There is no doubt: the Federal Reserve has shouldered the task of changing market expectations in terms of rates. The confirmation was given yesterday by William Dudley, president of the most powerful Fed, that of New York. “I was very surprised – he said yesterday at the press conference – by the interpretation that the markets have given of the times of the central bank's tightening. Still, I am of the opinion that a rate hike between June and July may be appropriate”.
The change of course coincides with the start today of the G7 meeting in Japan: finance ministers and central bankers are trying to reach an agreement capable of averting a war between currencies and thus restore impetus to world trade, in a dangerous decline .
US rates on the rise, therefore. But when? “To put it simply – writes Giuseppe Sersale of Anthilia – there does not seem to be consensus among bankers for a hike before the summer. But since the unwritten rules advise against proceeding with expansionary policies when they are totally unexpected, it is necessary to create the necessary leeway by preparing the market for the move. And that's what the Fed is doing”, comforted by the data coming from the economy.
The Leading Indicator, which serves to provide an indication of how the US economy will evolve in the next 3-6 months, surprisingly rose to +0,6% from 0,2% the previous month. Meanwhile, employment continues to improve: applications for new unemployment benefits fell to 278 from 294 the previous week.
WAL-MART SHINES (+9%), GOLDMAN SACHS BRAKES
Wall Street quickly fell in line with the new sentiment. Stock indexes weaken: Dow Jones -0,5%, Standard & Poor's 500 -0,4% to 2,040 points. NASDAQ - 0,6%. Banks are also down, even if the sector would be rewarded by the possible increase in rates: Goldman Sachs falls by 3%. But the hardest hit are telecoms (-1,3% the sector index), so far among the best stocks for yields so far higher than those of bonds, now seen on the rise. The brilliant performance of Wal-Mart is an exception. The global giant of large-scale distribution rose by 9% after having released results that exceeded expectations.
The dollar strengthens, growing against all currencies. The euro traded this morning at 1,123 against the US currency after yesterday crossing the 1,11 threshold. yesterday afternoon). It trades at 109,85 against the yen this morning, up 0,7% for the week.
The change of course penalized oil: Brent lost 2,8% to 47,54 dollars, WTI fell by a similar percentage, to 46,89 dollars. With suspicious timing Goldman Sachs has already adapted: on Tuesday morning the broker had already lowered the rating of American securities to "neutral". But already last week David Kostin, Goldman's chief strategist for US equities, had corrected his forecast: from a modest increase, 3%, for the whole of 2016, to a downward correction of prices by 10%. before any rebound.
Any increase in US rates will have a more than substantial cosmetic effect, argues Alessandro Fugnoli: "It doesn't matter that the Fed's hands are itching to raise rates, because QE will continue to push Europeans and Japanese to buy Treasuries as long as their yield is above zero". The 2-year bond is trading at 0,87%, it was 0,70% last week.
ASIA ON THE RISE: TOKYO LIKES THE STRONG DOLLAR
The effects on the Asian markets are moderate. This morning the Japanese Stock Exchange is about to close the session up by 0,5%, on these levels, the week ends with a gain of about two percentage points thanks to the push of the dollar in recovery against the yen. Hong Kong rose by 1% and Shanghai by 0,2%. Unchanged Seoul. Mumbai +0,5%.
BAYER'S TENDER OFFER FOR MONSANTO HOLDS BACK FRANKFURT
The signals coming from the Fed did not leave the European stock exchanges indifferent: Paris -0,7%, London -1,7%. In his press conference William Dudley, president of the New York Fed, underlined that the decisions of the American central institution on rates will take into account the probability of Great Britain leaving the European Union.
Frankfurt is doing worse (-1,3%), in full m&a climate. Bayer (-4,5%) presented a hostile offer on Monsanto, the world seed leader. In the note issued by the "prey" there are no financial details: at yesterday's prices, the capitalization of the Saint Louis company was 42 billion dollars. Since the beginning of the year, there have been $84 billion worth of agrochemicals deals.
MILAN SELLS 0,9% . THE BTP EARNS POINTS ON THE BUND
In Milan, the Ftse Mib lost 0,9% to 17.545 points, a subdued performance that reflects that of the other price lists. The market extended the downside in the afternoon as the selling also hit some banking sector stocks.
In the wake of US Treasury bonds, Bunds and BTPs opened yesterday down, only to then instead leave room for a recovery in the peripheral sector. The market has convinced itself that the conditions do not exist for a rise in rates in the Eurozone, protected by the ECB's Qe which has not yet achieved results on the inflation front. The ten-year BTP closed at a yield of 1,501%, the spread is at 131.
MEGAFUSION IN THE SECTOR: SAIPEM SINKS
Oil stocks weighed on the European indices (Stoxx sector index -2,5%): Eni lost 2,6%, Tenaris -3%. France's Total dropped by 2,2%. Saipem did much worse, down by 3,6%, closing at 0,3588 euros, after going up to 0,3849 euros in the morning on the news of a major merger in the sector. The French Technip (+12%) and the American FMC Technologies have announced the merger, an all-paper operation which will end with the creation of a subject jointly controlled by the current shareholders of the two groups which will have an endowment of 13 billion euros at equity level.
METROWEB, ENEL RELAUNCHES. PROXIES AGAINST CATTANEO'S BONUSES
The challenge for control of Metroweb has entered the hot phase. Yesterday Enel (-0,9%) made a new non-binding offer for the Milanese company controlled by CDP and F2i: 806 million euros. According to rumors, the offer concerns the purchase of 51% of the capital. The electric giant is in favor of a merger between Metroweb and Enel Open Fiber, the company created ad hoc for the implementation of the ultra-broadband plan. In the newco, F2i and CDP would continue to remain shareholders. It is not
In the meantime, a battle is announced at the next Telecom meeting: the proxy advisors, decisive for the voting choices of the funds, have declared themselves against the remuneration of the new chief executive officer Flavio Cattaneo, because it is linked to short-term results and because the bonuses are also guaranteed in case of early exit with the renewal of the board.
Weak utilities. Snam sells 0.77%: Société Générale has reduced the recommendation from buy to hold in the light of a valuation that goes from 5 euros to 4,7 euros. EPS estimates are raised by 10% to take into account a lower tax rate and a lower cost of debt. But the arrival of the rate hike in the United States should lead, by drag and drop, to an increase in the cost of money also in Europe, a potentially negative element for highly indebted companies, such as utilities.
DEUTSCHE BANK: REJECTED SALARY FOR VIPS
A day of high volatility for the banks, with investors who on the one hand see the possible advantages of a rise in the cost of money, and on the other fear a slowdown in growth. It should be noted that the Deutsche Bank shareholders' meeting (+1,3%) rejected the remuneration proposal for the bank's top management with 51,9%. However, the request to submit the behavior of the control bodies to an internal investigation, long inactive in the control action during a "catastrophic" 2015 also due to the fines showered by the supervisory authorities from all over the world, did not pass. The motion was still voted by 46% of the capital.
MORGAN STANLEY AWARDS INTESA. UNICREDIT STILL DOWN
Intesa shone in Piazza Affari, rising by 2,4%. The share remains Morgan Stanley's favorite in the Italian banking sector, with an overweight rating and a target price of 3,15 euros. On the other hand, Unicredit still falls (-1,4%), on which hangs the prospect of a changing of the guard accompanied by a strong capital increase. Monte Paschi is in negative territory (-1,1%). Carige leaves 2,4% on the ground: Fitch has downgraded the rating of covered bonds to BB+ from BBB-, with a stable outlook. Banco Popolare (-1,1%) and Pop.Milano (-1,2%) also fell. Mixed panorama also in insurance: UnipolSai +0,5%, Generali -1,4%.
SINGER BLITZ ON REAL ESTATE FUNDS, PRELIOS SAYS NO TO CONTI
Big movements on the brick front. The Luxembourg-registered company Blado Investment, which belongs to Elliott Associates and is controlled by Paul Singer, has announced its intention to promote a voluntary takeover bid on four listed Italian real estate funds, for a value of over 560 million but with a Nav higher than the billion. These are Polis (controlled by a group of popular banks, including Bper, Popolare di Sondrio and that of Vicenza) and, Immobiliare Dinamico of Bnp Paribas, Real Estate Mediolanum and Alpha Immobiliare of Idea Fimit. Stocks reacted with gains of between 12 and 18%.
Meanwhile, Prelios closed up 3,3% on the day of the shareholders' meeting which voted against the possibility of candidates nominated by former Enel CEO Fulvio Conti, who holds a small stake in a consortium of investors, to join the board .
MEDIASET SPAIN BUYS THE EUROPEAN RIGHTS
Positive Mediaset (+1,1%): the Spanish subsidiary acquired the television rights for UEFA Euro 2016.
Industry stocks moved slightly: StM -0,5%, Leonardo -0,2%. Fiat Chrysler falls by 0,4%. S&P upgraded FCA Bank's rating to 'BBB-/A-3' from 'BB+/B', with stable outlook.
In luxury, there was a drastic drop by Yoox (-4,1%).
