How long will the Macron effect last? The most surprising datum of the affirmation of the founder of "En Marche" in the first round of the French presidential elections, moreover foreseen by all the polls, is precisely the explosion of enthusiasm of all the markets, from Europe to Turkey, up to the new Nasdaq records. A triumph that involved the euro, the government bonds of the Eurozone, and of course the shares. The reason? The victory of Emmanuel Macron, who could become the youngest French head of state ever (Napoleon was a year older when he took over the directorate) has practically eliminated the risk of a collapse of the euro. At this point, the markets are already looking to the June legislative elections to see if the new President's party will have the majority or will have to deal with a coalition of parties to carry out the reforms. But let's leave politics aside. In the eyes of the markets, it counts that:
1) At this point it seems almost certain that after the German elections in September, the "political risk premium" in Europe will decrease, a circumstance that will allow investors to focus on improving the economies of the Eurozone and to take advantage of the discount of the equity markets Europeans compared to those of the United States.
2) Once the French risk premium has dissipated, all eurozone spreads will benefit and, apart from the geopolitical risks that will remain to be monitored, nothing could stop the correction of the overvaluation of the Bund.
3) If the trend is confirmed, it will above all be bank stocks that will gain. The ECB, it is said in the operating rooms, could progressively reduce the purchases of Qe (which will continue until December) and plan a first, timid increase in rates for spring 2018.
TRUMP: CORPORATE TAX WILL DROP FROM 35% TO 15%
Donald Trump could complete the party. On Twitter, the president anticipated that on Wednesday, two days before celebrating the first 100 unmemorable days in the White House, he will announce the lines of the tax reform, the most awaited by Wall Street. According to the Washington Post, tomorrow the President will announce the cut of corporate taxes to 15% from the current 35%. But the move comes just a few days before the deadline for an agreement with Congress on the budget, which is decisive for avoiding a freeze on federal spending. The agreement seems distant also because Trump insists on starting work on the wall with Mexico.
In the meantime, Wall Street also celebrated Macron's victory. The Dow Jones index rose by 1,05%, the S&P 500 by 1,08%. The Nasdaq set a new all-time record: +1,24%, at 5.983,82 points.
RAIN OF RESULTS FROM TODAY FOR THE S&P. OIL DOWN
The quarterly reports are also at the center of attention. Between today and Friday, more than 190 S&P 500 companies will release their results, including Alphabet (+1,7%) and Microsoft (+1,4%). In the wake of the European banks, the credit sector stands out (+2,8%). The best performance was that of the medical equipment manufacturer Bard (+20%) after the purchase offer for 24 billion by Becton Dickinson.
Hasbro +5,8%. The second largest toy company in the world (including Monopoly) closed the first quarter of 2017 with an increase of 41% year over year, to 68,6 million dollars.
The market euphoria does not involve oil: US WTI crude fell to 49,23 dollars a barrel (-39 cents). Brent sells 37 cents to 51,59 dollars. The expectations of a strong increase in US production and the great maneuvers of the producing countries weigh heavily. If an OPEC agreement is not reached at the end of May, Russia could increase production.
In Piazza Affari, on the contrary, the Macron effect also involved oil companies: Eni +3% (after the detachment of a coupon of 0,40 euro), Saipem +3%. Little move Tenaris (+0,07%).
The Macron effect also continued this morning on Asian price lists. Tokyo, already up 1,3% yesterday morning, achieved a new increase of 0,8% also thanks to the drop in the yen. The decisions of the Bank of Japan are expected on Thursday. Despite the threats coming from Pyongyang, the Korean stock market was also up (+0,4%). Hong Kong also did well (+0,9%), Shanghai recovered (+0,1%). At an all-time high, Indonesia.
PIAZZA AFFARI AT THE TOP: THE PRICE LIST RETURNED TO THE LEVELS OF JANUARY 2016
For once, the global trend was dictated by the European price lists, which exploded upwards after the victory of Emmanuel Macron erased the nightmare of an irreversible crisis of the euro and of the European Union itself. Euphoria has invested the weakest price lists and those exposed to the consequences of a crisis which, barring surprises on May 7th which no one wants to believe, now seems to have been averted.
Leading the ranking is Piazza Affari (+4,54%). The Ftse Mib index jumped up to 20.694 points, at the levels of January 2016. The coupon detachment of seven stocks in the main basket was absorbed without problems, which had a negative impact of 0,49%.
In Paris (+4,14%) the Cac 40 index reached its maximum since 2008. Madrid is also advancing (+3,78%). Frankfurt follows (+3,37%). Outside the euro area, London is also on the rise (+2,11%). The euro appreciated against the dollar to 1,086 from 1,072. Gold fell sharply, losing over 13 dollars to 1.275,7.
THE SPREAD FALLS TO 183. THURSDAY 8,75 BILLION BTP
On the government bond front, a sell-off was triggered on the ten-year Bund, whose yield rose to 0,33% (+9 basis points). The spread between the German and French 48-year bonds narrowed to 67 basis points, from XNUMX basis points on Friday night.
The Bund Btp spread fell to 183 basis points from the 197 basis points of the previous closure. In the meantime, the Treasury has successfully opened the month-end auctions placing 3,25 billion Ctz and Btpei. Tomorrow it will be the turn of the six-monthly Bots (6 billion). Finally, on Thursday, 8,75 billion of medium-long term bonds will be offered.
ALITALIA: NO WORKERS ON THE FLOOR. HIGH RISK FUTURE
Alitalia may have reached its last flight. The majority of the company's workers rejected the agreement reached with the unions with 6.816 no against 3.206 yes. Thus the receivership and the liquidation of the company are approaching within six months, barring a solution in extremis remedied by the government. "Regret and bewilderment for the outcome of the Alitalia referendum which puts the company's recapitalization plan at risk", declared the Minister of Economic Development Carlo Calenda, the Minister of Infrastructure and Transport Graziano Delrio and the Minister of Labor in a joint statement Giuliano Poletti. "At this point the Government's objective, while waiting to understand what the current Alitalia shareholders will decide, will be to minimize costs for Italian citizens and travellers".
UNICREDIT, THE STRONGEST INCREASE EVER
Credit securities were the driving force behind the equity markets: the EuroStoxx index recorded a rise of 7%, the Italian index rose by 9,2%. Kepler-Cheuvreux promoted the European sector to Overweight, justifying the decision with an improving macro picture and with the disappearance of political uncertainties.
Unicredit (+13,2%) achieved the largest daily increase in its history. Record performance also for Ubi Banca (+10,3%), followed by Intesa (+7,9%), Bper Banca (+6,8%), Mediobanca (+5,2%) and Banco Bpm (+7,7, 3,5%). Positive, but less brilliant, the insurance companies: Generali +5,4% and Unipol +XNUMX%.
ENEL IN ORBIT THANKS TO CREDIT SUISSE
After the banks, Enel (+6,2%) was the queen of the session. Credit Suisse analysts have raised the target on the stock to 5,70 euros from the previous 4,80 euros with an opinion confirmed in Outperform. Utilities are undertone, anti-cyclical securities well bought when risk aversion is particularly high. Terna, however, rose by around 2%.
TELECOM AND MEDIASET RUN. JUVE STARTS AGAIN
Strong increase for Telecom Italia (+3,6%). Mediaset (+5,29%) was rewarded by the increase in the target price (to 4,4 from 4,3 euro) by JP Morgan.
Money on Atlantia (+4,29%): Icbpi (neutral, Tp 24,1 euros) appreciated the data on motorway traffic for the first quarter of 2017. On the eve of the Board of Directors' meeting, Stm (+3,29%) rises on the quarterly accounts. Liberum Capital confirmed the buy recommendation and the target price at 17,4 euros. Juventus is back on the run (+3,4%) after the recent achievements. Since the victory in the first leg against Barcelona, the title has risen by around 50%.
