Twist in the night: FCA withdrew its merger offer with Renault "with immediate effect". The turning point came at the conclusion of the Board of Directors of the French company which, after more than six hours of discussions, closed after midnight with a further postponement: "The board - reads a press release - was not able to take a decision due to the desire expressed by the representatives of the French state to postpone the vote to a later council". In response, the board of directors chaired by John Elkann held in London decided less than an hour later to withdraw the offer.
"Fca continues to be firmly convinced - is the explanation offered by the note from the Italian-American group - of the stringent evolutionary logic of a proposal that has received wide appreciation from the moment it was formulated and whose structure and conditions were carefully balanced at the order to ensure substantial benefits to all parties. However, it has become clear that there are currently no political conditions in France for such a merger to proceed successfully”.
FCA expresses “sincere gratitude to Groupe Renault, in particular to its Chairman, Chief Executive Officer and Alliance Partners, Nissan Motor Company and Mitsubishi Motors Corporation, for their constructive engagement on all aspects of FCA's proposal. FCA will continue to pursue its objectives by implementing its independent strategy".
“NISSAN IS NOT THE FAULT,” EXOR CLAIMS
The market reaction was immediate: the FCA stock lost 3,7% in after-hours trading on Wall Street. Nissan shares were also down (-1,3%), after an initial plunge of 3,6%. Why the breakup? According to Paris it was a "precipitous" choice: the government was ready to say yes if Nissan gave its support. For this reason, Minister Bruno Le Maire was preparing to leave next week for Tokyo. But, according to Fiat Chrysler, things are quite different. “They are trying to unload the responsibility on Nissan – an anonymous representative of FCA (probably Elkann himself) declares to the Financial Times – But we are perfectly aware that the problem is not Nissan: the government is looking for excuses”. And from Tokyo, a few hours earlier, an ironic comment had arrived: "Exor will soon discover how difficult it is to deal with the French state".
RATING AGENCIES PUNISH MEXICO
Markets take note of another bust this morning. The mission to the US of a delegation from Mexico to avert the duties imposed by Donald Trump to curb illegal immigration into the States from the Latin American country, affected, among other things, by the drop in the rating decided by Fitch (BBB) did not produce results and by Moody's (outlook from stable to negative). Meanwhile, the skirmishes with Beijing continue: Ford was punished with a fine by the Chinese Antitrust Authority. Meanwhile, a negative signal is coming from the US from the world of employment: only 27 more paychecks in May in the private sector, against the 180 expected. In this context, the ECB takes to the field today, grappling with the problems linked to Brexit, which is looming ever harder, and with Italy, a new Titanic en route to the debt iceberg. All that remains, in short, is to appeal to the intervention of the central banks, an extreme but powerful resource of the markets.
IT BOND AT 2 YEARS AT A MINIMUM, FED READY TO MOVE
The Asian lists moved little: Tokyo and the Csi 300 index of Shanghai travel slightly below parity.
Yields on 2-year US T bonds, the most sensitive to interest rate trends, have slipped to their lowest since 2017, confirming that the markets expect a Fed cut in July.
The hope of a drop in the cost of money fueled by the latest macro data has given oxygen to the American Stock Exchanges: Dow Jones and S&P 500 both +0,82%, Nasdaq +0,64%.
Gold climbs back to a four-month high at $1.330,38 an ounce.
OIL SLIP, RECORD ORDER FOR SAIPEM
Oil is weak after the IEA communicated that crude stocks are at their highest since 1990. Brent trades at 60,71 dollars.
Leap forward yesterday by Saipem (+2%). The company has signed a contract in Mozambique worth about 6 billion dollars. Year-to-date, new orders are expected to be around €8,5 billion. A minus instead for Eni -1,3% and Tenaris -3,29% grappling with the duties on Mexico.
MILAN IN RED AFTER THE EU REJECTION
The start of the infringement procedure hit Piazza Affari yesterday but the effects of the rejection in Brussels have been absorbed, for now, with limited damage. The key to understanding market moderation is waiting for Mario Draghi's next (alas, last) expansive move being examined today by the ECB board.
In fact, Milan limited the damage in the afternoon, closing at -0,36% at 20.155 points after having touched a minimum of 20.034 points following the release of the Commission's communication.
The other European lists closed slightly: Frankfurt +0,08%; London +0,06%; Madrid +0,4%; Paris +0,45%.
The euro traded at 1,1228 this morning.
TODAY DRAGONS LAUNCHES TLTRO LOANS
At the center of attention are the decisions that the Frankfurt directorate will take today, ie the terms of what should be a mini QE, articulated on loans to banks. Mario Draghi's latest gift to the markets. Draghi has already anticipated that there will be seven maxi loans on a quarterly basis, starting from September 2019. Each operation will have a duration of two years. Some key points remain to be clarified, first of all the cost: it ranges from +0,25%, as the worst hypothesis for the markets, to -0,40%, or even lower, as the best hypothesis. It would be equally positive, an extension of loans also to real estate activities and the inclusion, among the subjects authorized to request liquidity, of the financial companies controlled by the banks.
Swing day for the Btp. The 2,63-year bond suffered the blow after the Commission's position was taken, reaching a yield of 285%, with the spread at 2,48 and then recovering to 270%, spread XNUMX.
The German Bund yield was -0,22% in the evening, after a historic -0,23%.
JUVENTUS ON THE ESCAPE, ATLANTIA RECEIVED
In a session characterized by volatility, the Oscar of the day goes to Juventus +5,18%. The leap forward should not for once be linked to the full coach but to the news that Kathryn Mayorga would have withdrawn the rape accusations against Cristiano Ronaldo.
The shares of motorway concessionaires are on the back foot: Atlantia +2,5%, Sias +1%. In the latest version of the procurement decree, there is an article that simplifies the procedure for revoking a motorway concession. The new rule protects ministry leaders called to sign the revocation, who are now subject to legal action. The decree should be converted by the middle of the month.
Autogrill +1,25%. Mediobanca Securities confirmed the outperform rating, raising the target price to 11,9 euro from 11,3.
BANKS HEAVY, MANAGED WELL
Heavy banks, the most sensitive to the trend of the spread, on the eve of the ECB. Unicredit extends the reduction to 3,45%, Intesa -0,87%.
Banca Generali, on the other hand, was positive +1,2%, which closed May with 475 million euro of net inflows, the total rising to 2,43 billion in the first five months. Collection of management products, 196 million, advanced consultancy 300 million.
Azimut +0,3% the day after Investor Day in London. Kepler Chevreux raised the target price to 17,7 euros. Equita Sim confirmed the target of 18,4 euros The note from Mediobanca Securities is pungent, assigning a Hold rating and a target price of 18 euros to the stock. According to the brokers, a floor of 300 million euros will perhaps be achieved through extraordinary items, but when fully operational, once the one-off points have been removed, the current net profit should be 200 million.
ADVANCE UTILITY AND LUXURY
Prismian -0,3%. The shareholders' meeting approved the dividend of 0,43 euro per share. The Scotland-Wales shipping link returned to full operation two days ago.
The march of utilities continues: Enel +0,4%. Italgas +0,5%, A2A +0,8%
Luxury is on positive ground: Moncler +2,25%, Ferragamo +3,04%.
Vola Geox (+4,5%): the new treasury share buyback plan is underway. OVS +0,7%.
