Fasten your seatbelts. A high-voltage crossroads is in sight: meeting of the ECB board while the bail-in syndrome is growing, not only in Italy; sealed British elections, as has probably never happened in the oldest democracy on the planet; last but not least, the testimony of William Comey, former head of the FBI, to Congress, a key step in the fate of Donald Trump's presidency. Do not forget the escalation of the crisis in the Middle East: the rift between Qatar and the leading countries of the Sunni world (Saudi Arabia and Egypt in the lead) comes after the recent visit of the US president, who consolidated the axis with Riyadh. But Qatar is also an ally of Washington which has a large military base there.
Stormy winds are blowing, the most fragile price lists are suffering. It is no coincidence that Piazza Affari is at the bottom of the rankings, again in the crosshairs of speculation. In the midst of so much confusion, few remembered a historic anniversary: on June 5, 1947, the United States gave way to the Marshall Plan, or rather a gigantic transfusion of capital to Europe destroyed by the war.
WALL STREET FLAT, SALES ON APPLE
Awaiting Comey's testimony this morning, the dollar is at its lowest for seven months against the yen (109,85) and the euro (1,127). Gold is at the highs of the last month and a half, trading at 1.284 dollars an ounce, taking advantage of the growing climate of uncertainty. The Tokyo Stock Exchange slows down (-0,5%) under pressure from the strong yen. Sydney also fell (-1,1%) after the central bank left rates unchanged. On the other hand, the Chinese markets were positive: Shanghai +0,3%, Hong Kong +0,1%.
US stock exchange essentially flat, just below last Friday's record values: the Dow Jones loses 0,1%, S&P 500 -0,11%, Nasdaq -0,12%. The Nasdaq rose 1,6% last week for a year-to-date increase of 17%. The S&P500 closed the week up 1%, +8,9% year-to-date.
ALPHABET CROSSES THE THOUSAND DOLLAR BARRIER
The rebound in financials and the energy sector served to offset the decline of Apple (-1%) on the eve of the presentation of new products at Developers Day. The first release of the Home Pod, a home speaker, is eagerly awaited. Better Alphabet, which surpassed the $1.000 barrier for the first time.
Among the pharma companies, Bristol Myers (-4,7%) took a hit: the tests of new products presented at the Chicago oncology conference disappointed.
KEEPING OILS: CRUDE DOWN FOR THE CRISIS IN QATAR
The energy sector rebounds (+0,2%) after last week's losses (-4,3%). The clear drop in oil after the break in the Middle East did not weigh: Brent lost 1,6% to 49,1 dollars/barrel amid fears that the political crisis in the Gulf could jeopardize the agreement on production cuts just renewed.
Saudi Arabia, Bahrain, Egypt and the United Arab Emirates have cut diplomatic ties with Qatar (-8% on the Doha Stock Exchange), accusing the emirate of compromising the security of its neighbors and funding terrorism . The four Arab countries have closed their borders and asked Qatari citizens to leave their territories within two weeks.
Exxon (+0,8%), Chevron +0,12% advances on Wall Street. In Europe Eni drops by 0,6%, Saipem -2,1%. Total loses 2,1%.
WEAK EUROPE, THE WORST BUSINESS PLACE
Bearish start of the week for the main European markets on the emotional wave of attacks and geopolitical tensions. The bail-in risk weighs no less in both Italy and Spain. A weak opening is expected again this morning. At 11am the April retail sales data will be out.
The Ftse Mib stops at 20.721 points, bringing up the rear in Europe, with a drop of 0,99%. Madrid does better (-0,19%), despite the collapse of Banco Popular. London falls by 0,29%, better than Paris (-0,66%). Frankfurt, Zurich, Vienna, Athens and Dublin were closed for public holidays.
British Prime Minister Theresa May could win 305 seats in Parliament in Thursday's election, 21 short of a majority of 326, according to a projection by polling firm YouGov.
On the macro front, the final Eurozone composite PMI for May stood at 56,8 points, in line with the previous and preliminary data. The Italian index slows down from 56,2 in April to 55,1 but still remains solid.
IMF PROPOSES A COMPROMISE ON GREECE
IMF managing director Christine Lagarde has proposed a compromise on Greek debt. Lagarde suggests agreeing on an agreement that allows the IMF to participate in the bailout, as requested by Berlin, but not to pay further aid until the debt relief measures are clarified. The compromise would allow the ministers of the euro area to give the green light to the next payment of the tranche of aid at their meeting on June 15, Lagarde argued in an interview with the newspaper "Handelsblatt". Greece has about 7 billion euros of debt due in July that it will not be able to service if it does not get new aid under the bailout programme.
BTP STILL IN LIVE. LONG DEADLINES SUFFER
Weak closure for the debt market: thanks to the light volumes due to the closure of the German market for holidays, the yield differential between BTPs and Bunds on the 10-year segment stands at 199 basis points from 200 on Friday, after a peak at 201 points, the highest since the beginning of May, while the 2,28-year rate drops to 2,26% from XNUMX% at the last closing.
Long-term bonds suffered from the hypotheses of the launch of new 30-year and 10-year bonds via syndicate by Italy and Spain respectively. Three days after the ECB meeting, Reuters drew a map of eurozone government bonds with negative yields and below -0,4% of marginal deposits with the ECB. Out of the total of around €7.300 trillion of government bonds in the eurozone, around €3.300 trillion had a yield below zero at the end of May, i.e. a share of 46%, up from 44% at the end of April. 27% pay less than 0,4%, i.e. what it costs the banks to park the funds at the price of the European central bank.
Week of exams for Italian finance. The annual mission of the Monetary Fund has begun, led by Carlo Cottarelli, which this year is concentrated on the issue of impaired bank loans. All while awaiting the new Moody's rating scheduled for next Friday.
SINKS THE POPULAR BANK. ITALIAN BANKS IN RED
Meanwhile, the bail-in risk remains the most immediate and dangerous threat to the Italian market. For the moment, a solution for the Veneto banks has not materialized on the horizon: raising a billion from private individuals is a mission impossible, a compromise with Brussels and Frankfurt as well. Italy is asking for a halving of the sum that private individuals have to invest in the operation, set for the moment at 1,25 billion euros.
The Ministry of the Economy could propose a bank rescue formula that provides for the issue of approximately one billion euros of convertible bonds, a route already used in Portugal for the Caixa General de Depòsitos with the issue of 0,9 billion euros of additional Tier 1 bonds in favor of private investors.
The news from Spain is making the situation worse. In Madrid there was a new fall of Banco Popular yesterday (-18%), after the fall of 17% on Friday. Investor fears about a possible bail-in are causing the lender's shares to plummet. The statements of the president of Banco Popular, Emilio Saracho (“We are solvent and we have positive capital”), failed to reassure the market, after the Bank avoided the bail-out with public money, but failed to solve its problems with the two capital increases that made it possible to raise 3,2 billion in 2012 and 2,8 billion in 2016, which have already gone up in smoke. The strategy of the new management aims to find a buyer. A meeting with the ECB is scheduled for today to take stock of the situation and, according to the Bloomberg agency, it is possible that Banco Popular will make a request for emergency liquidity.
However, it was only the Italian sector that paid the price for the crisis, in contrast with Europe. The Italian banking sector index lost 1,43%, while at the European level it marks +0,09%. All the leading stocks closed in the red: Unicredit lost 1,4%, Intesa -1,3%, Banco Bpm -2,7%, Ubi -1%, Mediobanca -0,8%. Insurance companies also fell: Generali -1,4%, Unipol -1,6%.
MEDIASET UNDER FIRE WAITING FOR BOLLORÉ'S MOVES
Mediaset was the worst stock on the main list, with a drop of 3,51%. According to Bloomberg reports, Vivendi will appeal against the Agcom resolution which requires the French group to present a plan to reduce its stake in Mediaset or Telecom Italia within 18 months by 12 June. According to rumors, Vincent Bolloré's company will propose to AgCom to freeze its voting rights in Mediaset below 10% within 12 months and as anticipated by its president Bolloré, waiting to reopen the dialogue with the Berlusconi family . Telecom also fell (-0,9%).
INDUSTRY, ONLY BREMBO GOES UP
In the rest of the main basket, Enel (-0,3%) and the other utilities fell: A2A -1,4%, Snam -1,2%. Widespread declines among industrial stocks: Fiat Chrysler -0,8%, Leonardo -0,7%, StM unchanged, Prysmian -1,5%. The exception is Brembo (+1,3%), the only positive stock on the list. The sharpest decline is recorded by Recordati (-3,1%).
FINCANTIERI, WEIGHTS THE DUEL WITH MACRON
Among other stocks of note, Fincantieri lost 2,34% on uncertainty surrounding the Stx France deal. The ministers of Economy and Economic Development, Pier Carlo Padoan and Carlo Calenda, met the French Minister of Economy Bruno Le Maire yesterday.
Leap forward for Maire Tecnimont (+6,4%), which on Friday announced a maxi-contract worth 3,9 billion euros to build a gas processing plant on behalf of Gazprom.
The Stock Exchange punished Juventus (-11%) after the defeat against Real Madrid. Pininfarina's capital increase (26,5 million euros) will start on June 12 and end on June 30, while the option rights will be negotiable until June 26.
