The bar of the cost of money is moving upwards. The Fed raised policy rates by a quarter of a point to 2%. The announcement that there will be two more increases during the year is less obvious. But, explained chairman Jerome Powell, the economy has now left the financial crisis behind, so that a cost of money below the "normal" level is no longer justified.
The decision that the ECB directorate will have to take today on his trip to Riga is much more difficult. The slowdown in the Eurozone economy is deeper than expected, as demonstrated by the drop in German expectations (from 2,4 to 1,8% the growth estimate for the end of the year). Thus the party of those who ask for the postponement of the choices on QE by one month to the end of July is growing. But such a choice could cause new stress in an already very tense climate in the Eurozone.
The foreign exchange market reflected the general uncertainty this morning: the euro slipped to 1,1725 after the Fed's statement, and climbed back above 1,18.
The markets immediately adapted to the indications coming from the US central bank. Wall Street, up in the first part of the session, reversed course: the Dow Jones closed at -0,47%, S&P -0,40%, Nasdaq -0,11%.
The yield on the US 3-year bond also rose to above 40% tonight after the decisions of the Federal Reserve's top management: during the night, sales on the Treasury Bond subsided and the yield fell. The distance between the two-year bond and the ten-year bond is getting smaller and smaller, it is 2007 basis points, the minimum since XNUMX.
The reactions to the federal sentence that gave the green light to the offer of 85 billion dollars by AT&T -6,2% on Time Warner +1,8% were immediate. Fox's shares shot up +7,7%, the subject of Comcast's offer (65 billion against the 52 agreed with Walt Disney).
As usual, Donald Trump will shake the picture. Tonight the president is expected to sign the new sanctions against Beijing.
Chinese stock markets fall, Hong Kong loses 0,6%. The Csi300 index of the Shanghai and Shenzhen stock markets loses 0,5%. macroeconomic data released tonight signal a slowdown in growth: industrial production and retail sales are below expectations.
Tokyo's Nikkei index is down 0,5%. The yen appreciated slightly against the dollar to 110,2.
The financial market of South Korea, closed yesterday, reopened in decline. Seoul's Kospi loses 1,5%. In this list, construction companies are falling back in particular, rising a lot in view of the Trump-Kim Jong Un summit.
The squeeze on the dollar has put new pressure on emerging currencies: the South African rand and the Mexican peso are suffering.
Oil moved little despite the sharp drop in US inventories. The markets await the outcome of the meeting between Vladimir Putin and the Saudi prince Mohammed Bin Salman, on the sidelines of the Russia-Saudi Arabia match which will open the World Cup.
Bad in Piazza Affari Eni (-1%) and Saipem (-1,92%).
MILAN UP FOR THE THIRD DAY
European stock exchanges moved little while awaiting the indications coming from the Fed and, above all, the indications on Quantitative Easing arriving today from the ECB, meeting in Riga. The great cold between France and Italy led to the cancellation of the meeting in Paris between the minister of Economics Giovanni Tria and his colleague Bruno Le Maire. Today Tria will meet his German colleague Olav Scholz in Berlin, after the cancellation of today's scheduled meeting in Paris with the French minister Le Maire.
The Milan Stock Exchange, on the third consecutive day of increases, continues its recovery. The index closed with a gain of 0,44% at 22.216 points. The performance of the FtseMib since the beginning of 2018 has returned to just above zero (+1,7%), against the -0,7% accumulated by the Eurostoxx index.
Frankfurt is also on positive ground (+0,38%). Lagging behind are Paris (-0,01%), London (+0,03%) and Zurich (-0,11%).
CREDIT SUISSE: EUROPEAN EXCHANGES TOO EXPENSIVE
Credit Suisse's global equity strategists downgraded continental European stocks to "underweight," saying valuations in Europe "aren't low" and Italy's political risk is unlikely to clear up any time soon.
“European stock exchanges price the probability of a crisis in the eurozone at only 15%, while the BTP/Bund spread prices a probability of 32%”, write the strategists in a note. And if the Italian political situation were to improve, the euro would be the first to take advantage of it, compared to the share market. “The euro is actually cheaper than eurozone stock exchanges,” conclude the strategists.
BTP AUCTION, YIELDS RISE. GOOD QUESTION
Positive closing for the BTPs, even if far from the highs, with the spread reducing the large drop in the morning, supported by the good performance of the medium/long-term auctions. the Treasury was thus able to close the mid-month round of placements without major problems.
The MEF has placed 5,63 billion BTPs on maturities of 3, 7, 30 years and off-the-run September 2046, slightly less than the maximum amount envisaged of 5,75 billion. Beyond the expected rise in yields, to the highest since 2014, auctions were, according to the experts, overall positive also in terms of the amount of market requests.
The Btp/Bund spread closed the session at 233 points, just below yesterday's close but 6 points above the low at the end of the morning.
THE TREASURY REACHED 55% OF THE 2018 NEED
The 2,84-year rate stopped in the evening at 2,86% (from 2,76% yesterday) after a daily low of 1%; the biennial holds below 0,85%, with a low this morning of 5%, the lowest level since XNUMX June.
In the afternoon, the Treasury re-opened 600 million 12-month BOTs, the entire supplementary offer, while the four BTPs up for auction today will be reopened tomorrow for a total of 937,5 million. Net of the reopening of the BTPs, the refinancing needs of 2018 (between 390 and 400 billion) are covered for about 55%.
STM AT THE TOP, MONDAY THE QUARTERLY COUPON
Gallops in Piazza Affari Stm, which rises by 4,37% to 22,22 euros after reaching the new all-time high of 22,24, benefiting from the strength of the tech sector at European level (+1,74%), on the wave the debut on the stock exchange of the Dutch ADYEN, whose share value on the first day of trading almost doubled to 455 euros compared to the IPO price and the indications coming from the Investor Day of the German Infineon. The company released its quarterly dividend of $0,06 per share ($0,24 on an annualized basis) on Monday.
UNICREDIT IS STILL CLEANING UP BAD LOANS
Once again, bankers supported the rise. The Italian sector index rises by 0,96%, while the European one loses 0,46%.
Leading the race is Unicredit +1,84%, which has put another 2 billion in non-performing loans on the market with closing expected after the summer.
Credito Valtellinese rose by 2,9% after the announcement of the sale of the non-performing portfolio at a price equal to 32% of the nominal value. The news also pushes the banks that are working on similar operations such as Banco Bpm +1,5%. The other former Popolari are highlighted: Ubi Banca +2%, Bper +1,65%.
Snags Banca Intermobiliare going up by 20%. The Italian sector index rises by 0,96%, while the European one loses 0,46%.
ADVANCE ITALIAN POST AMAZON MODEL
Poste Italiane is running (+1,89%) after the announcement of the agreement with Amazon for the delivery of e-commerce products also in the evening and on weekends. By 2020 there will be 10 employees engaged in parcel logistics.
FERRARI AND CAMPARI, NEW HISTORICAL RECORD
Two thoroughbred horses in the Milanese price list have reached an all-time high:
Ferrari rose by 3,6%, closing at 122,70 euros. +38% since the beginning of the year, one of the best performances of Piazza Affari.
Well bought Campari which updates its record to 6,93 euros, to close at 6,85 with an increase of 2,16%.
IN RED ITALGAS AFTER THE FLOOR. BRAKING REMOTE
Italgas drops 1,38% after the announcement of the industrial plan to 2024 which provides for 1,6 billion euros of additional investments in the period 2018-2024, as stated in the press release on the new industrial plan released this morning. The dividend is expected to grow by 4% compared to 2017. Operating profit for 2018 estimated at 435 million euros, slightly below consensus estimates.
Telecom Italy -1,4%. Bernstein cut the target price to 0,90 euro from 0,95. However, Bernstein calls it a buying opportunity.
MILANO SUPERSTAR FAIR: +89% FROM JANUARY
Fiera Milano closed the session with a gain of 5,5%, reaching the highest since 2015 at 3,56 euros. Since the beginning of the year the performance is +89%. There are two brokers who cover stock research and both have a purchase opinion: Banca Akros and Banca Imi.
After a sharp decline in the start, linked to the news of the house arrest of the president Luca Lanzalone for the Roma stadium, Acea recovered, settling at +0,44%.
