“The challenge we face requires us to move with the strength and speed necessary to prevent the recession from leading to a deep depression accompanied by a long series of defaults capable of causing irreparable damage. It is already clear that a sharp increase in public debt will be necessary (…) which will be a permanent aspect of economies and can only be accompanied by the cancellation of private debts”.
In a crucial moment for the European Union, Mario Draghi makes his voice heard with a long and important intervention in the Financial Times. And it does so, not surprisingly, when the hypothesis of a use of the OMT reappears in the ECB, the stabilization program he developed in 2012, at the time of the euro crisis, but never used. This time, Draghi writes, even more needs to be done, as in war: we need an increase in public debt and 100% guaranteed temporary loans to businesses. The banks, at that point, should become public entities, with zero shareholder remuneration.
NIKKEI LOSES 4,4%
Confirming that the war on the coronavirus will be long and difficult comes a new alarm from Tokyo. The epidemic, which seemed to be dying out, struck again yesterday: 41 new victims against 17 on Tuesday (and 6 on Monday). The reaction of the Stock Exchange was immediate, at first euphoric for the measures approved in the USA. The Nikkei index is down 4,4%, Hong Kong's Hang Seng and Shanghai Composite are down about 0,5%. The recovery of the Kospi of Seoul also stops (-1%).
Sidney, on the other hand, rises (+2,3%) and India's Sensex rebounds (+4%) in a country barred from the rest of the planet (1,3 billion people in quarantine).
STATE AID SUPPORTS DOW JONES
The US stock exchanges cautiously celebrated the launch of the most gigantic support plan for families and businesses in history. Overall, the United States has mobilized about 6.000 billion dollars, considering what has been put in place by the Federal Reserve, just under a third of US GDP and more than three times the Italian GDP. But the 1.619-page loot won't have an easy time in the House: Bernie Sanders promises a battle against too many "gifts" to corporations.
The Dow Jones gains 2,39%, S&P 500 +1,15%. The Nasdaq slows down the index (-0,45%). Apple (-2%) will postpone the launch of the 5G-based iPhone.
Fly, thanks to the forthcoming state aid, the airlines and Boeing (+24%). Cruises are also making a strong recovery.
GOLD AND OIL HOLD DOWN
Gold loses 0,7%, to 1.603 dollars an ounce.
Brent oil at 27,7 dollars a barrel, down 0,5%, from +0,9% at yesterday's close. US strategic crude inventories rose less than expected. According to rumors, Washington's diplomacy is trying to dissuade Saudi Arabia from pursuing its intention to push oil production to the maximum.
On the currency front, the dollar retreated against the yen, to 110,6, but also against the South Korean won and most of the currencies of the Asia Pacific area, which have been cornered in recent days.
THE EURO RISES FOR THE FOURTH STRAIGHT DAY
The euro strengthens for the fourth consecutive day to 1,091. Last night, the German Finance Minister said that the government is preparing to launch targeted and temporary stimulus measures for the economy to be implemented in the second half of the year to help the system restart after the lockdown.
A good way to open a day that promises to be as crucial as it is fought.
CORONABOND, 9 COUNTRIES IN FAVOR (OUT OF 27)
The European stock exchanges celebrated the launch of the US maxi-plan at the end. But the issue of fiscal policy in the Eurozone still needs to be resolved. Today, by videoconference, a difficult agreement will be sought on the use of funds from the European Stability Mechanism (about 500 billion). The Eurogroup has given a maximum availability for the use of resources for subsidized loans (up to 35 billion for Italy) but country by country, without any mutuality. Furthermore, the Netherlands and Austria believe that it is necessary to wait for the evolution of the crisis before opening the portfolio. The southern front, however, this time is compact: nine countries, including Italy, France and Spain (but also Belgium, Luxembourg plus Greece, Ireland, Portugal and Slovenia) have proposed the issue of Coronabonds under the guarantee of Brussels.
BUSINESS PLACE ON THE ROLLER COASTER
In this setting, Piazza Affari, like the other markets, experienced a day on a very steep roller coaster on Wednesday. After a rocketing start (+4,3%), the list swerved conspicuously, to then close with a rise of 1,74%, at 17,243 basis points.
Same script and same thriller ending for the other squares. Frankfurt, in the red until a few minutes after the closing, reversed course to close at +1,34%.
Brilliant Paris (+4,47%) trailing banks and financial companies: Société Générale is up 11,44%, Natixis does even better (+16,92%).
The City is also roaring. London rebounds by 4,26% driven by oil (Shell +7,40%). Madrid +3,65%.
Zurich +3,36%. The Swiss government and the Swiss central bank (SNB) have also started injecting liquidity into a drastically slowing economy.
THE ECB SHIELD PROTECTS BTPs. LOWER THE SPREAD
The rain of liquidity favors the BTP, moreover protected by the ECB's purchase shield.
The spread drops to 180 basis points, from 198 on the previous day. The 1,57-year rate is around 1,59%, after closing at XNUMX% the previous session.
Today, with the offer of Btpei (750 million) and Ctz (2,250 billion), the month-end auctions are starting.
ONLY 10 BLUE CHIPS IN RED
"We are studying the provision of the Golden Power shield in detail and, under the direction of Palazzo Chigi, we are ready to act to defend the industrial and corporate assets of our country". So yesterday Prime Minister Giuseppe Conte took note of the risks that the collapse in prices entails for the balance of a significant part of Italy's industrial and financial assets.
Only 10 out of 40 blue chips ended Wednesday's session lower.
Against this backdrop, the market experienced a day of ups and downs, with thrilling swings. During the day the index reached a maximum of 17.830 points and a minimum of 16.581 points. Approximately 7% excursion.
MORE FUNDS FOR AZIMUTH
Azimut stands out at the top of the list (+9,3%): Timone Fiduciaria, which brings together the shareholders adhering to the syndicate agreement that controls the managed group, has agreed on a 30 million bank loan to raise the share capital.
Good performance by Banca Mediolanum (+4%), even more effervescent in the morning. Citi upgraded the stock to Buy.
INTESA AND UNICREDIT CONFIRM THE COUPON
The decline in the spread favors bankers, also because the Bigs do not betray the policy of high coupons. Intesa Sanpaolo (+2%) confirmed its decision to propose the distribution of a dividend per share of 0,192 euro. Same choice for Unicredit (+0,8%, dividend equal to 0,63 euro), Banco Bpm (-1,47%, 0,08 euro) and Ubi (+1,23%, 0,13 euro). Mediobanca flies (+8%).
LEONARDO TAKES OFF THANKS TO BOEING
The leading stock of the day was Leonardo (+11,3%), which rebounded after the sharp declines of recent days thanks to the Boeing boom on Wall Street.
Exor (+7,12%) closed the year with a consolidated profit of 3 billion, more than doubled compared to the result of 1,3 billion in 2018. The Board therefore decided to propose to the shareholders' meeting the distribution of a dividend of 0,43 euro per share, a stable coupon compared to last year, for a total amount of dividends of approximately 100 million. No advance on the destination of the cash that the holding company will collect with the sale of Partner Re.
FCA +2,9%. LES ECHOS: THE EXTRA COUPON WILL BE REDUCED
Fiat Chrysler +2,92%. Moody's has put the judgment on seven automakers under review, for a possible downgrade. These are Daimler, Jaguar Land Rover, PSA, Renault, Volkswagen, Volvo and McLaren. FCA's rating is at risk because Mike Manley's exit to CNH could weaken the group, which, however, is now close to passing into the hands of Carlos Tavares. Les Echos believes changes to the merger project between PSA and Lingotto are very probable. “It is very difficult – he writes – that FCA shareholders, given the situation, could receive such a rich adjustment in the form of a dividend”.
New decline for Brembo (-7,8%) after the waiver of the dividend. Equita Sim reduced the target price by 9% to 9,6 euro per share, confirming the hold rating.
THE DROP IN THE STOCK MARKET HAS HEAVY, ELLIOT GOES DOWN IN TIM
Tim misses out (-4%). The Elliott fund reduced its overall stake in Tim ordinary capital from 9,722%, declared last January 7 to 6,976%. The reduction in the stake is linked to a rebalancing of the portfolio by the US activist fund (before the pandemic it had invested in assets around the world for a value of around 40 billion). But the company that controls 100% of Milan does not intend to go further to Tim and has confirmed its trust in CEO Luigi Gubitosi.
Among the mid caps, focus on Salini Impregilo (-8,29%), after yesterday S&P decided to place the 'BB-' rating on watch negative. In decline Danieli (-10%) and De Longhi (-8,42). Atlantia's retreat continues (-3,7%).
