The ghosts of Halloween have caused more than a shiver to the markets, frightened by the plunge of oil which has lost almost 4%. What's more, the specter of deflation has unexpectedly reappeared on Piazza Affari, fueling fears about BTPs and the weakest banks, from Monte Paschi to Carige. But fear hasn't stopped Wall Street, despite electoral tensions. An impressive series of M&As has supported the American stock markets.
In the last incredible ten days, the American Stock Exchange has been the scene of operations for a total of 300 billion dollars, enough for now to exorcise the ghost of Donald Trump. In this context, the board of the Federal Reserve kicks off today, from which an indication is expected, if possible, on the next moves on rates, complicated by the political situation. Meanwhile, in London the governor Mark Carney, once registered the trust of Theresa May, announced that he will still remain at the helm of the Bank of England despite the ferocious attacks of the Brexit party.
TOKYO AND SYDNEY CONFIRM MONETARY POLICY
Meteo Borsa reports variable weather with risk of precipitation. Better-than-expected data from Chinese industrial production offset Asian equity markets' concerns about the US election campaign. Hong Kong is up (+1,1%), Shanghai and Shenzhen are also positive, Tokyo flat, Sydney -0,8%.
The Central Bank of Japan has decided to confirm the current monetary policy. The Bank of Australia did the same: nobody intends to move before understanding the direction of travel of the USA. Unstable equilibrium for Wall Street, supported by mergers, but depressed by the recovery of Donald Trump: S&P500 -0,01%, Dow Jones -0,1%, Nasdaq -0,02%. For the three major indices, October was the worst month since January.
IN THE USA TRANSACTIONS FOR 300 BILLION IN TEN DAYS
The giants of Big Business are all on the move. General Electric (+1%) announced yesterday morning that it will merge its oil & gas division with that of Baker Hughes (-1%). Thus was born a giant with revenues of 32 billion dollars a year of which General Electric will control 62,5%. Shareholders will receive an extraordinary dividend of $17,5. The new entity will be listed.
Level 3 Communications (+5%) company that offers equipment and services for the telephone network, has decided to accept the offer of rival Century Link (-9%). The equivalent value of the operation, in paper and in cash, is 34 billion dollars. Level 3 is valued at $66,5 per share, about 40% higher than the stock was trading before the first rumors about the ongoing deal were released.
Meanwhile, Blackstone has announced its intention to proceed with the acquisition of Team Health, a health services company, for 6,1 billion. Apple loses 0,5%. The New York Post reports that the company is evaluating together with its financial advisor the possibility of launching an offer on Time Warner (+0,8%) as an alternative to the latter's agreement with AT&T (108 billion).
If we also take into account the merger of Qualcomm (47 billion) and Bat on Reynolds tobacco (58 billion including debt) it emerges that, from 22 October to today, the American Stock Exchange has been the scene of M&A for 300 billion dollars .
THUD OF OIL: THERE IS NO AGREEMENT BETWEEN THE PRODUCERS
The day was marred by falling crude oil. The Vienna meeting between OPEC and non-OPEC producers did not produce results: everything is postponed to the meeting at the end of November. The effects on prices were heavy: Brent fell to 48,3 dollars a barrel, Wti just above 46 dollars.
Exxon-Mobil loses 1,3%. Goldman Sachs cut the stock to Neutral from Buy. The same broker raised the second largest oil giant on the American stock market, Chevron, to Buy (+1%). Both companies released their quarterly data on Friday. Down Conoco Phillips (-2,5%).
In Milan, Eni left 1,92% on the ground. Barclays, Goldman Sachs and Credit Suisse have meanwhile cut the target prices on the company which announced worse than expected accounts on Friday morning. Tenaris (-1,9%) and Saipem (-2,2%) were also bad. In Paris Total fell by 1,94%, in London Shell and BP -2% approximately.
PIAZZA AFFARI (-1,1%) DISCHARGES FROM A GOOD OCTOBER (+4,5%)
European markets also paid a price for US electoral uncertainty and the marked decline in oil prices. The Milan Stock Exchange closed the last October session down (-1,1%). A short distance away is Paris (-0,7%), preceded by London (-0,5%) and Frankfurt (-0,1%). However, the Ftse Mib index closed October with a largely positive result: +4,5%. The EuroStoxx 50 index, in the same period, gained just under 2%.
The protagonists of the last four weeks, both in Piazza Affari and in Europe, have been the banks. The EuroStoxx index of credit institutions closed the month with an increase of 8,6%. Eyes on Eurozone inflation data yesterday. The consumer price index, according to the preliminary reading, grew by 0,5%, a slight but encouraging increase compared to +0,4% in September.
On the other hand, Italian inflation surprisingly returned to negative in October, in the absence of the awakening trend in consumer prices that has been underway in the euro area for a couple of months. According to preliminary Istat data, the Cpi index recorded a 0,1% tendential decline.
ITALY-SPAIN, THE SPREAD WIDES TO THE HIGHEST SINCE 2014
Despite the semi-holiday session, the return of the deflation risk favored strong selling flows on the government bond market. The yield on the BTP rose by two percentage points to 1,67%, a level not seen since February. The spread with the Bund widened to 151 basis points.
The Italy-Spain spread on the 40-year stretch went into the area of 2014 basis points, the highest since October 12. At 2026 noon, the reference 1,609-year BTP for June 1,19 yields 47%, while the Spanish equivalent registers a rate of 2014%, for a differential of XNUMX basis points at the maximum since XNUMX. The prospect of the formation of a government in Madrid as opposed to concerns about the Italian referendum favors the widening of the gap.
SINKS MPS AGAIN. AND PASSA PRESS
The risk of stagnation has also affected the banking sector. Again under fire Banca Monte Paschi (-7,4%), down between various suspensions up to -9%. After a run that led it to double its value in one week, the stock began to lose ground last Tuesday, the day of the presentation of the business plan; it has since lost about 30%.
Meanwhile, the Bank is working to gather proxies in view of the shareholders' meeting on the capital increase, while CEO Marco Morelli prepares the next road show in search of investors. But the breaking news is the withdrawal of the offer by Corrado Passera, unwilling to wait beyond this week to get an answer from Monte dei Paschi di Siena on the possibility of having access to the accounts of the Sienese bank for which he had said he had found investors ready to put 2 billion. Mediobanca, Siena's advisor, left 4,3% on the ground.
UNICREDIT, CARIGE UNDER FIRE -6,4%
Rain of sales also on Carige (-6,2%). Tomorrow the Board will meet to find an adequate response to the new requests of the ECB which has set more stringent targets in the medium term to reduce the problem loans in the bank's portfolio. The fear of investors is that, once the new plan on non-performing loans has been prepared, the Bank will have to prepare new capital measures.
Difficult day also for Unicredit which lost 3,8%. The institute completed the sale of the Ukrainian subsidiary to the Russians of Alfa Group. As envisaged by the agreement signed on 11 January, 99,9% held in Pjsc Ukrsotsbank, one of the largest credit institutions in Ukraine, passes to Abh Holdings, the company headed by Alfa Group based in Luxembourg in exchange for a share of the same Abn around 9%.
Sales on Intesa (-2,4%) which will approve the quarterly report on Friday. Credito Valtellinese was heavy (-4%) after the meeting which approved the transformation into a joint stock company on Saturday. Bper -1,3%. We are once again talking about the UBI Banca solution (-0,1%) for the three good banks (Banca Marche, Etruria and CariChieti): the ECB's go-ahead for the operation should arrive this week. Still on the front of banks at serious risk, the time is short for the merger between Popolare di Vicenza and Veneto Banca. Meanwhile, the yield on the subordinated bond maturing in 2025 issued by Banca Popolare di Vicenza fell to its lowest since April, at 64 euro cents.
Banca Mediolanum still down (-1,9%) after the veto of the ECB on the presence of Fininvest in the capital. Weak Generali and Poste Italiane, both -0,7%.
BERLUSCONI: IN MEDIASET WE ARE BUYERS
The Berlusconi family is increasing its stake in Mediaset,
according to what former premier Silvio Berlusconi declares in the new book by Bruno Vespa: "Mediaset is a pillar of our entrepreneurial group and I exclude in the most decisive way that it could be alienated from my family". In the meantime, Barclays analysts today confirmed the equalweight rating on the stock and the target price of 3 euro while awaiting the results for the third quarter of 2016 expected on November 8th.
In the three months, analysts expect total revenues of 701,7 million euros (+1,2% yoy), an Ebitda worsening by 40,4% and negative for 73,3 million and a net loss of 70 million, this too shows a negative acceleration compared to the -60,1 million of the same period of the previous year. Weak Telecom Italia (-0,1%) which will announce the results of the third quarter on November 4th. The consensus expects a drop in revenues of 0,7% to 4,74 billion euros and a growth in Ebitda of 5,5% to 2,09 billion.
CNH, REVENUES DOWN. FLY ALERION AFTER THE RELAUNCH OF FRI.EL
CNH closed in the red (-0,3%) on the day the quarterly data was released. Industrials EBIT was $248 million, better than consensus estimates. The Exor-controlled group's third-quarter consolidated revenues were $5.749 million, down 1,7% from the third quarter of 2015 but better than expectations. Adjusted net income was $68 million, an increase of 79%.
New leap of Stm (+3,3%), driven by the accounts. Among the small caps Alerion flies (+7%) at the center of a battle for control between Edison/F2i and Fri-El, which on Friday evening increased the offer on the 2,60th to 1,90 from 29,9 euros per share, 25,4% of the capital and bought XNUMX% of the company off the market at the same price.
