SALE OF A STAKE IN Türkiye?
Unicredit closed down 3,8% following the sale of 10% of the Polish subsidiary Pekao, an operation which adds to the sale of the stake in Fineco. But the market is already wondering about Jean-Pierre Mustier's next moves. According to JP Morgan, the sale of a 10% stake in Turkey's Yapi Kredi "could generate 17 basis points" to be used to strengthen Cet1, while generating a 5% reduction in earnings per share. The losses of the other institutions were heavier: Banco Popolare -6,6%, Ubi Banca -6%, Banca Popolare dell'Emilia Romagna -5%.
LEONARDO DOWN, THE SAIPEM RALLY CONTINUES
Leonardo closed with a loss among industrialists (-1,7%), despite the flow of positive news on the many orders announced during the Farnborough Air Show. Last among these is the agreement, through the German subsidiary Selex Es, with the Canadian Government for the supply of a national network of meteorological radars to Environment and Climate Change Canada, the agency for environmental protection policies and programmes. Banca Imi (buy) and Mediobanca Securities (outperform) confirm their positive view on the stock.
Stm slightly down (-0,37%): Liberum Capital has raised the recommendation from hold to buy, with the target price rising from 6,5 to 7 euros. Setbacks also for Fiat Chrysler (-1,75%) and Ferrari (-2,40%). In Piazza Affari Eni lost 1,2%. The sharp slowdown in Brent (-4,5% to 46,30 dollars) did not prevent Saipem from making the fifth rise in a row (+2,6%). Analysts' consensus on the stock has improved: out of 29 experts surveyed by Bloomberg, the number of those recommending the purchase has risen to 8. Average target at 0,41 euro.
THUD OF TELECOM, FLIP OF EI TOWERS
The collapse of Telecom Italia (-5% to 0,6590 euro), after the +4,5% on Tuesday, should be noted. Moody's confirmed the BA1 rating with a negative outlook. The French broker Oddo cut the recommendation from Buy to Reduce (lighten), lowering the target price to 0,52 euros from 1,20 euros. This is the lowest judgment since analysts began following the company in 2011. A prudent judgment also for Barclays, which reiterated its Underperform with a confirmed target price of 0,74 euros.
Mediaset also fell (-1,87%): Mediobanca Securities lowered its target price to 4,54 from 5,13 euro, however confirming the outperform recommendation. Conversely, Ei Towers closed sharply (+6,3%): analysts at Mediobanca Securities expect revenues to grow by 5% year on year for the quarter and +13% in Ebitda to 31 million euro.
ZANETTI (COFFEE) SHOPPING IN PORTUGAL
M. Zanetti (+0,26%) should be noted on the rest of the list. Exane confirmed the neutral recommendation and the target price of 8 euros after the acquisition of Nutricafes, one of the main players in the Portuguese coffee market. Luxury is up after the positive indications on revenues from Burberry: Ferragamo +2,4%, Luxottica +3,04%.
RCS DUEL: NEXTAM SIDES WITH CAIRO
The duel on RCS continues on and off the stock market (+0,25% to 0,99 euros). In terms of numbers, adhesions to the offer of Hmm (Investindustrial, Diego Della Valle, Mediobanca, Pirelli and UnipolSai) were equal to 3,94% of the shares involved in the offer, which corresponds to 3,047% of the share capital of Rcs. The consortium, already the direct owner of 24,77%, requested "adequate and exhaustive information" from the market on the 9,43% acceptances of Urbano Cairo's takeover bid (the doubt concerns whether Intesa's share has already been counted). The Piedmontese publisher's offer reached 11,29% of the share capital.
In the evening, Nextam Partners and the Antares funds joined the takeover bid (approximately 3%), accompanied by the motivation of the manager Nicola Ricolfi: "I decided to accept the offer promoted by Cairo not so much on the basis of the two competing plans – in these cases there is never a shortage of plans to increase revenues and reduce costs, which delight consultants but very rarely that of investors – but rather on the basis of the probability that they will actually be implemented. And here I was guided by an elementary observation: the previous shareholding structure of RCS, partly reflected in the current one of Imh, delivered to the shareholders an average annual return of -24%. I would say bordering on financial sadism. In the last ten years, however, Cairo's shareholders have achieved an average annual return of +10%”.
