EUROPE: THE ECONOMY SLOWS DOWN, THE BAGS AS WELL
MILAN -1,08%, GREEK BANKS SLASH
After a good initial rise, the European stock exchanges have lost their initial momentum and are moving in random order. In Milan, the FtseMib index lost 1,08% to 15.941. The other European Stock Exchanges were positive: London +0,42%, Paris +0,21%, Frankfurt +0,8%.
At the start of the session, the markets had been supported by the results of the European summit in Brussels and by the macroeconomic data arriving from China. Behind the mid-morning change of tone are the disappointing indications that arrived with the diffusion of the indices of purchasing managers of French and German manufacturing companies. Fears about Greece's ability to stay on its feet also return and in Athens the main lenders are in decline: Alpha Bank -19%, Bank of Piraeus -21%, National Bank or Greece -18%. UBS estimates that in the event of a "discount" on the nominal 50% of Greek bonds, Greek banks would have to take into account a loss of at least 25 billion euros.
The PMI indices (indications of the purchasing managers of the companies) were lower than expected in both countries. The PMI index of the euro zone drops in October and falls from 49,1 in September to 47,2. On the other hand, the market was expecting a drop to 48,8 points. Manufacturing output fell for a third straight month and service activities fell for a second month, both cases witnessing the sharpest acceleration in rates of contraction since mid-2009.
Germany, the first economy in the Eurozone, is slowing down. The manufacturing PMI dropped from 50,3 to 48,9 (after a forecast of 50). On the other hand, services recovered from 49,7 to 52,1 points (49,9 points forecast). In October, the French economy entered a recession: the indicator collapsed to its lowest level in the last twenty-nine months, 46 points from 51,5 in September. Furthermore, Martin Kotthaus, spokesman for the German Finance Ministry Wolfgang Schaueble, reiterated yesterday that "the figures remain the same for all countries, and Germany will participate with 211 billion euros: whatever model is adopted" for the fund European Rescue Service EFSF. The run of the euro stopped, trading at 1,387 against the dollar, from 1,389 on Friday evening.
On the government bond market, the ten-year BTP yield rose by 6 basis points to 5,92%, the spread with the German Bund widened to 390 points from 375 points on Friday afternoon. The banking sector thwarted, after the agreements within the EU on capital increases: Intesa gains 0,7% like Banca Mps, Unicredit unchanged. Down by 1%, after the initial gains Bpm, whose troubles did not end with Saturday's meeting: after the victory of the Friends of Bpm list, the Bank of Italy stopped the appointment as CEO of the current general manager Enzo Chiesa, appointment foreseen by the Amici programme.
The overnight loans requested by European banks from the ECB have more than doubled. The European Central Bank has announced that requests from eurozone institutions have jumped to 4,6 billion euros compared to 2,2 billion the day before. The ECB also announced that overnight deposits rose to 202 billion from the previous 188 billion. Among the insurance companies: Generali +0,3%, Fondiaria-Sai -0,1%.
ON SCUDI EDISON (+4,9%) AND IMPREGILO (+3,6%)
FIAT (-1%) RETURNS LEADER IN BRAZIL. ENI DOWN
Stm also performed well (+1,2%) which tonight, with the markets closed, will release the quarterly results. Luxottica is also paying the bills tonight. Turnover is expected to grow by more than 2% and Ebitda and Ebit margins in line with the same period last year. On the other hand, net profit is growing.
Pirelli rises by 1,5%, Exor equal, Fiat -1%. According to preliminary indications from Fenabrave (National Federation for the distribution of self-propelled vehicles), Fiat is once again the leader with a market share of 22,36% after the September round (-11%). The new tax on imports announced in September by the government has been postponed to December.
Edison runs +4,9% on the rumors that Edf will offer Italian shareholders up to 1,30 euros per share to exit the company. According to rumors, the EDF delegation has already landed in Milan in view of the final round of negotiations to acquire the Delmi stake. The final offer should be around 1,20-1,30 against the request of 1,50. The gap depends on the valuations assigned to the assets that will supplement the cash offer (around 0,95, just above the share price last week). The offer, in fact, will include the "small" size hydroelectric plants which report directly to the parent company, both wind power (not appreciated by the Italian shareholders) and photovoltaic plants which are managed by the subsidiary Edens (Edison Energie Speciali spa) in addition to large-scale hydroelectric plants (1.690 megawatts produced).
The Buzzi cement group (+1,25%) and the Impregilo construction group (+3,6%) remain strong, which could also benefit from the end of the stalemate in Libya after the death of Gaddafi. But the rumor, however unlikely, of a possible takeover bid by Salini also has its weight. The oil stocks are holding back: Eni falls by 2,4%, BP -0,9%, Total -1%. Crude oil is up 1% with WTI at 88,2 dollars a barrel and Brent at 110,3 dollars.
