A powerful new stimulus to the markets is coming from Japan. In an unprecedented move overnight, the Central Bank of Japan adopted negative interest rates. The Nikkei immediately reacted with a leap of 2,8%. But the move comes after a series of data that showed a steeper-than-expected drop in industrial production amid tepid inflation in December, well off the BOJ's 2% target. And it is therefore an indicator of the pervasiveness of economic weakness.
We are now looking at the opening of Europe, hit yesterday by sales due to economic uncertainties and sales on the banking sector. The auto sector also weighed. Frankfurt closed down by 2,44%, Paris by 1,33%, London -0,98%, Madrid -1,72%. the Eurostoxx dropped 2,10%. In Milan, the Ftse Mib recorded the greatest losses, -3,49%, drowned by sales on banks. The rally of the barrel with Brent which touched 36 dollars a barrel instead helped European energy stocks and Wall Street which closed up: Dow Jones +0,79% and S&P500 +0,55%.
THE OIL RACE
The rally in oil was triggered by the possibility that Russia, together with OPEC, would cut oil production by 5% after rumors had been circulating for days. On these rumors, Brent has jumped up to almost 8%, touching 36 dollars a barrel and WTI has gone beyond 34 dollars. The oil race continued even after the denial from Saudi Arabia which denied having proposed a cut in oil production to Russia but, he later specified to the Wall Street Journal, said it was ready together with its Gulf allies to cooperate with other producer states to restore stability to international crude oil markets. Both WTI and Brent subsequently trimmed gains to settle at $33,91 and $34,74, respectively. The euro-dollar exchange rate is at 1,0903
MARKET MOVERS: DON'T LIKE THE BAD BANK
In addition to oil, today the market is looking at the numerous macroeconomic data on the agenda: from US, French and Spanish GDP to inflation in the Eurozone. In Italy, eyes are on thetoday's meeting between Prime Minister Renzi and Chancellor Angela Merkel in Berlin and on the banks after yesterday's flurry of selling. The market doesn't like the agreement on non-performing loans which does not remove the uncertainty about the numbers of the banks.
On the other hand, work on the risk front is progressing, with the Bpm and Banco Popolare merger in an acceleration phase. In the meantime Bmps has returned to profit after four years in the red. The preliminary results approved yesterday by the board show 2015 revenue growth of 26% and an 85% improvement in gross operating profit. Non-performing loans then begin to fall. Eyes also on the change at the top of Generali -4,08% after the departure of Greco.
