ZERO INFLATION, BAGS IN SHARP DOWN. SPIRITO SANTO CRUSHES THE BANKS
Zero level inflation. We have arrived in Italy, slightly ahead of schedule. Experts, in fact, expected +0,2%. The return of the Eurozone is not much better: consumer prices rose by 0,4% in July compared to the +0,5% expected by the consensus and the +0,5% of the previous month. Inflation is at levels not seen since October 2009.
The data contributed to the pessimism that prevails on the Old Continent's price lists. In Milan, the Ftse Mib index lost 1,61% to 20573. In Europe, London also turned negative -0,26%. The negative variation was broader in Frankfurt -1%, Paris -0,8%, Madrid -1,88%. The euro traded at yesterday's close of 1,339. Modest movements on the bond market, Bund at 1,16% and Btp at 2,68%.
The collapse in Lisbon of Banco Espirito Santo up to -64% contributes to the decrease. Tonight, the leading bank in the country announced that the loss for the six months will amount to 3,57 billion euros. The bank has started the process to increase the capital. Also play the default of Argentina preceded by the declaration of selective default by Standard & Poor's. First of all, the banks are paying the price of the negative economic situation.
In Milan the banks retreat. Unicredit -2,4%, Intesa Sanpaolo -2,7%, Ubi Banca -2,7%, Mediobanca -2,7%. Most of all Monte Paschi loses -3%. On the other hand, Generali stands out + 0,5% after announcing an operating result up 9,5% year on year to 2,51 billion euros, above estimates. This morning, during the presentation of the data, the managing director Mario Greco said that the dividend pay out could rise to more than 40%. The group's number one says he is confident of reaching the 2015% return on assets target before the end of 13.
Weak management: Azimut -3%, Mediolanum loses 2,5%. Treasury groups in the spotlight today in comparison with analysts. Enel -0,5% approved the purchase from Endesa of 60,62% of Enersis, the Chilean holding on which the subsidiaries in Latin America depend. Once the transaction is completed, Enel will evaluate the possibility of increasing the free float of Endesa itself which will in any case allocate the proceeds from Enersis to an extraordinary dividend. In March, Enel will present a new business plan. The objective is the reduction of debts from 41 to 37 billion, thanks to sales. But, for now, "it makes no sense to see the assets sold in Russia" says CEO Francesco Starace.
Eni loses 0,7%. The major closed the second quarter of 2014 with strong growth but below expectations. Adjusted operating profit for the second quarter was €2,73 billion (+39,3% year-on-year), but the consensus was expecting €2,86 billion. The EBIT of the Exploration & Production division stands at 2,98 billion, 200 million euros less than estimates. Tenaris -1,9%, Saipem -3,5%.
Industrial companies are down sharply: Fiat -3,5%, Pirelli -2,6%. Finmeccanica is down by 2,9%. Big losses also for Telecom Italia -2,5%. In luxury, Yoox rises by 0,9%, in renata after the jump of 3 at the start. Yesterday the company presented the figures for the quarter: net revenues were 111,5 million, +14,9% (+17,7% at constant exchange rates). This morning Citigroup confirmed the Buy recommendation and cut the target price to 25 euros, Bank of America Merrill Lynch confirmed the Buy and also the target price to 33,5 euros.
