With a perfect surgery, the Fed has initiated the reduction of monetary stimulus without hurting the bull run. Furthermore, and it was the most difficult operation, he convinced the markets that a rate hike is not in sight: inflation remains "transitory", but the Central Bank is ready, if necessary, to intervene.
By the end of the month, the Fed will start buying fewer Treasury bonds and less bonds linked to home loans: the cut is $15 billion. The initial scope of the monthly tapering is now deemed "appropriate", but the Fed says it is ready "to adjust the pace of purchases if justified by changes in the economic outlook. Imagining to proceed at this step, in July, we arrive at zero stimuli, as expected. But the Fed specified that the announcement is not an anticipation of an imminent and inevitable rate hike.
The markets liked this non-dogmatic approach: sure, prices are rising more than expected, but there are good reasons not to traumatize the financial markets with a drastic turnaround: it applies to the Fed as well as to the ECB or the Bank of Japan. And the possible hike being examined today by the Bank of England does not disturb the climate, in line with what has already been decided by the other banks of your Majesty, namely Canada and Australia. And so: a) stock markets go up; b) the bond markets slow down but do not tremble; c) the dollar and raw materials fall; d) the exception is oil pending the decisions of OPEC+ and the developments in the nuclear negotiations with Iran.
THE EUROSTOXX SEES PINK, IN THE USA 14 LIFTS IN 16 SESSIONS
Eurostoxx futures anticipate a positive start for Eurozone stock markets; up even those on the City.
Last night Wall Street made the 14th increase in the last 16 sessions: Dow Jones +0,29%, S&P 500 +0,05%. NASDAQ +1,04%. Russell 2000, the list of medium-sized companies, also goes up.
ASIAN EXCHANGES RISE. GLOBAL INDEX AT THE HIGHEST
Jerome Powell's convincing reassurances about the transience of inflation are setting the tone for the Asian Pacific stock exchange session, with the result that the global MSCI World index is once again at its all-time high.
The Nikkei gains 0,7%, the CSI 300 of the Shanghai and Shenzen lists 0,9%, the Kospi of Seoul 0,4%. The India Stock Exchange is closed.
MODEST INCREASE IN T BONDS
The bond market reacted with a modest increase in yields and a steepening of the yield curve. The yield on the 1,60-year Treasury Note rose to 1,55% from 5% at the close. The spread between the 30-year and 84-year yields widened for the fourth consecutive day, to XNUMX basis points.
The derivative that prices five-year inflation rose by two basis points, to 2,46%, about 25 basis points below the highs for the period reached in mid-October.
The exchange rate has hardly reacted: this morning the euro-dollar cross is down slightly to 1,159. The dollar is also appreciating against the yen, sterling and the Danish krone.
OIL RETURNS TO AUGUST LEVELS
Among the raw materials, oil has moved a lot. The increase in US crude inventories, back to August levels, was accompanied by a 3,5% decline in WTI. Texas oil is down 1% to $80 this morning. According to rumors reported yesterday evening by Dow Jones, there is a date for the resumption of nuclear negotiations between Iran and the United States.
LAGARDE: THIS IS WHY EU RATES WON'T GO UP
“It is very unlikely that the European Central Bank will raise interest rates next year, despite market expectations for a similar move as early as next October”. The president of the ECB, Christine Lagarde thus put her hands forward before the Fed announced her decisions. "In our forward guidance on interest rates we have clearly articulated the three conditions to be met before starting to raise rates," added Lagarde, already challenged for the uncertainties revealed after last week's directorate. “Despite the current peak in inflation, the medium-term outlook remains weak and consequently it is unlikely that these three conditions will be met next year”, he added from Lisbon, noting that “the current surge in inflation is mainly due to factors of a temporary nature, although these factors may show a greater degree of persistence than initially estimated".
BREATHE THE BTP AND THE SPREAD FALLS
Lagarde's message has garnered the attention of the markets. The fall in rates on Italian bonds continued: the yield fell to 1,05% from 1,09%, down to a minimum of 1,02%.
Before the words of Jerome Powell, the spread with the German counterpart touched 119 points against 122 on Tuesday.
MILAN PINK JERSEY IN EUROPE
Piazza Affari is the best in Europe (+0,69%) and grabs 27.377 basis points. In September, the unemployment rate fell to 9,2% from 9,3% the previous month, in line with expectations.
In the rest of Europe, Madrid (-0,85%) and London (-0,4%) are in fractional losses. Frankfurt is flat, Amsterdam (+0,46%) and Paris (+0,34%) rise, which at 6.950,65 points exceeds its record dating back to 21 years ago (6.944,77 points).
LUFTHANSA FLYING AGAIN (+7%)
Lufthansa flies (+7%) after the airline returned to profit for the first time since the start of the coronavirus crisis thanks to an easing of travel restrictions.
Ferment in biotech. The French Biomerieux (+2,6%) advances on the wave of the possible merger with the Dutch Qiagen, active in molecular biology.
FERRARI SUPERSTAR, VINEYARD PROMOTED BY BROKER
Piazza Affari rises thanks to the quarterly reports, starting with the brilliant debut of Benedetto Vigna at the helm of a Ferrari (+3,99%), which has garnered unanimous approval among brokers. Equita has revised its estimates: the target price of the stock rises by 7%, to 180 euros (rating hold confirmed). After the accounts, Kepler Cheuvreux also raised the target price on the Prancing Horse from 190 to 210 euros, confirming the hold recommendation. The same judgment of Intesa Sanpaolo, which raised the target price from 184 to 220 euros, appreciating the CEO's statements on the acquisition of orders which, together with the presentation of a new icon in mid-November, provide strong support for 2022. SocGen rewards the Reds with a buy.
Exor also benefits from the rally (+3,42%), which now has its first stake in Ferrari. Stellantis was also positive (+0,46%) despite the negative sales figures for October. According to Equita, the market will restart with the new incentives.
LEONARDO ELETTRICA WAITING FOR THE ACCOUNTS
Well bought Leonardo (+2,57%) who will publish the results of the third quarter today. Meanwhile, the defense holding company has signed an agreement with Elettronica, one of the leading global operators in the electronic defense sector, which aims to consolidate long-term strategic cooperation.
Interpump and Buzzi also do well among the industrialists.
INTESA APPROVES THE INTERIM DIVIDEND FOR 2021
Intesa San Paolo was down slightly (-0,4%) after its excellent results: in the first nine months the institution reached 4 billion in profits, the minimum target for the whole of 2021. The bank also approved the interim dividend (1,4 billion euro) on the 2021 financial year.
The other big names were positive: Banco Bpm +1,97%, Unicredit +1,68% and Mediobanca +1,28%. Both Mps (-1,2%) and Banca Carige (-2%) were weak.
IFIS FILL UP WITH NPL CREDITS
Followed by Banca ifis (+1,77%), which acquired an NPL portfolio of unsecured loans from Cerberus for a value of 2,8 billion. This is the largest direct sale in Italy in terms of size in 2021 and the largest in the history of the institution.
In managed business, Anima Holding (+2,73%) runs after the results ahead of Fineco (+2,35%).
TIM BOUNCES, TAKES FLIGHT TINEXTA
One week after the extraordinary board of directors, Tim wakes up (+1,6%) after the shock of the downward revision of the guidance. He took profits for Prysmian (-1,4%) after the previous highs.
Fly Tinexta (+7,2%) after the announcement of the completion of the acquisition of 60% of the capital of the French CertEurope.
ONLY SARAS SHINES IN THE ENERGY, TODAY THE DATA FROM TENARIS
In the red Diasorin (-1,47%) and oil sector stocks on the eve of the OPEC+ meeting. Tenaris drops 1,28% just a few hours from the accounts, the same correction for Eni.
The good tone of the refining market gives a boost to Saras (+3,62%). Purchases on the stock were also stimulated by the opinion of Kepler Cheuvreux analysts, who raised their opinion to hold from veteran.
WE REVIEW BIALETTI, RECORD DEBUT FOR MEDICA
Bialetti Industrie gains 6,8% after the go-ahead from the Court of Brescia for the new debt restructuring agreement.
The Medica freshman rips off with a leap of 25,5% on the day of its debut on Euronext Growth Milan.
Intercos drops 2,1% on profit-taking after the run on the first day of listing. Fly Tinexta (+7,2%) after the announcement of the completion of the acquisition of 60% of the capital of the French CertEurope.
