In a Brussels under siege, the finance ministers of the Eurozone will today discuss the Commission's judgments on the national budgets presented in recent days. But the new security needs will be at the center of the debate. In London, meanwhile, David Cameron will present a 30% increase in the defense budget to deal with the threat of terrorism. In this context, having overcome the first impact of terror without apparent damage, the markets are preparing for the next moves by the central banks. It begins on 3 December with the directorate of the ECB, which will adopt measures to counter the slowdown in inflation. This will be followed on the 16th by the increase in US rates, the first since 2008. Even earlier, on Monday the 30th, the Monetary Fund will admit the yuan to the club of currencies that make up the special drawing rights.
EUROPE, FLAT OPENING EXPECTED
In the absence of Tokyo (closed for holidays), the Asian stock exchanges moved little: Shanghai -0,3%, Hong Kong in negative ground, Sydney +0,4%. The decline of the euro continues: the single currency is trading at 1,0605 against the dollar.
An almost flat rise is expected for stock markets in the Old Continent, pending the PMI data (relating to business orders) which will be released in the morning. Here are the Ig Markets forecasts: Paris + 2 points to 4.912; Frankfurt +5bp to 11.124; London -25 bps to 6.309.
SAVE BANKS, 3,6 BILLION ADVANCED BY INTESA, UNICREDIT AND UBI
The credit sector is in the spotlight this morning. Yesterday evening the government approved, subject to the consent of the European Commission, the decree authorizing the deferred payment of taxes for the institutions that will participate in the rescue of four commissioned banks (Banca Marche, Cassa di Ferrara e di Chieti, Popolare dell'Etruria). The operation envisages the transfer of risky loans (8 billion, already written down to 1,5 billion) into a single bad bank and the creation of 4 “cleaned up” and recapitalised bridge banks. The newborn "National Resolution Fund" will provide the necessary funds (1,5 to cover losses, 1,8 for new capital and 140 million for the bad bank).
The necessary liquidity was advanced by Intesa, Unicredit and Ubi, which were granted deferred tax payments in exchange. The control of the four rescued institutions is in the hands of the Fund, administered by the Bank of Italy's resolution authority. There will be four distinct managing directors but a single president in the person of Roberto Nicastro, former general manager of Unicredit. In this way, the old shareholders and the holders of the senior bonds will pay the bill with the write-down of the receivables and the zeroing of the capital. The recourse to the bail in (in force from next January 100) was averted in extremis, which envisages the involvement of the other bondholders and current accounts over XNUMX thousand euros.
MEDIOBANCA COUPON TODAY. GAMBERO ROSSO MAKES DEBUT
Rain of coupons in Piazza Affari. Atlantia (0,4 euro, interim dividend), Mediobanca (0,25), Mediaset (0,16 interim), Tenaris (0,15 interim), Terna (0,07 interim) and Sias (0,14 euro) ). Gambero Rosso makes its debut at Aim today (2014 revenues of almost 15 million euros, for an Ebitda of 3,4 million euros). The proceeds from the listing are intended to strengthen the TV and digital part of the platform dedicated to taste. Finally, the capital increase of Bonifiche Ferraresi is under way: the adjusted reference price of the share has been set at 20,40 euros, that of the rights at 2,472 euros.
Finally, here is the summary of a hot week, lived in anticipation of the choices of the central banks.
WALL STREET TOP 12 MONTHS
1) The US Stock Exchanges celebrated the prospect of an increase in the cost of money. Wall Street had its best week in 12 months. The S&P 500 index rose 3,3%, Dow Jones +3,4%. The Nasdaq leads the race (+3,6%): signs of improvement in the economy prevail over the imminent higher cost of money. In evidence Nike (+5,46%) which launched a buyback of 12 billion dollars and the split (2 for an old one) of the shares. Abercrombie & Fitch jumped 25% after doubling profit in the third quarter.
FEAR-PROOF EUROPE. MILAN THE LESS BRILLIANT
2) The European Stock Exchanges have not let themselves be intimidated by the terrorist attacks that have rocked Paris. Indeed, it was enthusiasm that dominated. The leader was the Dax of Frankfurt with a gain of 4%. Good performance for Paris: the Cac gained 2,3%. Piazza Affari is less lively, held back by the performance of the banking sector: the FtseMib index gained 1,6%.
FINMECCANICA RECORD, BANKS BAD
3) A week to remember for Finmeccanica (+10,5%). Confirmation has arrived from the ECB that public safety expenses will not be accounted for in the Stability Pact. On the financial front, Azimut performed well (+5,6%) which toasted the drop in European rates. Geopolitics benefited oil stocks, especially infrastructure providers such as Tenaris (+4,6%) and Saipem, which benefit from the newfound "friendship" with Russia. Strong increase also for Eni (+ 3,7%).
The banking sector is bad: the prospect of falling rates weighs heavily, but also the risk of capital increases. Banca Popolare dell'Emilia lost 2,4% on the end of speculation about its involvement in the risk of the popular ones. Monte dei Paschi lost 2% along with Unicredit. Pop Milano was also down (-1%).
EU BONDS TOWARDS ZERO INTEREST
4) The European market has already aligned itself with the expansive measures envisaged for the ECB summit. In particular, yields on medium-term securities are aligning below the level of -0,3%, i.e. the new negative rate that will be adopted by the ECB for deposits with the Central Bank. The schatz, the German two-year bond, returns (so to speak) -0,39%. But the qualifications of the same duration in the Netherlands, Finland, Austria, France and Belgium are also below zero.
ITALY, END OF MONTH AUCTIONS UNDERWAY
5) The two-year BTP, meanwhile, records a zero rate. On longer maturities, the 10-year BTP closed below 1,50%, the lowest since the beginning of November. The spread for the simultaneous fall of the Bund was stable at 0,49%. Month-end Treasury auctions will be held next week. It begins on Wednesday with the Ctz (1-1,5 billion) and the reopening of two Btpi (1 billion). Tonight the amount of the Bots on offer will be communicated on Thursday 26.
CHINA ALLIED WITH DRAGONS. AND SELLS T BOND
6) US rates have moved in the opposite direction, with the 2-year Treasury up by 0,9%, the highest since May 2010. Both the US market and that of the Eurozone, explains Barry Eichengreen, are now strongly conditioned by the choices of the Central Bank of China. After the crisis in August, Beijing pledged to curb the devaluation of the currency by buying up yuan. Part of the T-bonds accumulated over the last ten years has come to support the effort, holding back the prices of US securities. The effect on the euro area is even more significant: Chinese sales of Bunds have provided Mario Draghi with the raw material to make purchases of Qe on German paper.
