"We will not end up like Greece” assures Matteo Salvini attacking “the enemies of Europe”, or the EU Commission. But Undersecretary Stefano Buffagni of the Five Star Movement notes that "we are one percent away from Greece and this cannot please". Meanwhile, Minister Paolo Savona, the architect of the manoeuvre, which he judged "correct and balanced", foresees that "the EU Commission may slam into an iceberg", but is confident in a new parachute from Mario Draghi, far from obvious given the attitude of the partners.
ITALY, IMF REPORTS DETERIORATION OF DEMAND
The reflections of the government guru are not confirmed by the assessments of the Monetary Fund which does not take much account of the government's growth forecasts for the years to come. The estimates foreseen by the IMF report for the Bel Paese stop at +1,2% +1,2% in 2018 and +1% in 2019, the lowest growth among the countries of the euro area, despite the downward revision of the estimates for Germany and France. If anything, the bulletin signals a "deterioration in internal and external demand and the uncertainty linked to the agenda of the new government".
After all, Italy is not the only area at risk for the markets at the beginning of October, the most delicate month. During the night, the cut in world growth estimates by the International Monetary Fund arrived: the lack of fiscal stimulus in the United States, together with the slowdown in China, translates into a correction of the forecast for 2018 and for 2019 to + 3,7% growth, from the +3,9% estimated in April.
WEAK YUAN HELPS SHANGHAI
After Monday's sharp slowdown (-4,7%), the Chinese stock market made a timid recovery: the Shanghai CSI index +0,3%. On the other hand, the Tokyo Stock Exchange decreased -1,2%. The exchange rates lead the price lists.
The yuan falls. Beijing's official fixing was set this morning at 6,9 against the dollar, one step away from the psychological barrier of 7. So much for the accusations of competitive devaluation launched by Donald Trump. Instead, it continues the strengthening of the yen, which reached 113,11.
IN FLIGHT THE BRAZILIAN STOCK EXCHANGE AND THE REAL
In the world of currencies, the strong appreciation of the Brazilian real should be noted, on the highs of the last two months due to the outcome of the first round of the presidential elections: the victory of the candidate on whom the markets had bet is looming in the ballot, Jair Bolsonaro. The São Paulo Stock Exchange gained more than 4%.
NASDAQ DOWN FOR THE THIRD STRAIGHT DAY
For the third day in a row, the Nasdaq loses ground -0,67% hit by the alarm over Chinese supplies to US technology companies. Google's problems weigh on Alphabet -1% after the Wall Street Journal revealed software operating problems involving half a million users.
The prospect of rate hikes held back the S&P 500 index - 0,04%. The Dow Jones rises +0,16%.
HURRICANE MICHAEL FIRES THE BRENT
Oil rebounds this morning: Brent +0,6% to 84,4 dollars under pressure from hurricane Michael which forced the closure of some manufacturing plants in the Gulf of Mexico.
Of note is the announcement between BP and Libya involving l'Eni, yesterday -2,5%. The British oil company has agreed with the national company to restart exploration in an area in the north of the country where drilling had stopped in 2014. Eni will take over 42% of the project and will assume the role of leading operator.
Meanwhile, analysts are expecting an increase in US oil and distillate inventories. But Tehran's alarm sounds: the global market will soon face "a serious shortage" of crude oil, says energy minister Bijan Zanganeh. US sanctions on Iran will be operational on November 4,
In Piazza Affari it held Tenaris -0,48%, a sharp decline Saipem -3%. Saras + 3,2%.
THE SPREAD ASPHALT BUSINESS PLACE
It must have been a difficult day. And it was. The spread has jumped over 300, Piazza Affari has competed with China for the worst stock market title on the planet. Unknown Italy also crippled the euro, which slipped to 1,147 against the dollar, and the other European stock exchanges, pushed deep into the red by the negative news arriving from Wall Street yesterday in the middle of the story.
Piazza Affari thus wore the black jersey on a bad day for everyone:
- Milan has slipped below the 20 mark: - 2,43% to 19.551 points.
- In the afternoon, the other European Stock Exchanges turned red: Frankfurt, -1,36%: Paris -1,1%; Madrid -0,59%; London -1,12%; Zurich -0,94%.
SAVONA: DRAGONS WILL THINK ABOUT IT
“The markets have reacted moderately to what has happened and what has been said in Europe. In fact, we expected more." Paolo Savona, Minister for European Affairs thus responded to a question about concern for the reaction of the markets. “We are not worried by the markets but by the political clash between conservative and reformist forces. We have made the choices, we want to stay in Europe and in the euro but Europe must do something”. That is to say? “If necessary – added the minister – Mario Draghi will intervene. I am confident that the ECB will prevent a new serious crisis”.
THE BTP/BUND GAP WIDES AND TOWARDS SPAIN
Meanwhile, a new red alert was triggered on the debt market. Already in the morning the rate on the 3,63-year benchmark BTP rose to 20%, 3,43 cents above the 2014% of Friday's closing, reaching new highs since February XNUMX.
The Btp/Bund spread has reached 311, widening by more than 25 points since the last closure, in view of the 5-year highs reached at the end of May (326), in the most chaotic days that accompanied the birth of the M5s-Lega government.
Another negative sign: the interest rate curve has flattened on the long end, the differential between the 34-year and the XNUMX-year bond falls to XNUMX basis points: the lowest in the last six years.
The spread between the Spanish Bono and the BTP has never been so high, 199 basis points (+15 basis points).
AUCTIONS COMING SOON. THE NEW BTP 3 MAKES DEBUT
Against this backdrop, the market is preparing to face a new round of auctions starting tomorrow. 6 billion 12-month Bots will be offered, against an equal amount maturing.
Treasury Thursday will make available between 5 and 6,5 billion of medium/long-term securities. The new 3-year Btp October 3,5 will make its debut for an amount between 3 and 2021 billion (coupon of 2,3% against 0,05% of the current April 2021 benchmark).
Between 1 and 1,5 billion of the Btp 7 years November 2025, coupon 2,50%, will also be made available. The offer on the extra-long stretch is completed by the reopening of the 15-year BTP in September 2033, coupon 2,45% and that of the 30-year off-the-run BTP in February 2037, coupon 4%, with a residual life of 19 years, for a total amount between 1 and 1,5 billion.
“The markets have reacted moderately to what has happened and what has been said in Europe. In fact, we expected more." Paolo Savona, Minister for European Affairs thus responded to a question about concern for the reaction of the markets. “We are not worried by the markets but by the political clash between conservative and reformist forces. We have made the choices, we want to stay in Europe and in the euro but Europe must do something”. That is to say? “If necessary – added the minister – Mario Draghi will intervene. I am confident that the ECB will prevent a new serious crisis”.
BANCO BPM LEADS THE DECLINE OF BANKS
Banks were the companies hardest hit by the downturn. The sector index fell to its lowest level since the end of 2016 with a drop of 3,5% (the European Stoxx for the sector -1,4%). At the origin of the crisis is the soaring spread: according to the analysts of Crédit Suisse. a Btp/bund spread above 400 points would not be sustainable for the banks which would then be forced to carry out capital increases to restore capital ratios.
Among the most targeted titles Bpm bank -6,47%. The institute is ready to evaluate the sale of the stake held in Agos Ducato as part of a reorganization of consumer credit activities.
Heavy Mediobanca -4,67% and the two big names: Understanding - 3,26%, Unicredit - 3,56%.
Of note is the new thud of Banca Carige -8,47% and Bank Ifis -12%.
In managed it loses its shots FinecoBank -4,79%. Heavy Italian post -3,7% which also should not be involved in the rescue of Alitalia.
Banca Mediolanum -3,3%: net inflows slowed down in September. Azimuth -3,2%.
FIAT CHRYSLER ANNOUNCES A HYBRID JEEP
Among the industrialists:
- He misses out Fiat Chrysler -2,3%: in 2020 the group lThe Jeep Renegade Phev will be on the market, a plug-in hybrid electric vehicle which will be produced in Melfi. Brembo -3,75%.
- Prysmian -2,3%. After the target price cut by HSBC.
- Leonardo-1,7%. The controlling stake in the company, held by the Treasury, could be transferred to Cassa Deposito e Prestiti. An aggregation with Fincantieri to create a defense and shipbuilding pole on the Cdp Reti model is not excluded, as part of a project that would also bring Enav under the hat of the Cassa.
Weak Tim-1,9%. The Ministry of the Economy wants to review the payment mechanisms for the concessions for the use of frequencies for 5G telephony, in order to speed up the collection, which is now spread over several years.
Enel-1%, Credit Suisse reduced the target price to 6 euros, from 6,40 euros.
ONLY LUXOTTICA AND RECORDATI ARE SAVED
A few stocks escaped the general decline:
- Luxottica -0,74% on which Kepler Cheuvreux confirmed the buy rating.
- Recordati +0,54% - The Rossini Sarl vehicle, used by the private equity operator CVC to finance the acquisition of Recordati, has launched a roadshow, which will end on Thursday, for the launch of a 1,28 billion two-tranche bond of Euro.
- Continue the bounce of Astaldi it closed up 12,82% after having been in the auction for most of the session awaiting news on the restructuring.
- Highlights too Molmed +7,2% and Go Internet + 6,45%.
- New historic low instead for Ovs -6%. The stock has lost 67% in the past 12 months. The market capitalization decreased to around 500 million euros.
