The current level of US rates is "just below" the normal level. Jerome Powell, under pressure from President Trump, decided to wear the dove's shoes. A month ago, the head of the Fed had argued that it would still take "a long way" to bring monetary policy back into balance. Yesterday, on the contrary, he said that from now on any adjustments will be linked to the economy. It follows that in the coming months any increase in the cost of money could be very gradual.
The change of course had immediate effects. After Powell's speech, delivered at 18 pm, Wall Street has embarked on an upward trend, the most robust in the last eight months: Dow Jones +2,5%, S&P 500 +2,3%.
HEAD TO HEAD BETWEEN APPLE AND MICROSOFT
The Nasdaq rose by 2,95% under the pressure of the duel between Microsoft and Apple for the title of the most capitalized company on the planet. In closing, the Apple won by a whisker (+3,85%), but Microsoft (+4%) confirmed that it was the brightest, in the wake of the successes of cloud computing.
TRUMP PROMISES CAR DUTIES, THUD OF TIFFANY
The auto sector also rose, in the wake of Trump's announcement that he promised new incentives and new duties to defend the sector after the cuts announced by GM (+ 0,71%).
On the other hand, Tiffany's slump (-11,3%) should be noted in the face of an unexpected collapse in purchases by Chinese customers: duties are starting to make victims in the luxury sector.
BAGS UP ALSO IN ASIA, DOLLAR DOWN
However, the Powell effect also had its effects in Asia. The Japanese Stock Exchange is about to close its fifth consecutive session higher: Nikkei index +0,7%. Shanghai gains 0,3%, Taipei 0,4%, Hong Kong is on par, Seoul 0,5%.
As expected, both the dollar and bond prices fell: the euro traded this morning at 1,139 against the dollar, up 0,2%, after gaining 0,7% yesterday. The US currency also slows down in Asia. The dollar-yen cross falls by 0,3%; dollar-Chinese yuan -0,3%, dollar-Korean won -0,7%, dollar-Indian rupee -0,8%
In short, on the eve of the confrontation with Xi Jingping, Trump brought discipline back to the Fed, moreover guided, in his words, "by a guy I don't like at all".
OIL BELOW 60 DOLLARS, ENI WEAK
Brent oil, after closing down yesterday by almost 3%, recovered during the night and this morning traded at 59,2 dollars a barrel (+0,5%). US oil inventories climbed for the tenth consecutive week. The stock exceeded 450 million barrels, returning to its highest levels for 12 months, but for Russia, one of the world's major producers, prices at these levels are not a problem, Vladimir Putin said yesterday, a few days after the summit with Saudi Arabia. Putin's statement seems to confirm Russia's willingness to dissolve the pact signed with OPEC two years ago.
At Piazza Affari Eni -0,4%, Saipem -0,1%.
PAOLO ROCCA UNDER INVESTIGATION IN BUENOS AIRES.
The Argentine capital is also the scene of the storm that hit Tenaris (-7%) with the news on theindictment of the president and CEO, Paolo Rocca, over alleged bribes paid to senior Kirchner government officials in 2008. The club issued a statement tonight in which it confirmed its trust in Rocca.
The Milan Stock Exchange (-0,18%) closed the session with little movement at 19.115 points. The volume of trade is around 2 billion euros. "The reality is that we trade shares among ourselves, there is not a shadow of a foreign investor," commented an operator interviewed by Reuters.
Only Madrid (+0,19%) ends in positive ground: Paris unchanged, Frankfurt -0,09%. London -0,16%.
SPREAD TO 290, TODAY THE LAST MEDIUM-TERM AUCTION OF 2018
Even the Italian secondary archives an overall calm session without major jolts, with a moderate improvement in prices and the spread up to 290 points (297 the maximum for the day).
In the morning, the auction of 6,5 billion 6-month BOTs was successfully held, placed at a rate of 0,163%, in line with the previous issue. It was the only BOT auction of 2018 in which the amount issued (6,50 billion) was greater than the securities maturing (6,05 billion). The market these days loves short maturities.
Medium-long term securities, i.e. up to 5,5 billion Btp and Ccteu, will be auctioned today. This is the last medium/long-term issue to be settled in 2018, since the Treasury canceled the mid-December offer.
BANCO BPM TAKES FLIGHT, UNICREDIT FOLLOWS
Italian bankers are making progress: the sector index rises by 1,21% against a flat European sector. To pull the sprint à Banco Bpm (+4,39%) on the eve of a decisive board of directors for the sale of a share of non-performing loans and the restructuring of consumer credit, based on the sale of Agos. Unicredit (+1,89%) which has issued is also on the rise a 3 billion euro senior bond, with a five-year maturity, at a yield of 3% above the reference value. Intesa : JP Morgan owns 6,952% of the capital, of which 1,941% with voting rights.
An increase of more than 1% also for Ubi Banca (+1,25%). Off the main list, fireworks for Banca Carige (+11,11%): the Interbank Deposit Protection Fund should approve on Friday the accession to the 2 million Tier 320 subordinated bond.
BUT THE INCREASE IN FUNDING COSTS HAS A WEIGHT
The bankers' efforts serve to limit the damage of a high-risk situation. The outburst of Giuseppe Castagna, CEO of Banco Bpm is exemplary: "Many banks - he tells Reuters - have to bear billions of capital loss impact due to the spread, not for economic problems that do not exist in Italy today, but for a political choice very strong first with rumors of an exit from the euro then with a push-pull on deficit numbers. And so we end up not being able to afford derisking and funding operations with such high rates, which then have repercussions on businesses and customers, despite some undersecretaries who say that there are no effects on mortgages".
The confirmation came from the Unicredit bond fully subscribed by Pimco with a spread of 420 basis points on the euro swap rate. The previous issue, on 18 January, had been placed with a spread of 70 points.
According to the rating agency Fitch, forecasts for the Italian insurance sector remain negative. Generali +0,2%: the supervisory authority IVASS has authorized the extension of the internal model for evaluating the solvency margin, also to activities in Austria and Switzerland. Unipol +0,8%.
GOLDMAN BOCCIA TIM, WEAK ATLANTIA
Under pressure Tim (-1,15%) who pays for the rejection of Goldman Sachs (neutral from buy). The Senate's yes to the amendment confirming the system of incentives for the creation of a single national telephone network does not affect it.
Weak Atlantia (-1,18%) on fears of the consequences for Aspi after the collapse of the Morandi bridge in Genoa.
PIRELLI WINS BEHIND CONTINENTAL
The auto sector is holding back, hit by the threat of US tariffs. Fiat Chrysler loses 1,47%, Brembo -0,95%, Sogefi -1,28%. The worst is Pirelli (-3,37%), in line with the German Continental (-5% in Frankfurt): during an event, the financial director warned that profitability will not recover in the first part of 2019.
Only Ferrari is saved (+1,06%).
OPS AT 93%, LUXOTTICA DELISTING DISCOUNTED
Luxottica -0,6%) on the last day of the public exchange offer aimed at the delisting, now taken for granted given that Essilor/Luxottica, according to initial calculations, should have reached 93%. Piazza Affari is starting to lose one of its most important stocks, pending a possible double listing.
Some medium/small cabotage titles such as Fiera Milano (+9,61%) and M&C (+9,71%) are close to double-digit increases.
