The expectations of the European markets reversed like a boomerang when it emerged that the measures taken by Mario Draghi, while expansive, were much more cautious than the hopes that the ECB itself had nurtured.
Meanwhile, almost simultaneously, Janet Yellen stated in her hearing in the United States Congress that "we are approaching the moment when it will be possible to raise the cost of money". A challenging statement made even before the release of the November employment data, today's most important event.
BAGS AND BTP IN RED THIS MORNING TOO. LIVE OIL
The combination of central bank moves has produced this concoction. A violent rise of the euro which soared and in a few hours gained 2,9% against the dollar reaching 1,092, from 1,061 at the previous close.
Government bond rates rose significantly. The yield on the 10-year BTP moved to 1,62% from 1,40% on Wednesday. The spread with the Bund moved little to 96 basis points from 92. The yield on the 10-year Treasury Bill was also up: +10 basis points, to 2,28%, on the levels of three weeks ago. New high since 2010 for the two-year period at 0,98% (+2 basis points).
European stock markets are down sharply. In Piazza Affari, the FtseMib index fell by 2,4%, the stock exchanges in Paris and Frankfurt even lost 3,5%. Futures anticipate new declines at the opening this morning. London -43 points to 6.232. Paris -40 to 4.690, in Frankfurt the Dax - 86 bp remains below 11 thousand (10.703).
Wall Street is also in negative territory, which experienced its worst session since September 28th. The Dow Jones lost 1.42, the S&P 500 1,44%. Worse was the Nasdaq -1,67%. Oil, on the other hand, rebounds in the face of the weakness of the dollar: Brent is once again close to 44 dollars. Today at the OPEC summit, Saudi Arabia could propose cutting production by 1 million barrels, subject however to the adhesion of some countries outside the cartel such as Russia and Mexico.
Asian stock exchanges also closed the week in deep red. Tokyo loses 2,3%, Hong Kong 1.1%. Shanghai retreats 1,2%
DRAGONS SIZE BUT NOT ENOUGH. AND INFLATION IS DOWN AGAIN
Is the disappointment of the European Stock Exchanges justified? In part yes, if we consider the expectations raised by Draghi's advances of "doing everything necessary to beat inflation" which had led to think of extreme moves, capable of causing parity between the euro and the dollar in the short term.
With a cool head, however, the package voted by the ECB it is not contemptible, given the strong opposition of the Bundesbank. The measures, according to the governor of the Bundesbank Jens Weidmann, were not necessary "as the new estimates published by the staff of the central bank do not raise new concerns".
However, the ECB resolved to:
1) Lower the rate at which it remunerates the capital that banks park at its branches. The rate, which was already negative, fell from -0,2% to -0,3%.
2) The bond purchase plan is confirmed at 60 billion euros per month and will remain in force until at least March 2017, six months more than the previous indication. Overall QE is thus brought to around 1.460 billion euros, 360 billion euros more than in the first announcement.
The Central Bank confirmed the 2016 GDP growth estimates for the Eurozone (+1,7%), and slightly revised upwards that of 2017 (+1,9% from +1,8%). A restart of inflation is not seen on the horizon: for 2015 the ECB estimates remain unchanged at +0,1%, for 2016 they drop to +1% from +1,1%. It is the second time since the beginning of the year that estimates on consumer prices have been lowered.
POPULARS UNDER FIRE, ONLY MEDIOBANCA HOLDS
In the banking sector, only Mediobanca holds (-0,6%) supported by the acquisition of the Italian retail network of Barclays by the subsidiary Chebanca!. Unicredit closes at -2,38% at 5,37 euros. The rating agency Standard & Poor's confirmed the group's long-term debt rating at BBB- and at A3 in the short term. The outlook remains stable.
Agreement -2,91%, Monte Paschi -2,6%. The losses of Banco Popolare (-4,3%), Ubi (-3,3%) and Bper (-3%) were even heavier.
RATES PUSH SNAM. GAS IMPORTS WEIGHT ON ENI
The utilities went against the trend after the regulator published the final decisions on the remuneration of the weighted average cost of capital for the energy network. After the decision, many analysts raised their target prices on stocks. Snam closed up by 3,50% at 4,9260 euros, exceeding the threshold of 5 euros during the session (Kepler Chevreux's new target price) for the first time in its history.
Terna is also progressing (+0,64%). Citigroup has raised its target price to 5,5 euros. Eni, on the other hand, fell (-3,5%) despite the rebound in crude oil. The long-term gas contracts with Russia, Algeria and Norway "make no sense", cost Eni hundreds of millions in losses, and therefore everything will be done to change them. This was stated by the managing director Claudio Descalzi, speaking at a conference on gas in Confindustria.
“If I could, I would immediately get out of long-term contracts that make us lose hundreds of millions, they make no sense. That the Russians, Algerians and Norwegians come to sell their gas in Italy. I will only buy equity, what I produce,” said the manager. Descalzi then explained that "with oil at 45 dollars, ENI is not rich, and therefore I will do everything I can do to change these long-term contracts".
CAMPARI AND LUXOTTICA THE WORST BLUE CHIPS
On the other hand, the stocks of luxury goods and consumer goods penalized by the rush of the euro dropped sharply. Luxottica loses 4,3%, second worst blue chip in Piazza Affari. In fact, Campari is doing worse (-5%) which is also affected by the "underweight" judgment with which JP Morgan started hedging with a target price of 7,5 euros. Yoox, on the other hand, rose (-1,1%), on the wave of Christmas growth in online sales.
MARCHIONNE: FCA ZERO DEBTS IN 2018
Fiat Chrysler closes down by 2,95% at 12,83 euros. In Amsterdam, on the occasion of the meeting which approved the split of FerrariSergio Marchionne said the group is on track to bring net industrial debt close to zero by 2018. The Maranello firm will be listed on the Milan Stock Exchange from January 4.
Heavy losses also for Atantia (-3%) and StM (-2,9%). Among the medium caps, Piaggio should be noted (-0,18%) which is resisting the widespread losses on the market. Kepler Cheuvreux confirmed the buy recommendation and the €2,8 target price on the stock, citing the rebound in registrations in Italy in November.
