The rise in US rates has arrived: the Fed funds rise to a range between 0,25 and 0,50%, a quarter of a point more than the previous -0,25%. After nine years, the US is shelving its zero interest rate policy. An historic but widely announced decision which, underlined Janet Yellen herself, closes “an extraordinary period that lasted seven years” in which money at low interest rates made employment recovery possible.
“We have only moved now – explained the Fed chairman – because the positive conditions on the employment and inflation front have matured”. Central Bank policy, he added, "will remain accommodative" and future increases will be "very gradual", because the 2% inflation target is still a long way off.
The roadmap foresees, if the data permits, increases totaling 1% by the end of next year. "The Fed - writes Mohammed El-Erian of Allianz - has kicked off the softest phase of increases in financial history".
The motion, decided unanimously by the Monetary Committee of the Bank, has been welcomed by the markets. On Wall Street, the Standard & Poor's index closed with a rise of 1,5%, at 2.073,07 points. Dow Jones +1,26%, Nasdaq +1,52%. Highlight Goldman Sachs, which gained 2,5%, best blue chip. General Electric +2,2%: the industrial-financial conglomerate has announced an 18 billion dollar buyback plan.
2-year T-bonds, the most sensitive to short-term rates, rose more than 1% for the first time since April 2010.
WELL FOR ASIA ON THE EMERGING EVEN
The response of the Asian markets was also positive this morning. In Tokyo, the Nikkei index opened at +2,4%. Sidney (+1,7%) and Shanghai (+1,1%) also performed well. Emerging countries are also doing well, potentially the most affected by the rise in interest rates (and the dollar). Kuala Lumpur +0,6%, Jakarta +1,3%.
THE DOLLAR RISES, EUROPEAN FUTURES RISE
The dollar rose, traded at 1,0852 against the euro (-0,6%) and the yen (-0,3% to 122,55). Meanwhile, the controlled descent of the yuan continues, down for the ninth day in a row to 6,457 against the US currency: compared to the prices at the beginning of August, the decrease is 5,88%.
A positive response is also expected this morning from the European stock markets after a slow session yesterday, pending the appointment with the Fed. Futures report: London +69 bps, Paris +65 bps, Frankfurt +125 bps. Piazza Affari (-0,29%) closed yesterday slightly lower than on Tuesday. Better London (-0,72%) ahead of Paris (+0,18%) and Frankfurt (+0,22%). Madrid unchanged. The stocks of the Automotive sector (Stoxx +1,3%) and the Oil (+0,9%) are highlighted. On the bond market, the 1,7-year yield rose to 102%, the spread slightly improving to XNUMX points.
THE DESCENT OF OIL CONTINUES
Oil returns to fall: Brent fell to 37,27 dollars a barrel, Wti to 35,54. The unexpected increase in US inventories weighs heavily. Meanwhile, the leaders of the US congress have reached an agreement which provides, after 40 years, for the possibility of exporting crude oil from the US. On Wall Street, the energy index is the only one to close down by half a point. Eni marks an increase of 0,1%, Tenaris falls by 1%.
THE JUDGMENT OF CITI FOLGORA A2A (-6,1%)
The utilities sector (+2,6%) led the rally in the US BRSE, the first to benefit from the drop in rates. The plot of Piazza Affari is different, where A2A (-6,1%) was the worst stock in the main basket. The thud is linked to the judgment of Citigroup which demoted the Lombard company to Neutral from Buy with a target price reduced to 1,30 euros from the previous 1,50 euros.
On Tuesday, the stock had marked its highest quotation since the summer of 2010 at 1,3670 euros. The progress since the beginning of the year is 51%. Analysts are optimistic about A2A: according to Bloomberg, out of 12 recommendations on the stock, 10 are Buys and two Holds, only one Sell. The average target price is 1,538 euros. Enel closed unchanged.
TREVI +25% ON A MISSION TO THE MOSUL DAM
Great deals ahead in the Middle East chessboard. Noteworthy is the leap of Trevi (+25,32%) after the confirmation that the Cesena company, owned by Fondo Strategico, is the only candidate in the field for the 2 billion dollar order for the repair works of the Mosul, Iraq.
The group intervened with a note explaining that the plant, located 35 kilometers north of Mosul, is seriously damaged. The risk is of a subsidence that could have serious consequences putting the provinces of Nineveh, Kirkuk and Salahuddin at risk, causing serious damage in the Euphrates plain as far as Baghdad, 350 kilometers to the south.
Meanwhile, Prysmian (-1%) has announced an investment of 100 million euros to raise Oman Cables Industry to 51%, of which it already held a 34,7% stake.
PININFARINA RISES UP 50%. FCA UNCHANGED
Among the other industrialists, Finmeccanica is advancing (+1,5%), while Stm is down (-2%). Fiat Chrysler closed unchanged. Sharp rebound by Pininfarina (+50% to 1,965 euros) after the crash on Monday in the wake of the news that Mahindra will acquire 76,063% of the group's capital from Pincar at a price of 1,10 euros per share. Mahindra will then launch a full public offering on the common shares at the same price. But the delisting from Piazza Affari is not foreseen.
BRAKE REMOTE DE PUYFONTAINE: THE BOD SHOULD NOT BE TOUCHED
Telecom Italia fell back (-0,7%) on the day after the first shareholder, the French Vivendi, confirmed its success at the meeting, managing to include four of its representatives on the board of directors and blocking the conversion of savings shares into ordinary shares. Vivendi's CEO, Arnaud de Puyfontaine, new director of the former incumbent, has ruled out new changes in the board of directors of the Italian group in the short term.
"It's not on the agenda, it's absolutely not under discussion," said de Puyfontaine as he left the Telecom boardroom and answered a question about the possibility of new changes on the board. “We already made the changes yesterday.” De Puyfontaine said he had very interesting discussions on the future of the Italian group with the other members of the board. Mediobanca Securities confirmed the outperform recommendation and the target price at 1,51 euro
BANKS CONTRAST, FLY AZIMUTH
Contrast the banks after Tuesday's leap: Unicredit -0,5%, Intesa -0,7%, Monte Paschi -1,3%. In asset management, the rise of Azimut (+2,1%) stands out.
TOD'S RESETS 2015 EARNINGS
In luxury, Tod's slide reversed the positive trend of the opening and from the high of 75,10 euros and closed down 2,5% at 72,65 euros, resetting the performance since the beginning of 2015. Raymond James' analysts have cut the target price on the stock to 68 euro from the previous 72, confirming the negative Underperform rating.
Luxottica (-1,08%) announced that it has renewed the license with Dolce & Gabbana until December 31, 2025. Since the beginning of the year, the share has risen by 33%.
RCS: THE INCREASE IS NOT INEVITABLE
Rcs Mediagrup is recovering (+ 4,34%). At the meeting, CEO Laura Cioli declared that "the capital increase is not inevitable" adding that "the delegation" to the Board of Directors "allows greater flexibility but does not imply the need to carry out the capital increase now". The new industrial plan will be examined by the Board next Friday and will be presented to the market on Monday 21 December.
Good Cairo Communicarion (+3,8%): Mediobanca Securities confirmed the outperform recommendation and the target price of 5,67 euro. Finally, Fiera Milano is on the rise (+9,06%). The Milan Chamber of Commerce, a 6,36% shareholder through PARCAM, resolved to fully exercise the option rights on the capital increase. The new industrial plan will be examined by the Board next Friday and will be presented to the market on Monday 21 December.
