EXCHANGES ACCELERATE WITH US DATA
EU, NECESSARY TO RECAITALIZE THE BANKS
Piazza Affari closes sharply higher on the day of trust in the Government which received 316 yeses. The Ftse Mib rose by 2,49% to 16.289,65 points after yesterday's crash, while the spread between the Btp-bunds also returned below 360 basis points, climbing up to 380 points in the morning. The rest of Europe was also positive, albeit with more contained performances: the Dax rose by 0,89%, the Cac by 0,97%, the Ftse 100 by 1,17%. Stock markets, aided by good US macroeconomic data on retail sales, are leaving behind the downgrade to AA on Spain by Standard & Poor's (arrived overnight) and inflation rising to 3% in Italy (data released in morning). However, a partial slowdown was triggered by the fall in consumer confidence to 57,5 from 59,4 in the University of Michigan index.
At the moment Wall Street is traveling up with the Dow Jones at +0,63% and the Nasdaq at +0,93%, with Google jumping by 5,88% after the better-than-expected accounts. While the G20 of finance ministers is taking place in Paris, the moods on the price lists are however linked to the prospect that an agreement will soon be reached for the management of the debt crisis with the expansion of the Esfs fund and with the first yeses received from the plan recapitalization of the banks indicated by Josè Manuel Barroso, president of the European Commission. "The European Commission's proposal to set an equity level of 9% for banks, to be reached by the end of the first half of 2012, is acceptable, because it allows a shock to be cushioned", said the French economy minister, Francois Baroin.
“It is absolutely clear that where there is a need for recapitalization we proceed to implement it - said the German government spokesman Steffen Seibert - “Now we are waiting for concrete proposals to say how to proceed with the recapitalisation”. Yesterday there were divisions over Barroso's plan which envisages that the recapitalization be conducted first by private investors and only later by the states or by the EFSF fund. At the head of the no front is Deutsche Bank's number one, Josef Ackermann: "It's a simple round game - he said - In these market conditions, private individuals will not subscribe, therefore the burden will fall on the state budgets, aggravating the situation of the public debt".
But today the EU Commission replied by reiterating the need to recapitalize the banks: "It is clear that the difficulties that financial institutions are going through are closely linked to a lack of confidence created by the debt crisis - said a spokeswoman for the EU executive – It is therefore not possible to deal with these two problems separately”. The EU Commission's proposals on the recapitalization of banks will be discussed at the Eurogroup and Ecofin meetings at the end of next week. Meanwhile, estimates on capital requirements are emerging: Credit Suisse speaks of 220 billion for 66 banking groups and Goldman Sachs of 300. Fitch has cut UBS's rating and placed seven other banking groups under observation: Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley and Société Générale.
EMERGING COUNTRIES READY TO INTERVENE
GEITHNER, IMF CAN HELP
According to the Financial Times, the IMF will also be involved in the European rescue and emerging countries are ready to strengthen its firepower to combat the debt crisis that has hit some countries in the euro area. Under study - writes the FT - there would be the creation of a financial vehicle managed by the IMF and financed by the countries, or the direct financing of the Washington institution through the subscription of special bonds. Meanwhile, Treasury Secretary Geithner said the IMF has "substantial" uncommitted resources that could be used to help Europe manage the debt crisis.
Geithner went on to say that US and world growth is still slow but fears of a recession have diminished. After yesterday's record against Italy of the Italy-Spain spread of 67 basis points, today it is the French Oats that signal the new record with the bunds with the differential widening to 94 points. However, central banks are continuing to buy BTPs and Bonos, according to market sources. The euro is back close to 1,39 against the dollar in the wake of the prospect that the agreement for the management of the debt crisis is approaching. WTI oil rises above 87 dollars per barrel.
FIAT AND THE BANKS BOUNCE
BANKITALIA, SOLID INSTITUTIONS BUT RISKS FOR ACCESS TO CREDIT
In Piazza Affari, the Ftse Mib is driven by the banks and the rebound of the Fiat galaxy. The Lingotto, which closed up 5,42%, issued a new 1,95 billion revolving credit line with a three-year term which replaces the 1 billion one in February 2009. The credit line is not currently used but it remains available for general corporate needs and working capital requirements”. Equita confirmed the buy recommendation with a target price of 7,5 euros.
Banca Akros instead reduced the judgment to accumulated from buy due to market conditions which suggest prudence. Fiat Industrial rose by 5,32% and Exor by 5,16%. Steady increases also for the banking sector which regains confidence after yesterday's sales on the divergences of the European recapitalization plan and on the new tensions of government bonds. Bpm leaps again (+6,36%), under the spotlight in view of the meeting of 22 October for the appointment of the new Supervisory Board. Ubi rises by 4,35%.
Consob communicated that since 11 October Norges Bank has directly held a 2,008% stake in the capital. Yesterday the stock, demonstrating the strong volatility that persists on stock exchanges and on banks in particular, was suspended down by around 5%. Unicredit (2,32%) was also up sharply, while Intesa stopped at +1,09% and Mps at +0,39%. Consob takes the field on Mediobanca (+2,35%) in view of the meeting of 28 October which must renew the board of directors and the board of statutory auditors to ascertain that the list presented for the statutory auditors by the Cariverona Foundation is actually minority and not connected to that majority expressed by the Agreement and attributable to Unicredit of which Cariverona itself is a significant shareholder.
The reassurances of the Bank of Italy's October bulletin also arrived today for Italian banks, which states: "The basic conditions of Italian banks remain solid" but also a warning on the consequences of the tensions on the markets which risk being reflected "increasingly on the conditions of access to credit".
PIRELLI INVESTS IN ARGENTINA
STM RISES THANKS TO RBS
Stm (+3,46%) benefits from the reconfirmation of the buy by Rbs and the target price of 6,30 euros and is supported by the good performance of the US chip sector. Pirelli rises by 3,81% after announcing the doubling of the factory in Argentina. The della Bicocca group will invest 300 million dollars for a plant specializing in truck tires. The investment was already included in the business plan presented last year. The updates to the business plan will be illustrated by Marco Tronchetti Provera himself on November 9 in London.
TELECOM ITALIA BOND SOLD OUT
FINMECCANICA FALLS ON HSBC
Telecom Italia's financial director (+1,18%), Andrea Mangoni, confirmed a debt at the end of the year of 29,5 billion euros and confirmed the debt target of 25 billion for 2013, despite the outlay for frequencies and thanks to an improved kick generation. Yesterday the group placed a 750 million bond maturing in January 2017 at a rate of 7,15 percent. Finmeccanica loses 1,39% after the broker HSBC cut the recommendation to underweight. Today the CEO Giuseppe Orsi met with the mayor of Rome Gianni Alemanno on the question of the Alenia restructuring. The subsidiary Ansaldo Sts was also down. These are the only two stocks down on the main basket.
