Even Asia joined the rise of the stock markets this morning, after two nightmare days. A technical rebound or a signal that the worst is over? The situation remains at high risk and the damages of Brexit promise to be serious and long-lasting, as Mario Draghi said (a drop in GDP of around half a point over the next three years). But, the most optimistic hope, the first measures to stop the banking crisis at the center of the talks in Brussels are about to see the light. Pending confirmations, however, the markets breathe a big sigh of relief.
The situation tends to stabilize both on the stock exchanges and on the currency and commodity markets. In Tokyo, the Nikkei index, the least exposed to the crisis in recent days, rose by 1,4%. Sidney and Hong Kong are also on the rise, driven by the stocks most exposed to the British economy. The renmimbi also recovered, after two days of sharp decline against the dollar.
Wall Street was also in great shape, which yesterday experienced its most lively session in the last three months: Standard & Poor's +1,78%, Dow Jones +1,57%, Nasdaq even better (+2,12%), pushed from the rise of Gilead (+5,2%): the Californian biotech company obtained approval from the US authorities for the use of one of its drugs in the treatment of all forms of hepatitis C. Data on consumer confidence confirm that the recovery continues: Brexit, overseas, is less scary.
MILAN LEADS THE REVIVAL. GOOD TLC AND INSURANCE
In Europe, the recovery started from Milan, the stock exchange most affected since last Friday. In Piazza Affari, the FtseMib index rose by 3,3% to 15.602 points after reaching a maximum of 15.799 points. Great recovery also in London (+2,64%), Paris (+2,61%), Frankfurt (+1,93%) and Madrid (+2,39%). In Europe, the best sector is that of insurance (Stoxx of the sector +3,5%) together with telecommunications (+3,5%) and utilities (+3,2%). At Piazza Affari Telecom Italia gained 5,2%.
The debt securities market is also improving: the Btp/Bund spread fell to 144 points, to its lowest level after Brexit. The Treasury placed 6 billion 6-month BOTs with a yield of -0,150% (up from the previous all-time low in May of -0,262%).
Oil on the rise: Brent rose by 1,5% to 47,8 dollars a barrel, Wti to 47,2 dollars (+1,8%). Gold prices are holding back (-0,7%) at 1.315 dollars/ounce.
STERLING SLIGHTLY RECOVERY, BUND STILL UP
In the evening there was a partial course correction, coinciding with the closing of the first day of the European summit in which David Cameron expressed his hope that "the process of separation will be as constructive as possible". On the contrary, by a very large majority, the European Parliament has asked for "a rapid and coherent implementation of the revocation procedure" of the United Kingdom's membership of the EU.
The pound wiped out all the gain accumulated during the day settling at 1,328 (+0,1%) against the dollar at 1,328. Even the 0,11-year German Bund, which had weakened during the day, rallied at the close with the yield falling again to -XNUMX%.
DRAGONS: BREXIT WILL COST HALF A POINT OF GDP
According to Mario Draghi, European growth could be 0,3-0,5% lower over the next three years. But the real danger, added the ECB president, is that Brexit could trigger a race for competitive devaluations. To avert the risk, the institute has intensified cooperation with other central banks on currency movements and will do everything necessary to ensure price stability. Draghi then underlined the need to address the vulnerabilities of the banking system, "since we can no longer afford" to stand by, without resolving the issue: "It's time to do it".
Pressure from the ECB president could unblock the negotiations between Italy and the Commission. Prime Minister Matteo Renzi, on the sidelines of the EU Council, argued that Italy is having a "strong" discussion with the European Commission about the turbulence that has hit the banks, but there are no specific negotiations in progress. He weighs the boulder of 90 billion in subordinated bonds still in the hands of families, at serious risk in the event of a bail-in if the rules of the Banking Union were applied.
SOROS SHORT SELLS DEUTSCHE BANK, ITALIAN BANKS +3,8%
The banking system remains the weak link in the chain, despite yesterday's robust rebound. The confirmation comes, as usual, from the moves of George Soros, who has targeted Deutsche Bank. The financier announced that he had shorted 0,51% of the bank on Friday, a position he then reduced (with a large profit) to 0,46% on Monday. Even in Piazza Affari the spotlights remain focused on the banks: very strong games, with increases in the morning of more than 8%, end the session with more contained variations. However, the Italian basket closed with an increase of 3,18%.
Among the best, Ubi rose by 9%: the market appreciates the new business plan. Intesa recovers (+4,7%) after two nightmare sessions. The CEO Carlo Messina yesterday anticipated some lines of the new business plan: he will focus on growth, he anticipated, not on cuts. Banco Popolare (+1,8%) finalized the assignment of non-performing leasing credits for a total nominal amount of 53,76 million euro. In evidence Pop.Milano (+5,6%) and Mediobanca (+5,7%).
MontePaschi finished the day with a gain of 1,6%, while Unicredit still closed in negative ground (-1,5%), driven in the morning by the expectation (later disappointed) of the announcement of the new CEO. Pop.Emilia corrects downwards (-2,3%), the bank that defended itself better in the days of the storm. The recovery also involved managed savings starting with Anima (+10,09%) and FinecoBank (+6,45%). Among the insurance companies, Generali rose by 1,5%, Unipol +2,4%.
THE CAR STARTS AGAIN, MEDIOBANCA CUT THE FCA TARGET
The automotive industry is recovering, much harassed in recent days: Cnh (+2,02%) and Ferrari (+1,32%) are on the rise. Brembo flies (+8,02%). Fiat Chrysler also recovered (+1,4%), despite the downgrade of Mediobanca Securities which cut the rating from outperform to neutral and the target price from 10 to 7 euro. Also noteworthy is the strong recovery of Leonardo-Finmeccanica (+7%), sacrificed in recent days due to the strong presence in the United Kingdom.
ENERGY AND UTILITY DRIVING THE UPWARD. SPOTLIGHT ON SNAM TODAY
The rally of the Italian market was supported by the recovery of utilities and the oil & gas sector: Eni rose by 3,2%, Saipem +2,55%, Tenaris +1,08%. Enel (+4,3%) and Terna (+4,5%) are even more brilliant. Snam +3,9% on the eve of the publication of the 2016-2020 strategic plan: one of the most important elements on which analysts and investors will focus their attention will be the fate of Italgas.
