The Davos Forum opened with an invitation from Indian premier Barendra Modi to practice yoga, an effective therapy against the risk of war and to combat pollution (in New Delhi the air is more poisonous than that of Beijing). But the call to relax sounds like an opportunity as the risks of a trade war spread: Donald Trump, before embarking for the Swiss Alps, endorsed tariffs on Chinese solar panels and Korean home appliances, to protect Whirlpool.
Meanwhile Canadian Prime Minister Justin Trudeau, pledged together with Mexico to defend NAFTA, he announced that Canada will join the TPP, the trade agreement between the nations of the Asia-Pacific area canceled by the US president. That way, Trudeau said, we'll limit the damage. But, on the contrary, the auto unions fear the mass landing of Japanese and Korean manufacturers.
In this lively setting, on the markets the new thud of the dollar stands out. The yen rose (-0,35% to 109,90 for the first time below 110 since September) together with the euro on the eve of the ECB directorate. This morning the single currency traded at 1,2315, the highest since 2014. The yuan also advanced to levels not seen since the end of 2015 at 6,39%. The yield on T bonds is under tension (2,62% over ten years)
TOKYO DOWN, TECHNOLOGISTS DOWN IN TAIWAN
The slowdown in the US currency affected the Asian markets, which were weak despite the new records on Wall Street. There Stock market of Japan is starting to close lower: Nikkei index -0,8%. The Hang Seng index of the Hong Kong Stock Exchange lost 0,3%, the CSI300 of the Shanghai and Shenzen stock exchanges unchanged. Sales on high-tech companies cost Taiwan a more than 1% decline. The equity markets of South Korea and India remained unchanged.
S&P AND NASDAQ AT THE HIGHEST. NETFLIX (AND BARBIE) SHOW
The weak dollar, on the other hand, is the propellant to wall street, committed to grinding record after record. The S&P500 index closed up 0,2% at 2.840 points, a new all-time high. The index has set 12 records this month, something that has never happened in history. The boost came from the companies' quarterly data, overall very good up to this point.
On the Nasdaq +0,71% (new record at 7.460,29) the show by Netflix +12%: the capitalization of the streaming leader exceeded 100 billion dollars yesterday, subscribers broke the barrier of 100 million units at launch. The unknown lies in the production costs (8 billion in investments for the current year). On Wall Street, even the more traditional entertainments stand out: Mattel, the house of Barbie, achieved a 16% increase on the wave of a possible merger with Hasbro (Monopoly).
The Dow Jones index moved little -0,01% held back by the accounts of Procter & Gamble -3,09% and by Johnson & Johnson -4,26% which is affected by the lack of tax reductions for previous losses (effect of the reform) for 13,6 billion dollars.
Little moved this morning on petrolium: Brent at $69,77, Wti at $64,41. Barclays has raised its 2018 estimate on the average price of North Sea crude oil to $60 a barrel, from $55. Yesterday in Piazza Affari Eni -0,1%, Saipem +1,5%.
GERMAN CONFIDENCE PUSHES FRANKFURT TO RECORD
The rise of European stock exchanges wears the colors of the German flag. The data arriving from across the Rhine, two days after the ECB meeting, signal the excellent conditions of Europe's leading economy: the climate of confidence among investors is growing strongly (Zew index 20,4 from 17,4 in December ), economic conditions, according to statistics, are at their highest level since December 1991.
- The boom of the real economy is confirmed by the advance of the Stock Exchange: the Dax index scored its all-time high, flying to 13.596 points and then closed the session at +0,7% at 13.554.
- Instead, Piazza Affari lost momentum after having temporarily missed the 24 quota (maximum at 24.050). The Ftse Mib index -0,22% fell back at 23.837 points. The Zew index, which measures confidence in the Italian economy, also improved, rising by 5,6 points in January.
- Positive Madrid, +0,24% and London +0,21%; little move Paris -0,12%.
THE MARKETS REDISCOVER ATHENS BONDS
The finance ministers of the euro zone, said the head of the Economy Pier Carlo padoan, in the two days of the Eurogroup and Ecofin, they expressed "concern" about the scenario of instability that could arise from the elections of 4 March. The sentiment, at least for now, is not transmitted to the trend of the debt market concentrated on the progress of Mediterranean Europe: Portugal and Spain have been joined by Greece.
The Eurogroup has reached an agreement on new aid for 6,7 billion, believing that Athens has met the objectives on the 2018 budget of a primary surplus of 3,5% of GDP. The new aid will arrive in two tranches: the first in February for 5,7 billion, the second in the spring. The aid program will end as planned in August. The yields on 2-year and 5-year government bonds fell to record lows of 0,97% (first time in history below 1%) and 2,73%, respectively.
THE SPANISH AND PORTUGUESE TITLES FLY. AT AUCTION THE CTZ
In the meantime, Spanish debt continues to enjoy great success: yesterday the Treasury of Madrid launched a 10-year loan agreement for 43 billion via syndicate: demand was over 140 billion. Against this backdrop, the spread between the BTP and the Bund fell to 142 basis points (against 1,89) at the close, for a yield of 1,92% (from 1,88%) after hitting a low of XNUMX%.
The Ministry of Economy will make available between 2,75 and 3,75 billion euros in the October 2019 CTZ and in the May 2022 and September 2032 BTPEIs in the auction scheduled for January 26th. Judging by the performance of the other Eurozone countries, the decline is affected by electoral uncertainty. The Portugal-Germany spread has in fact fallen to its lowest level since April 2010 to 118 points, the Spanish one falling below 90 points, the lowest since March 2015. It is expected that tomorrow's ECB directorate will not change communications to the market despite the shower of positive data on the macro front.
ECB APPOINTMENTS, DE GUINDOS AND WEIDMANN THE FAVORITES
The meeting of Ecofin and the Eurogroup was partly dedicated to starting the discussion on the appointments to the central bank: for the role of deputy Draghi in place of the Portuguese Victor Constancio (decisive meeting on 19 February) the Spanish is the favorite Louis de Guindos. His appointment could translate into support for a candidate from the North at the time of Mario Draghi's exit (end of 2019). In this case, Jens Weidmann could be in pole position, but he will have to deal with the governor of the Banque de France François Villeroy de Galhau.
BANKS, HIGHLIGHTS BPM AND BPER
Banks were weak in line with the trend of the European sectoral Stoxx, while the focus of the market is still concentrated on non-performing loans. In particular:
- Positive Bper +1%. Kepler-Cheuvreux confirmed the Buy judgment, adjusting the target price to 4,70 euros from 4,65 euros. Mediobanca was more optimistic as it promoted the target to 6,0 euros from 5,60 euros on Monday. The potential upside compared to the listing is around +30%.
- Ubi it rose by 0,5% in the end following the positive comments from analysts on the press rumors relating to an acceleration of the Npl stock reduction strategy with a possible sale in sight for one billion bad loans.
- Bpm bank +1,8%. Capital Research has 5,15% of the capital, with this share, the fund is the first shareholder.
- Down Unicredit-0,73%, Intesa remains at the highs of the year, unchanged.
- Creval -4,8%, was the worst stock of the session. The institute aims to bring forward the transfer of non-performing loans to June. The Algebris fund would be ready to participate in the capital increase, as well as being interested in discontinued loans.
MANAGED: 100 BILLION IN FUNDING. STILL FINE SALT
In the meantime, the rally of FinecoBank continues + 1,38%. 2017 ends on a high note for Italian asset management. Net inflows in December amounted to 2,3 billion euros, a result which it has allowed the industry to reach almost 100 billion in the year. Based on Assogestioni's monthly map, in the past year flows amounted to 97,5 billion euros, almost double the 56 billion in 2016.
EXOR LEADS THE AGNELLI SCUDERIA. TOMORROW THE FCA ACCOUNTS
Budget eve for Fiat Chrysler– 0,61%. Yesterday, the share hit a new all-time high at €19,98, then corrected and closed down at €19,57. Well Exor+0,96% to 62,95 euros) after the increase in the target price by Kepler Cheuvreux from 60,9 to 68,3 euros (rating buy). The target price has been revised upwards to take into account the increase in the NAV following the growth of FCA shares. But, in light of the multiples paid by Aig for the purchase of Validus reinsurance, Partner Re was paid with the discount.
THE SHADOW OF THE DOLLAR AND APPLE ON THE STM FINANCIAL STATEMENT
Stm -0,79% is also starting to announce the accounts for the quarter tonight. There is much anticipation after the rally following the race of the Sox semiconductor index which, since its low in 2008 (hit following the bursting of the subprime bubble) has multiplied its value by seven.
But on the title of the Italian-French group, supplier of Apple uncertainty reigns over the economic situation experienced by the US giant, given the rumors about the sales crisis iPhone X: according to some analysts, Apple is about to withdraw the latest smartphone from the market. Others, however, are of the opposite opinion: according to Canalys, 26 million units were sold during the quarter. For the company led by Carlo Bozotti (who will soon cede the baton of command) analysts expect an increase in revenues of 27% year on year, +10,4% quarter on quarter.
TELECOM RECOVERY CONTINUES, PAUSE FOR MEDIASET
To be noted in the main price list:
- Buzzi Unicem +1,44%: Ubs raised its target price from 27,4 to 30 euros, confirming the buy recommendation.
- Telecom Italia still up +1,23%. Equita Sim confirmed the buy recommendation and the target price at 1,06 euros.
- As regards investments for football rights, analysts positively judge the cautious and opportunistic approach of the operators involved, including Tim e Mediaset -0,49% who presented offers below the minimum.
- New sales on Ferragamo which lost 2,12% on profit taking after yesterday's increases in the wake of Ynap's takeover bid.
CAMPARI ORDERS A RHUM, GIMA BOOMS
Sale Campari +1,18%. Mediobanca Securities (neutral, target price 6,1 euros) reports some statements by CEO Bob Kunze-Concewitz according to which the group is ready to grow in the dark and aged rum segment in great turmoil after Bacardi's purchase of tequila Patron for $5,1 billion.
Among the medium/small caps:
- New rise for Mondadori +8,52% awaiting news on French activities.
- Vola Gima Tt +5,35%. Mediobanca Securities reiterates outperform recommendation and a target price of 19,9 euros on the e-cigarette maker; the US Food & Drug Administration has concluded that Iqos (the new generation cigarettes of Philip Morris) contain fewer harmful components than traditional cigarettes.
- Trevi Fin. +19,84% to 0,462 euro was the best stock on Piazza Affari. The market's attention remains focused on the agreement with the creditors and on the possible sale of Drillmec.
