Le US midterm elections have unleashed the Stock Exchanges. Wall Street stocks show increases of more than two percentage points: Dow Jones and S&P 500 up 2,13%, Nasdaq + 2,63%. It was the best session for the US stock market since 1982.
Asian price lists are also positive. Tokyo gains almost 2%, Hong Kong 1%, Shanghai 0,6%, Seoul 1,3%. The trade dispute between China and the United States has so far not caused serious damage: in October, Chinese exports rose by 15,6% yoy, accelerating from +14,4% in September and better than +11,7% estimated by economists. Imports also accelerate (+21% from +14,5%), the trade surplus rises to 34 billion dollars. The dollar appreciates against both the yen (113,7) and the yuan (6,93).
Surprisingly, the elections on Wall Street were celebrated with record increases in securities linked to marijuana, the latest discovery of financial speculation. But the rally is justified by the resignation of Jeff Sessions, the attorney general opposed to the liberalization of cannabis for therapeutic use, forced to step aside by Donald Trump for not having stopped the Russiagate investigation. The investigations, after the majority of the Chamber has passed to the Democrats, could find new vigor, but the President, strengthened by the Republican affirmation in the Senate, flaunts security: "We work together, without rancor", he told his rivals in a press conference, "but know that, if you want war, I know how to make it better than you".
Wall Street appreciates the new balance: Democrats are strong enough to block new tax cuts but not to repeal existing tax reform or to redistribute corporate funds. The president will have to give up the wall with Mexico (the weight is on the rise) and share the next steps in the trade war against China with the Democrats.
The president will then have to limit his pressure on the Fed, already under pressure for its intention to proceed with the rate increase. The central bank will meet today but will in all likelihood postpone the hike until December. Meanwhile, yesterday the Treasury had to take note of the flop of the 30-year bond auction: market yields rose to 3,41%.
Brent oil moved slightly to $72,1 a barrel, after the release of data on crude inventories in the United States. Strategic reserves increased for the seventh consecutive week: +5,7 million barrels, to 431 million, against the +2 million expected.
EVEN EUROPE IS PARTYING. TODAY'S EU FORECASTS
Even the European lists celebrated the outcome of the US vote. The better-than-expected performance of German industrial production (+0,2% in October) also contributed to the increase, which reduced fears about the state of health of the euro area. However, the negative note comes once again from the Bel Paese: the Italian economy will remain weak in the coming months, communicates Istat, noting that, in October, "the leading indicator registers a further decline, signaling the persistence of a phase of weakness in the economic cycle”. The forecast falls on the eve of the new estimates on EU economic growth.
MILAN SALES, RECORD BANKS IN MADRID
The warning did not prevent the Milan Stock Exchange from excelling in Europe with a rise of 1,42% to 19.517 points.
However, the rise was driven by the Madrid Stock Exchange (+2,02%). But the rally of the banks (increases between 2 and 3%) is not linked to the US vote: the Supreme Court has decided that credit institutions are not required to pay the stamp duty on mortgages, thus allowing them to avoid the possible repayment of billions of euros to mortgage holders.
Frankfurt limits the increase to 0,8%: Adidas suffers (-2,1%) after the sportswear company cut its turnover target. Paris +1%, London +0,97%.
The euro/dollar, which also exceeded the 1,15 threshold during the day, closed at 1,1470 (against 1,1412).
ENRIA AT THE LEAD OF EU SUPERVISION
The European Central Bank has chosen the Italian Andrea Enria to lead the banking supervision sector after a head-to-head with the Irish Sharon Donnery. Enria will replace Daniele Nouy as head of the Single Supervisory Mechanism, which oversees the 118 major banks in the eurozone, a €21.000 trillion sector. The Italian banker, who was certainly not helped by the Italian government, still beat the Irish candidate Sharon Donnery. It is probable, at this point, that the replacement of the chief economist of the ECB Peter Praet will be the Irishman Philip Lane.
DRAGHI: ITALY, YOU MUST BE MORE RESPONSIBLE
Meanwhile, news has leaked of a meeting between Mario Draghi and Giovanni Tria on the sidelines of last Monday's Eurogroup. According to the ECB president, Rome must demonstrate a degree of responsibility that "goes beyond EU rules", because high public debt and low growth require a degree of discipline that goes beyond EU legislation.
Positive day for the Italian secondary, recovering both on the Bund and on the titles of Portugal and Spain.
SPREAD TO 289, 5,5 BILLION BOTS ON MONDAY
The yield of the ten-year BTP drops by 7 basis points to 3,31%, from 3,39% yesterday. The spread closes at 289 basis points, from 295 at the opening.
On the occasion of the placement of the 12-month Treasury bond on Monday 12 November, the Ministry of the Economy will make 5,5 billion euros available to investors, the same amount maturing.
INTESA SUPERSTAR LEADS THE BANKS
In Piazza Affari, bank shares were well bought (+1,67 the sector index), which benefited from the recovery of government bonds. Intesa Sanpaolo rose by 2,67%, still celebrating the quarterly higher than expected. Banca Akros promoted the recommendation to Buy from Add confirming the target of 2,90 euro. Mediobanca was more cautious which confirmed the Neutral, reducing the target price to 2,35 euros from 2,40 euros.
However, the Ubi went against the trend (-0,58%), on the day of accounts for the first nine months. The words of number one, Victor Massiah, penalized the actions, which opened the door to actions to strengthen capital ratios.
CNH SWENDS, BREMBO BRAKES
Pirelli (+3,42%) did well together with the entire automotive sector: FCA +2,32%, Ferrari recovering (+0,25%) after yesterday's losses. CNH Industrial (-0,42%) recovers after the stock exchange due to the good news coming from Wall Street on Caterpillar, after having lost, following the quarterly, up to 5% at the start. The higher-than-expected industrial debt ($2 billion) is worrying.
The exception is Brembo (-2,54%) which reversed the trend by closing sharply lower, at 9,60 euro, with a trend in contrast with the market. In the last quarter, Ebit recorded a drop of 4,4%, to 57,1 million from 59,8 million. A note explains that "the tension caused by the macroeconomic scenarios remains high", but the solidity of the fundamentals allows "to be cautiously optimistic for the remaining part of 2018 management".
DIASORIN BLACK JERSEY AFTER THE CONTI
Negative signals also from Diasorin, falling by 6%, to 81,60 euros.
The company active in diagnostic tests closed the first nine months with growing revenues, Ebitda and profit, but raised some uncertainty about the performance of the last quarter of 2018 thus triggering the negative reaction of the market. A note specified that "the possible postponement to 2019 of some major tenders in countries served through distributors could negatively affect the closing of the accounts for 2018". CEO Rosa added another factor of uncertainty regarding the fourth quarter , or the US sanctions on Iran.
ENEL ELECTRICITY, BRINDA CAMPARI
On the other hand, the quarterly effect on Snam was positive (+2,5%), also in the wake of the new four-year strategic plan.
Enel (+1,7%) closed the first nine months with ordinary income of 2,88 billion, up from 2,583 billion in the same period of 2017. In the third quarter, Ebitda rose by 13% year on year 4,27 billion euros, net of non-recurring items, the growth is 4%. Confirms the targets for gross margin and net result, but announces the upward revision of the estimated net debt expected at the end of the year. The company presents the industrial plan on November 20th.
Campari purchases continue (+3,59%), thanks to the increase in the target price by Jefferies (to 7 euros from 6,70), RBC (to 6,60 euros from 5,70) and Bofa Merril Lynch (at 7,50 euros from 6,20).
Buzzi also did well, rising by 3,07% on the heels of the quarterly.
Fly up to +17,16% Tiscali, which announced that the agreement with Fastweb for the transfer of frequencies should be finalized at the end of the month.
