The spotlights are focused on the Fed which tonight, alongside the expected rate hike, will update its forecasts on the US economy, significantly different from those of President Trump. The news from Amsterdam was no less attentive: Dutch voters today inaugurated the hottest electoral season in the history of the Eurozone, red-hot by the bitter duel with the Turkish president Erdogan. Eurosceptic Geert Wilders could finish first, but, given the absence of allies, will have no chance of setting up a government. An affirmation higher than the polls, however, could ignite new fears about the strength of the populist wave in Europe, with immediate repercussions on the chances of Marine Le Pen, already favored by the scandals that are sinking François Fillon.
Surprisingly, however, the real news on the eve comes from oil, now in free fall. The new landslide (-10% in a week) was caused by the increase in Saudi Arabian production in February, which also remained within the limits agreed at the OPEC summit in November. The growth was 263.000 barrels per day to 10,11 million barrels per day. According to sources close to the Riyadh government, Saudi Arabia has not allocated the largest share to the international market, but to domestic stocks to be used for its own refineries and terminals. However, this is not good news for the emerging markets, which are already grappling with the probable increase in US interest rates and, consequently, in dollar debts.
LI KEQUIANG TO US: TRADE WAR WILL COST YOU MORE
Weak markets in Asia this morning under pressure from energy stocks. Both Tokyo and Shanghai are down slightly. The Korean stock market falls by 0,2%: the presidential elections will be held on May 9th.
"Economic data comforts us but we remain vigilant against both domestic and international dangers." In any case, Chinese premier Li Kequiang underlined during a press conference that "we have the tools at our disposal to deal with a possible trade war, which would cost the US much more than us".
US stock prices mixed on the eve of the Fed's rate decisions. The Dow Jones index falls by 0,21%, S&P 500 -0,34%. The Nasdaq was also down (-0,32%).
OIL, COLD AND HEALTH HOLDING WALL STREET BACK
The combined pressure of three factors weighed on prices: the oil landslide, the plunge in airline stocks grappling with the storms that are preventing flights in the North-East USA; the decline in health care-related stocks, with hospitals in the lead, in the face of the health counter-reform that will remove all coverage from 14 million Americans.
The bond yield curve flattened. The yield on the 10-year Treasury Bill fell to 2,59%, from a high in September 2014 reached yesterday at 2,61%. The two-year bond weakened, with its yield rising to 1,38% (+ two basis points).
The energy sector dropped 1,1%. Chevron (-1,8%) was the worst blue chip. The trend of oil stocks on the European Stock Exchanges was similar: the Stoxx index of the sector (-1,7%) marks the most consistent drop.
Eni closed down by 1,1%, Saipem -1,3%, Tenaris -0,7%. Among airlines United Continental -4,7%, Southwest Airlines -3% and American Airlines -2,7%.
BRAKING IN MILAN. THE SPREAD IS WIDENING
A day of waiting also for the markets of the Old Continent, held back by falling oil and by tensions on the debt market, still at their highest levels. In Milan, the Ftse Mib index closed the second session of the week down by 0,86% to 19.537 points.
The other European indices were also down: Paris closed at -0,51%, London -0,13%, while Frankfurt lost 0,01%. The Zew index of economic expectations in Germany rose to 12,8 points in March from 10,4 in February.
The level of economic activity remains significantly below potential in some countries including "France, Italy and South Korea". This was supported by the International Monetary Fund in the document prepared in view of the meeting of finance ministers and central bankers of the G20, scheduled for 17 and 18 March next in Baden-Baden, Germany. The International Monetary Fund has asked the group of the world's twenty largest economies to work together to preserve the benefits of free trade and avoid protectionism.
The spread between BTPs and Bunds widens, albeit slightly, to 191 basis points from 189 at the previous close. On the markets, caution prevailed in view of today's events. Italian paper was also affected by the particular concentration of supply: the reopening in the afternoon of the auction on three-, seven-, 7- and thirty-year BTPs recorded a request from specialists for less than 15% of the total available, equal to over two billion. Interest was limited to the thirty-year bond: the extra-long section is the one that has shown the best performance.
BRAKING BANKS PLACED UNDER FIRE
The day was characterized by the mediocre performance of the banking sector, down by 1,4% both in Italy and on the continent. Under fire Banco Bpm -3%, Ubi -2,5% like Bper, the subject of a study by ICBPI on the issue of the disposal of NPLs that the Modenese institution is called to address at the request of the ECB.
Non-performing loans of Italian banks are also beginning to drop sharply: 77,8 billion in January, the lowest figure since June 2014. The drop allows the net non-performing/impi ratio to be reduced to 4,45% (from 4,89 % of December).
Unicredit finished down 0,9% despite Barclays' promotion to Equal Weight from Underweight. Understanding -1,3%. In insurance, the decline of Generali (-0,9%) is less marked than that of UnipolSai (-2,3%).
Poste Italiane is under fire (-0,85%) despite the judgment of Goldman Sachs which raised the target price to 7,20 euros from 7,0 euros (Neutral/Attractive recommendation confirmed). The market thus reacts to the rumors about the possible non-reappointment of CEO Franceso Caio, disliked by part of the majority.
THE SUN RISES: GENTILI AD INTERIM, INCREASE AROUND 50 MILLION
Piazza Affari rewarded the turnaround at the top of the Sole 24 Ore (+10,5%) after the decision of the Board of Directors to entrust the direction of the newspaper ad interim to Guido Gentili, replacing Roberto Napoletano who goes on unpaid leave, After the held the meeting of journalists decided by a very large majority to bring back the strike that has blocked the publication of the newspaper since Saturday, this morning again on newsstands. Regarding the future director, CEO Franco Moscetti clarified that he personally believes that "it would be preferable to identify a person who has never worked for the Sole 24 Ore group in any capacity". According to the CEO, the capital increase, which will be approved by the assembly at the end of April. It should be "closer to 50 than 100 million".
ON FIAT CHRYSLER VOLKSWAGEN IT CORRECTS. SUFFERS FROM CIRC
Fiat Chrysler closed down (+0,3%) after a brief outburst following the statements of Volkswagen CEO Mathias Mueller who denied that he did not want to open a dialogue with Sergio Marchionne in view of a hypothetical alliance. “I just said – he specified during the meeting – that we have not met”. In the automotive sector, Brembo also rose +0,6%.
The other industrialists did little: Stm rose by 0,3%. Among the small companies, Gefran leaped +11,56% just a few days before the Star conference in which the pocket multinationals will be the protagonists.
Technogym also did very well +5,05%: Equita Sim raised its target price from 5,7 to 6 euros, confirming the buy recommendation. Marr (+3,35%) celebrates the new all-time high at 20,99 euros.
On the contrary, Cir still suffers (-4,2%). Kepler Chevreu downgraded to “hold” from “buy” and Banca Akros to “neutral” from “accumulate”.
Among the utilities, Snam drops by 2,3% after the announcement of the launch of an equity-linked bond loan for a nominal amount of 400 million. Acea slips by more than 3% in the wake of some broker downgrades.
Atlantia rose slightly (+0,18%): Deutche Bank raised the target price on the stock from 22,6 to 24,7 euro.
