It's time for the hawks. Donald Trump's offensive against the Fed has fostered the unity of bankers in support of a more stringent cost of money policy.
The minutes of the last meeting of the Central Bank show that the Fed, regardless of pressure from the White House, intends to continue on the path of monetary tightening, even at the cost of going beyond the area of neutrality. Central Bank select committee members are quiet about US economic growth. In short, rates will continue to rise, pace the president.
The attitude, more rigid than expected, held back Wall Street and drove up the yields of ten-year T bonds, back above the guard level of 3,20%. The biennial rose to 2,8942%. Tensions were also kept up by the modest drop in the stock of Treasuries held by China, more linked, according to analysts, to the defense of the yuan (which dropped this morning to 6,9378 to its lowest level in 2 years) rather than retaliation on tariffs. Beijing has escaped accusations by the US Treasury of manipulating exchange rates.
In this context, however, the lists have slowed down after the strong increases on the eve.
The Tokyo Stock Exchange is down 0,7%. Japan's trade balance was disappointing, especially exports, which fell by 1,2% last month after almost two years of increases.
The Hong Kong stock market rises as it reopens after a pause. Those in China are still down, to levels not seen since March 2016. CSI 300 index of Shanghai and Shenzhen stock exchanges -1,5%. The Korean central bank left rates unchanged.
The Fed's messages "froze" the bull's run on Wall Street: the Dow Jones index closed at -0,36%, the S&P 500 (-0,03%) and the Nasdaq (-0,04%) showed little movement ).
Netflix still on the rise (+5,2%). IBM collapses (-7,62%): the group closed the third quarter with revenues below expectations at 18,76 billion dollars, against the 19,1 billion forecast by analysts.
The news of the legalization of cannabis in Canada, widely awaited for weeks, has been accompanied on the stock market by sharp declines in the companies producing marijuana, which have climbed steeply in recent months. Canopies -4,5%.
Brent oil moved little this morning, just above eighty dollars a barrel, the sharp increase in crude inventories in the United States, equal to 6,5 million barrels, contributed to yesterday's drop (-1,7%).
Eni-1,4%. HSBC raises the target price from 19,4 to 19,5 euros. Saipem -3%.
TODAY AT THE EU FIRST SUMMIT ON ITALY
The respite was short-lived. From Brussels the torpedoes on the Italian maneuver have resumed, welcomed with sovereign contempt by the two yellow-green deputy premiers. Today's meeting of European leaders, already scheduled to relaunch the reform of the monetary union, could be transformed, according to the Financial Times, into a sort of trial against Italy on the initiative of Holland and other Northern countries. Prime Minister Giuseppe Conte has already anticipated that the maneuver "has little room for change". But according to Deputy Prime Minister Luigi di Maio, he has already thought about changing it a little hand by introducing pro-tax evasion changes. "It is an unreal accusation" replies Matteo Salvini.
“My opinion – tweeted the EU budget commissioner Guenther Ottinger – is that we will have to ask Italy to correct the budget plan”. Short-term to avoid rating agencies' ruling first (S&P is scheduled for day 26).
EUROBAROMETER: ITALIANS PRO-EURO, BUT AGAINST THE EU
A Eurobarometer survey on Europeans' liking for the EU revealed that in the event of a referendum only 44% of Italians would vote in favor of remaining even though, curiously, 65% declared themselves in favor of the euro.
In this climate, Piazza Affari closed in the red once again, reversing the positive trend recorded at the start: -1,33% to 19.455 points (against an initial high of 19.912 points).
The other Stock Exchanges were also negative: Frankfurt -0,52%; Paris -0,54%; Madrid -0,8%; London -0,08% and Zurich -0,4%.
THE SPREAD RISES TO 309 AGAIN. MAXIMUM EXCHANGE OF THE TREASURY
The debt market also suffered again, with a sharp decline towards the end. The spread closed at 309 points from 297 basis points on Tuesday night and 293 at the open.
On the agenda today is an exchange transaction in which the Treasury offers to buy back up to 3 billion euros of the BTP Italia April 2020 - whose free float amounts to around 20,5 billion - by issuing new tranches of five nominal bonds. The operation accentuated the market correction on the medium-long part of the curve, offering support to the short part.
GOLDMAN SACHS REJECTS THE CAR. FCA AND CNH SUFFER
The auto sector fell sharply yesterday. The sector has come under pressure after a note from Goldman Sachs, which predicts a weak third quarter and possible downward revisions of estimates. The investment bank's analysts speculate a negative mix composed of a decline in production in Europe (due to changes to the rules on emissions), a slowdown in demand in China and weakness in Latin America.
German manufacturers and Renault lost their shots (-3,15%). In Piazza Affari, Fiat Chrysler dropped 4,19%. For the group, September was particularly negative, -31,4%. The result is the fruit of the boom in registrations in August, supported by heavy discounts from houses to empty warehouses in view of the introduction of new anti-pollution regulations. Down also Ferrari (-3,36%) and Exor (-3,6%).
Cnh collapses, losing 4,1% in the wake of Bofa Merrill's rating cut to 'neutral'.
Difficult day also for Pirelli (-3,22%): Goldman Sachs lowered the target price from 8,1 to 7,2 euros, with neutral rating confirmed.
Brembo is saved (+1,07%). Piaggio -1,3%. Banca Imi confirmed the Buy recommendation with a target price of 2,6 euros.
Prysmian also declined among industrialists (-2,5%). The rise of Stmicroelectronics has also deflated: +1%, from +5% in the morning in the wake of rising forecasts for the turnover of. Asml Holding, the first European manufacturer of equipment and machinery for chip production.
BANKS AND INSURANCE COMPACTIONS WITH THE REBUS MANEUVER
The trend in credit is thwarted: bankers are trying to orient themselves in the novelty of the manoeuvre. Bper Banca (+0,14%) and Unicredit (+0,32%) earn, Intesa decreases (-1,14%). The sector index loses 0,64%.
Unipol Sai -1%, Cattolica -0,9%, Generali -0,4%. Insurance companies fear that, in order to favor the South, there will be a return to the single rate of Rc Auto. This will be clarified by the omnibus law decree that will accompany the maneuver but in the meantime the main companies are calculating and it emerges, for example, that if the premium were the same in all the provinces, in Bolzano it would increase by 40% while in Naples it would be more than halved: -65%.
ASTALDI AND OVS, TWO STOCKS IN THE TUNNEL
Ovs, a leading company in the Italian clothing market with the Ovs and Upim brands, collapsed by 9% in the final, reaching a new all-time low of 1,748 euros. Yesterday the first modest rise after 17 negative sessions in a row had arrived. HSBC reiterated the Hold recommendation, but drastically cut the target price to 2,0 euros from 2,90 euros due to the uncertain scenario in the country.
Astaldi -5,59% with more than double the trades compared to the average of the last 30 days. The Bankruptcy Court of Rome accepted Astaldi's request of a conditional composition prior to the subsequent submission of a recovery plan within the composition. The company now has 60 days to present the composition plan. The term can be extended by another 60 days. A CDP role in the rescue of Astaldi "is not currently being studied" by the Cassa Depositi Prestiti. This was announced by sources close to the CDP.
