Price lists down, euro recovering. The markets are convinced that a season marked by the rise in the cost of money is also imminent in Europe. The first increase, judging by the performance of the interbank market, is expected only for July 2018, after a gradual reduction in tapering. A soft change of course, in the intentions of the bankers, but without yielding. This prediction was comforted by the reading of the declarations of the last three days by Janet Yellen and Mark Carney, as well as the words of Mario Draghi who unleashed the storm, despite the subsequent partial denial.
The feeling is that the central banks have decided that, faced with a weak recovery of economies and inflation, the time has come to close the strategy of extraordinary stimuli, started about 10 years ago by Ben Bernanke to counter the financial crisis global. And so America proceeds on the upward path, Europe, while waiting to liquidate the Qe (necessary to relieve the Italian debt), allows the euro exchange rate to rise which, among other things, will serve to contain tensions with the US in view of the forthcoming G20. The new climate is not helping the stock exchanges, already reprimanded by Janet Yellen, who has returned to criticize the "too high" level of the markets: the Bull has lost its great protectors. The Bear, after hibernation, is ready to leave the den.
TOKYO ARRIVES, THE CHINESE ECONOMY IS GOOD
In this atmosphere, the markets lose momentum. The Japanese Stock Exchange is about to close the last session of the week down by 1,1%. The increase in June is reduced to 1,7%. Hong Kong lost 0,8%, Shanghai 0,2%, despite the comforting data on manufacturing activity: PMI index at 51,7, for the eleventh month in a row above 50 which divides growth and recession. Seoul is also down - 0,3%, although the won is the only Asian currency declining against the dollar. Mumbai – 0,2%.
The US markets are down significantly. The prospect of rate hikes hit technology stocks above all, the main players in the rally at the start of the year. On the other hand, financials and oil rose.
TECH MISSES ON THE IPHONE'S BIRTHDAY
The Nasdaq fell 1,44%, the worst one-day drop in 2017, coming on the heels of the largest one-day rise in the same index in the past eight months. Despite the banks' rally, the Dow Jones lost 0,8%, the largest daily negative change in four weeks. S&P500 -0,9%. The Vix fear index jumped 26% to its mid-May highs. The yield on the 10-year Treasury Bill rose to 2,27% from 2,22% the day before, over the past three days the yield has risen by 15 basis points.
US BANKS WELL, NIKE ACCOUNTS OK
Increasingly weak dollar, this morning it is at 1,144 against the euro, from 1,137 at the end. The dollar index, an index that compares the US currency against its major counterparts, is at its lowest since October. The technology sector fell by 1,8% - Apple is also under pressure -1,4% which today celebrates the tenth anniversary of the birth of the first i Phone. The stock has soared 700% since then.
The best sector was finance, driven by the expectation of a rate hike: JP Morgan advanced by 1,5%, Wells Fargo +2,7%, Citigroup +2,8%. Nike's accounts were announced with the stock market closed: net profits of 1,01 billion dollars, +19% compared to the same period last year.
The Energy sector also rose (+0,1%). Brent oil is on the seventh consecutive day of gains: this morning it traded at 47,7 dollars a barrel (+0,4%). The rise in oil did not help Eni which lost 1,9%. Saipem -1%. Positive Tenaris (+0,8%).
THE EURO AT THE HIGHEST FOR 13 MONTHS CRUSHES EUROPE
The euro rose to a 13-month high against the dollar at 1,142, up from 1,137 last night. The strength of the euro combined with the opposed opening of Wall Street caused the slowdown of the European stock exchanges. Futures anticipate a start down by 0,2%. Milan was no exception: the Ftse Mib index closed down by 1,63% at 20.705 points. More marked reductions in Paris (-1,88%) and Frankfurt (-1,83%). Madrid fell by 1,60%. London damage limits: -0,51%.
The growth of the Italian economy will be strong both this year and in 2018, Economy Minister Pier Carlo Padoan said yesterday. Economic sentiment in the eurozone recorded a better-than-expected improvement in June, climbing to a nearly ten-year high. Driven by the increase in food and services prices, German inflation saw a higher-than-expected trend in June: 1,4% against 1,5% in May.
RATES ON BTPs GO UP. THE NEW XNUMX-YEAR ANNIVERSARY IS AT AUCTION TODAY
The money market sees a probability of around 90% of a tightening of ECB rates by July next year, after the latest comments by Mario Draghi which seem to pave the way for an upward adjustment on the cost of money. This is what emerges from the Interbank market, where the forward rate on the EONIA in July 2018 travels at -0,2713%, about 9 basis points above the spot of -0,3620%, a gap that precisely signals a chance around 90% of an increase in the cost of money.
This signal also contributed to the sales that characterized the bond market yesterday, with BTPs particularly heavy on the eve of the medium-long term auctions which envisage the offer of the new ten-year bond. the yield of the 10-year BTP rose to 2,14% from 2,02% yesterday. The Bund is trading up 0,45% from 0,36%. The spread with the Bund closed at 171 basis points from 166 basis points last night. Also noteworthy is the widening of the Italy/Spain spread, which at the beginning of the week was around 53 basis points and which closed the session at 64 bps.
Adding fuel to the markets' fire was the higher-than-expected rise in German (1,5% vs. 1,4% in May) and Spanish inflation, which could increase political pressure from Berlin to reduce stimulus measures. The words of Bundesbank governor Jens Weidmann go in this direction, who, while agreeing on the appropriateness of an accommodating monetary policy, reaffirmed his right to disagree.
The medium-long term Treasury auction will be held today: up to 8 billion of new paper will be made available, including the new 2027-year BTP August 2,05, coupon 2,22%. On the gray market, yesterday the stock yielded a yield in the XNUMX% area at the close.
GEARBOXES HOLD DOWN CARS, STM AND LUXOTTICA
The effect of the strong euro was felt on the stocks most linked to the US market. Fiat Chrysler, which accounts for 80% of profits in North America, dropped 3%. Sharp decline also for Ferrari (-2,59%). Cnh Industrial did worse (-3,6%). Stm under fire (-2,4%) under the pressure of sales on technology and the drop in the dollar. Heavy reductions also for Leonardo (-3%) and Buzzi (-2,2%).
Luxottica also fell (-2,3%) despite Rbs having raised the target price from 49 to 52 euros, confirming the neutral recommendation. Rbc's opinion also rises: the target price of the stock goes from 50 to 55 euros (rating sector perform). Other luxury stocks are under pressure: Ferragamo -3,1%, Moncler -3%.
EQUITA SINKS TOD'S: THE RECOVERY IS NOT SEE
Tod's sinks (-7,7%) after the cut of Equita: target price at 56,5 euros, reduced recommendation. Revenues in the second quarter, according to the broker, should have fallen by 1% year on year at constant exchange rates: the retail channel recovered slightly, but the wholesale channel worsened. The report states that there is very little evidence of any improvements in the second half of the year, for the moment the market scenario remains negative: e-Commerce continues to grow, sales of traditional clothing stores do not restart. The Ebitda margin for the first half should be 160 basis points lower than a year earlier.
INTESA HOLDS DOWN, THE RALLY OF BANCO BPM AND UBI CONTINUES
Setback of the banking sector after four roaring days on the wave of the reassuring epilogue of the Venetian banks affair. The Italian sector index closed in negative territory -0,98% in contrast with the European one +0,56%. Profits in the final on Unicredit (-1,7%) and Intesa (-1,3%). The US broker Keefe, Bruyette & Woods raised its target to 2,85 euros from 2,65 euros, confirming the Outperform recommendation. Bper -0,54%: the European Commission has approved the sale to the institute of Nuova Carife, one of the four good banks born from the resolution at the end of 2015. But there are positive notes. The rise of Banco Bpm stands out in particular, gaining 3,4%, and that of Ubi +2,3%.
UTILITIES UNDER FIRE, ATLANTIA ALSO DOWN
Utilities are down, held back by fears of rate hikes: Enel -2%, Terna -2,3%, Snam -2,4%. UBS cut its recommendation on the European fund to neutral from overweight as the fund has outperformed the market by around 9% since February. The trend in interest rates also weighed on Atlantia (-1,84%). Baco de Santander has raised the recommendation of the stock to buy from hold, with the target price rising to 28,6 euros from 26,2 euros to take into account the value that could be released from the Abertis operation.
RECORDATI, IMA, FILA: MANY REDUCTIONS. BUT STEFANEL SEES THE LIGHT
Recordati (-2,1%) was the worst stock in the European HealthCare sector, itself down 1,2%. Since the beginning of the year, the company boasts a gain of 33% against the +12% achieved by the sector index.
Im -2,76%. The subsidiary Gima TT (tobacco) presented the request for admissibility to listing on the MTA to Borsa Italiana.
Prelios dropped 7,9% leaving half of the gains (+15%) of Wednesday's session on the ground on the rumors of the sale to the Chinese Cefc. "In relation to these press rumors - reads a note from the company - it should be noted that Prelios is not currently aware of this hypothesized transaction or of any offers or agreements, nor has it maintained any contact with the CEFC group". The note adds that the investment companies Davidson Kempner and Tecnoinvestimenti have expressed interest in evaluating possible transactions with Prelios itself.
Achievements on Fila (-5,43%), protagonist of strong growth thanks also to acquisitions: The Italian group in the color and writing sector closed the first three months of 2017 with revenues of 117,6 million euros, +41,9, 82,9% from the 5,7 million euros. The net result is a profit of 300 million euros compared to the loss of 255,9 thousand euros in the same period a year ago. Debt growing to 223,4 million euros, from 2016 million at the end of XNUMX, but management has announced that the net financial position should improve in the second half of the year.
Fly Stefanel (+23,86%). Monte Paschi and Unicredit also signed the debt restructuring agreement.
