The Draghi effect has spread from Frankfurt to all price lists on the planet. The promise of the president of the ECB to "reconsider and revise" the institute's policy at the next meeting in March to deal with a much worsened situation has heartened operators, who in recent weeks have been deprived of signals from central banks, caught off guard by the crisis of oil.
Tokyo is thus starting to close a very difficult week with an increase of almost 5%. Hong Kong advances by 1,4%, Sydney +1%. Positive, but with less euphoria, the US markets: Dow Jones +0,74%, Nasdaq +0,1%. The S&P 500 index, up 1,6% one hour to the close, trimmed gains to 0,52%.
Meanwhile, George Soros has announced that he has opened short positions on the main index of the US Stock Exchange. Wall Street's caution is bound to have repercussions on European openness. The futures of London, Paris and Frankfurt signal a start in line with the prices of the evening.
38 OUT OF 40 BLUE CHIPS ARRIVE IN MILAN
Draghi's flame has rekindled the engines of the Old Continent stock exchanges. Frankfurt, despite the thud of Deutsche Bank (in the red for 6,7 billion) gained 2%, on a par with Paris. Madrid +1,8%. The reaction of Piazza Affari was much more robust: +4,2%, at the end of the day in which the FtseMib index fluctuated from a maximum of 18.354 points to a minimum of 17.836 points, with a hike of no less than 518 basis points.
The climate of uncertainty continues to push purchases of German Bunds, whose yield has fallen to 0,4840%, and of gold, just below 1.100 dollars an ounce. But Wednesday's alarm on our government bonds has returned: the spread has fallen by 6 basis points to 110, for a 10-year BTP yield of 1,56%.
The upward movement of the list involved 38 of the 40 blue chips that make up the main basket, but was particularly sensitive for the banking sector, supported by statements by Mario Draghi. The president of the ECB guaranteed that the questionnaires forwarded by the European Supervisory Authority to banks (not just Italian ones) are not the antechamber of requests for capital increases or other interventions.
Furthermore, the president of the ECB underlined that “we are aware that the problem of non-performing loans can be resolved over a long period of time, as demonstrated by the case of Ireland” where the return from the Npl accumulated in the 2008/09 crisis has not yet been completed. An indirect response to the attitude of EU Commissioner Margrete Verstagen, firm on the valuation of stranded items at the market realizable price.
THE MONTE GOES INTO ORBIT. RENTI: SOON A PARTNER
After the ordeal of the past few days, Monte Paschi has achieved a stellar performance: +44%, to 0,73 euro from 0,4980 euro, the lowest price in its history, reached on Wednesday. The tension also eased on the subordinated bonds issued by the institute: the yield on the MPS bond maturing September 2020, coupon 5,6%, fell to 12% from the previous peak of around 25%. In the meantime, the bank has decided to bring forward the Board meeting on 28 results by one week, to 2015 January.
Finally, positive signals also arrived yesterday from investors such as Davide Serra of Algebris: "We are starting to invest in bank debt, both senior and subordinated bonds", he declared on the sidelines of the World Economic Forum in Davos.
The support arriving from the executive was much more robust: "Mps 'went through crazy vicissitudes but today it is restored, a beautiful brand", reiterated yesterday the Prime Minister, Matteo Renzi, to 'Porta a Porta', recalling that "at the At the end of a process that will last a few months, the Bank will have to find some partners. Il Monte – he had said previously – is at incredible prices. I think the best solution will be what the market decides. I wish it were Italian but whoever comes will get a great deal”.
Leap from the Guinness Book of Records also for Carige (+29%) after the government's reassurances on the capital solidity of the Italian banking system. Unicredit (+7,9%) and Intesa (+4,9%) are also making a comeback. The Populars recover: Bper +11%, Banco Popolare +10,3%, Ubi +5,7% Bpm +4,4%.
DECISIVE WEEK FOR THE BAD BANK
Meanwhile, the agreement between the Italian government and the European commission on the credit transfer project seems close. The government plan on the Bad Bank foresees that non-performing loans are transferred to private vehicles, set up by the banks themselves in tandem with interested investors, for example funds specialized in the management of distressed assets. The bad banks will have the possibility to buy a public guarantee from the State at market conditions and the transfer price of the credits will fluctuate between 20 and 30% of their nominal value. But the problems are not all overcome.
Margrethe Vestager, EU Commissioner for Competition, has raised the possibility that banks, by selling anomalous loans to corporate vehicles not at market conditions, will in any case face a resolution procedure, with losses for shareholders and holders of subordinated bonds.
SAIPEM SUFFERS, THE INCREASE IS COMING SOON
The only negative note concerns Saipem (-5,68%), which today will communicate the terms of the 3,5 billion capital increase which should start next Monday.
Eni strengthened in the final, closing up by 3% and reaching 12,55 euros. The Eurostoxx Oil & Gas sector index also accelerated by 3,2%.
OIL: MAYBE BOTTOM HAS BEEN TOUCHED
The critical situation of the oil market remains to condition the markets. Crude oil has dropped by 25% since the beginning of 2016. It has lost 2014% since its 115 peak at $75.
Yesterday there was a rebound in prices, despite weekly inventories of crude oil in the United States were up (but less than expected) compared to the previous week: the WTI gained 1,18 dollars to 29,53 dollars a barrel. Prices stable this morning in Asia.
According to Khalid Al Kahli, president of the Saudi giant Aramco, "the collapse in prices is completely irrational". But Riyadh will not lower production.
Faith Birol, president of the IEA, foresees a forthcoming hike. “It is the first time – she points out – that investments have fallen in the sector to this extent”. Therefore, "demand is bound to rise and prices will be under pressure again."
“The old maxim according to which the best remedy to counter low prices are low prices themselves has not stopped working but works, in the first phase, very slowly, except to accelerate over time – ota Alessandro Fugnoli -. Very alert analysts such as Goldman's Currie and Citi's Morse, who correctly predicted the decline, speak of crude oil at higher than current levels already for the end of this year”.
CARS AND TLC IN THE RALLY
The rest of the list is in great turmoil. Mediaset +6% thanks to the Buy of Ubs. Telecom +5%. Good increases also for the Agnelli galaxy: Fiat Chrysler scores +6,37%, while Ferrari rises by 3,59%.
