The Fed won't touch rates until inflation is above 2% for "a significant amount of time." In other words, the cost of money will remain close to zero until at least the end of 2023. The dovish move of the Central Bank, taken by a majority with the opposition of two members of the board, had the effect, surprising at first sight, of interrupting the race of the Bull, starting from the technological ones. The Nasdaq, up until then, suffered a setback which was then repeated this morning on Asian markets.
Tokyo's Nikkei lost 0,6%, Hong Kong's Hang Seng 1,6%, Shanghai Composite 1%, Seoul's Kospi 1,2% this morning.
Contrasted closure yesterday on Wall Street. Holds the Dow Jones (+0,13%); S&P -0,46%. The Nasdaq leaves 1,25% on the ground.
SNOWFLAKE RISES 7X BEFORE IPO
The drop in the technology index hasn't slowed down the rush of freshmen, starting with the pyrotechnic debut of Snowflake, the cloud company which, after raising its IPO price twice to $120 per share, took off within a few instant at $320, a price that is worth a capitalization of $90 billion, seven times what it was valued in February. The stock closed at $253.
THE FED WILL BUY BONDS TO PUSH UP INFLATION
"It's a question of credibility: we are aware that we must acquire credibility on the markets", said Jerome Powell in the press conference after the board which, moreover, showed signs of improvement in the economic situation, which is still "fragile and incomplete". In 2020, GDP will fall by only 3,7% (against the -6,5% estimated in June) to rebound by 4% next year. But, beyond these numbers, what counts is the determination to support growth beyond the end of the emergency. Not surprisingly, Powell has urged Congress to issue new stimuli while, as part of the policy to push inflation above 2%, new bond purchases are looming on the markets.
“Fine words but little action” is the stern comment of Mizuho Bank. In short, the markets are not satisfied with the signals of the central bank: it will not be easy to gain the credibility desired by Powell.
DOLLAR RISES UP, OIL BEYOND 41 DOLLARS
However, the Fed's message had the merit of slowing down the dollar's decline. The US currency takes its revenge on the yuan and goes to 6,77. But the Chinese currency has gained almost 6% in the last four months and at these exchange rate levels it would close the best quarter in history against the dollar.
The euro trades at 1,1767 against the dollar, down 0,4%.
Brent oil fell to $41,7 a barrel, down 1%. Crude is stabilizing after yesterday's 4% jump, an appreciation not unrelated to the unexpected drop in US strategic inventories. The drop in inventories and the rise in oil prices prompted the markets to rediscover oil industry service companies in particular: Schlumberger +5%, Halliburton +4%.
BUT THE ECB DOESN'T LOWER ITS GUARD
Yesterday, hurricane Sally lent a hand to European stock markets, which are still awaiting signals from the Fed. The increase in oil prices caused by problems with offshore infrastructure in the Gulf of Mexico, already absorbed, pushed up quotations of the crude. In addition to oil, however, the recovery of fashion and retail, strong areas of the economy of Southern Europe, is confirmed. Meanwhile, warlike signals are arriving from the ECB on exchange rates. the European Central Bank stands ready to adjust its monetary policy if economic developments indicate that it is failing to bring inflation back to target levels. This is what was declared by Isabel Schnabel, member of the board of the ECB: "We continue to closely monitor incoming information including exchange rate developments, and we are ready to act".
FLAT BUSINESS PLACE, ZARA CHARGES MADRID
Piazza Affari is almost flat: +0,04%, on the threshold of 20 thousand points.
Modest changes also in Frankfurt (+0,24%) and Paris (+0,13%). More lively Madrid (+0,95%), driven up for the second day in a row by the performance of Inditex, the parent company of Zara (+6% after the accounts above expectations for the second quarter: +214 million against the loss of $409 million in the first quarter, the first in 20 years).
London leaves 0,44% on the ground. New room for compromise on the Brexit front emerges after Reuters reported that the UK offered interim fishing concessions during talks with the European Union last week as London threatened to breach the terms of the divorce deal with the block.
Hut bucked the trend: the first major IPO on the British market in seven years started with a jump of 25,8%.
The secondary was positive: the spread between Italian and German ten-year bonds fell to 142 points (-1,62%) and the BTP rate stopped at 0,92%.
FERRAGAMO TAKES FLIGHT, MONCLER RUNS
Ferragamo takes flight (+8,36%), to the highest since June on the wave of the results of the first half, better than expected especially as regards the operating loss. Equita highlights “a less weak than expected EBIT in the second quarter thanks to better cost control”. Even if the broker points out that "there are still some uncertainties in the short term, and there is a need for greater clarity on the strategy". Brokers raised their target prices on the stock.
The results of the Florentine maison have infected the rest of the sector. Moncler (+3,2%) runs ahead of Brunello Cucinelli (+2%) and Tod's (+2,2%).
New ideas on Nexi (+1,8%) awaiting news on the merger with Sia.
Thud of Rai Way (-5,6% to 5,74 euros) after the placement of a package of 8,5 million shares by an institutional investor. Equita writes that the sale price was 5,65 euros.
Weak banks. The big Intesa and Unicredit are down between 1,4% and 1,6%.
The jump in crude oil eases some pressure on the oil sector. Tenaris +2,1%, Saipem +2,6%. Flat Eni.
GOOD DIASORIN
Diasorin also performed well, increasing by about 2,4% after announcing that it had placed the CE marking on the "Simplexa COVID-19 Direct" test for its use with saliva samples.
Leap by Astaldi: +5,8% after the accounts. Falck Renewables performed poorly (-4,7%) after the announcement of a senior unsecured equity-linked green convertible bond placement for 200 million.
