Not just Trump. Indeed, despite Trump. 20 days after the constitutional referendum, domestic politics has forcefully entered the Italian stock market. In the general rise in interest rates and parallel strengthening of the dollar with which the financial markets respond to the election of Donald Trump, a note distinguishes the Bel Paese: the Italian stock market lacked the support of the banks, which instead characterized the other European markets , carried by the wind of Wall Street. And so, against the rise of Deutsche Bank (+4%) the most solid Italian banks pale: Intesa loses 0,4%, Ubi loses 1,7%, Pop. Emilia -0,2%. Rumors of a possible dissolution push Société Générale to Paris but not Unicredit which, after a day of great contrasts, closes at +0,4%. Monte Paschi (+10%) makes history in itself, which follows a script of its own.
In the meantime, the belief has spread on the markets that, in the words of Margie Patel of Wells Fargo, "we have entered a new paradigm: there is the possibility that, after 35 years of falling rates, we will move on". According to this thesis, the fiscal stimulus wanted by Trump, combined with protectionism and disbursed to an economy close to full employment, will produce an acceleration of inflation and a tightening of monetary policy, to the full advantage of the strong dollar and the weakening of bonds . On the contrary, both the ECB and the Bank of England will only be able to maintain expansionary monetary policies also to balance the tightening of monetary conditions due to the rise in yields driven by US securities. The reasoning goes well but, Giuseppe Sersale of Anthilia points out, "the fiscal stimulus that has produced all these expectations will arrive at least in a six-month period, and in any case it will take a while to produce effects on the cycle and inflation".
4 BILLION BONDS BURNT IN 1,500 DAYS
Therefore, temporary corrections cannot be ruled out today after the violent sales of the last few days which brought US 2,26-year yields to a yield of 2,2153% (this morning down to 4%, first drop of 3 points after six sessions) and thirty-year-olds over 1.500%. The sell-off on bonds over the past four days has resulted in a $1 trillion drop in prices. A storm that did not spare the German Bunds, which climbed more than 0,15% for the first time since May. Even Japanese JGBs returned to a positive yield yesterday, before falling back to -XNUMX% this morning.
BTP AT 2,12%, THE SPREAD WITH SPAIN ALSO RISES
In the general rise in interest rates, the yield on 10-year BTPs rises to 2,12%, from 2,01% on Friday. The spread with the German Bund also rose, widening by 5 basis points, to 176 (with a peak of 182), a level not seen since October 2014. The 2015-year yield also jumped to its highest since July 20, rising by more than 3,353 basis points on the previous closing and reaching a maximum of 2015%, while in parallel the US thirty-year bond jumped to its highest since December XNUMX.
The differential between the rates of the ten-year Italian and Spanish benchmarks widened to exceed 50 basis points and reach 52 basis points, the highest level since February 2012.
Even the fury of the dollar, which yesterday gained new positions on the euro traded at 1,07 (-1%) and on the yen (-1,7% to 108,45%), seems to have calmed down for now: -0,3 % this morning against Asian currencies. But the US currency remains close to a 14-year high. The Chinese renmimbi is also at its lowest since December 2008.
WALL STREET: BANKS THROUGH, TECH IN FALL
The tensions on bonds and currencies affected the performance of the stock markets. Weak Tokyo (-0,1%), after Monday's leap (+1,7%) also due to the excellent and unexpected performance of GDP in the third quarter (+2,2%). Tonight Shinzo Abe leaves for Washington for the first official meeting between heads of state of the Trump era. The stock markets of the region are still under pressure and, under pressure from the outflow of capital towards the dollar, they have suffered losses of around 5% since the day of the US elections. This morning the worst is the Indian Stock Exchange (-1,4%). Sydney -0,4%, Hong Kong rises +0,5% thanks to the good results of Tencent.
Lists contrasted yesterday on Wall Street: the Dow Jones rose by 0,11%. The S&P500 index was stationary (-0,01%). The Nasdaq is down (-0,36%). The portfolio rotation movement started last week, after the election results, continues. Finance continues to shine (+10,8% since the start of the Trump era). The sector index rose 2,3%, led by Bank of America, JP Morgan and Morgan Stanley. The changing of the guard is approaching for the heads of the financial control institutions: after pressure from Janet Ywlln, it is the turn of the president of the SEC, Mary Joe White who has announced her intention to leave the role together with President Obama.
On the other hand, the technological ones are down sharply (-3% in the last week, -1,7% yesterday). Leads the descent Apple (-2,5%), followed by Facebook and Microsoft.
BIG SHOTS OF SIEMENS AND SAMSUNG. OIL BOUNCES
Even big business is back after the electoral break. Mentor Graphics rose 18% after Siemens (+1,8%) announced an agreement to acquire the company that makes design automation software in a $4,5 billion deal.
Harman International Industries booms (+25%) after Samsung Electronics announced an $8 billion deal to acquire the company that deals with connected car audio systems. It could be a sign of the Korean giant's less interest in Magneti Marelli.
Oil prices rebound above 45 dollars this morning, after the fall of the last few days. Brent futures rebound in Asia to 45,14 dollars while the US West Texas Intermediate one rises to 44,13 under the pressure of the decline in the extraction of shale oil. Eni shares fell yesterday in Piazza Affari (-2,3%). Saipem loses 3,5%, Tenaris gains (+1,8%).
BUSINESS PLACE LIGHTNING UP. AIR OF MERGER IN THE BANK
European equities in positive ground with the sole exception of Milan, down under the stress of the referendum. Piazza Affari (-0,75%) brought up the rear, with the Ftse Mib index down to 16.686 points, far from Paris (+0,43%), Frankfurt (+0,24%), London (+0,34%) and Madrid (+0,22%).
The European go-ahead for the manoeuvre, albeit conditional, is ready. After the controversies between Juncker and Renzi in recent weeks, the EU Commission will today indicate that the Budget Law may not comply with the European rules on debt and deficits, but will suspend the judgment until the beginning of 2017, giving the government time to pass the referendum and lengthening the terms of the negotiations with Rome. But in addition to the report cards on the maneuvers of the individual countries, the Commission on Juncker's political initiative will publish an eighteen-page communication with which, if it does not decree the end of austerity, at least it calls for a moratorium for the two-year period 2017-2018.
Meanwhile, the trend of the reopening of the Btp offer at auction last Friday also confirmed the uncertainty of the government bond market. The supplementary offer, which was €412,5 million for the three-year October 2019, €337,5 million for the seven-year October 2023, €225 million for the thirty-year March 2047 and €112,5 million for the September 2040 issue, did not indeed he had no request.
The prospect of a rise in interest rates favored the banking stocks of the Old Continent (excluding Italy) . The sector index is among the best today, up nearly 2%, aided by news of possible mergers in an industry whose margins have shrunk significantly with ultra-low rates and weak growth.
Commerzbank jumped 7% after Handelsblatt said it could acquire rival Oldenburgische Landesbank from Allianz. Sweden's Intrum Justitia jumps 16% to new record highs after announcing a merger with Norway's Lindorff.
MPS, A CONVERSION FOR 40 BONDSHOLDERS
Contrasted day for Italian banks. In Italy only the star of Monte Paschi shines: +11,4% on the day of the board of directors who gave the green light to the voluntary conversion of a dozen issues equal to 4,7 billion including four tier 1 and seven tier 2 subordinated bonds in addition to Fresh from 2008. 1,5 billion euros are expected from the conversion. To convince the bondholders (about 40) leverage will be on a premium compared to current market values: for Tier 1 bonds, the riskiest, the conversion should be around 85% of the nominal value.
Yesterday the board approved the transfer to Cerved of the management of Juliet, the non-performing loan platform that will manage MPS's non-securitized non-performing loans. Finally, it was learned that a dozen investors were admitted to the data room for the analysis of the bank's confidential accounts. Among them could be the future anchor investor of the Sienese bank.
THE STOCK EXCHANGE BELIEVES IN SOCGEN-UNICREDIT
Day of ups and downs for Unicredit: up 5,5% and postponement due to an excess rise in the morning, braking and closing at 2,28 euros, practically unchanged compared to the day before. What aroused the expectations of the markets was the indiscretion about the creation of the first cross-border giant of European, indeed global, finance: the marriage between Société Générale and Unicredit. A great suggestion which, in truth, has been aired for some time but which gained speed after the appointment of Jean-Pierre Mustier, formerly of Socgen (chaired by Lorenzo Bini Smaghi) to the top of the Italian institute. The two banks reacted to the rumors with a curt no comment. In reality, it is impossible for something concrete to mature before the presentation of the strategic plan of the Italian Bank, set for December 13, and before the amount of the capital request is specified. There is talk of 13 billion, a figure which could also include the conversion of 3 billion of bond cashes issued in 2008.
UBS AWARDS GENERALI. 5 BILLION IN FUNDING FOR BANCA GENERALI
In asset management, a crash for Anima (-5,11%), while Banca Generali performed well (+0,85%). Gian Maria Mossa, general manager of the institute, said that this year the group's goal is "to close organic funding above 5 billion and I think this is a result worthy of attention"
The insurance companies are dusting off, in particular Unipol (+2,18%) and UnipolSai (+2,01%). Generali rises by 0,7%: UBS raised its target price to 14,4 euros from 13,7 euros, confirmed the Buy judgment.
EXOR FLIES, UTILITIES IN DIFFICULTY
The rate hike hit the most indebted companies: Telecom Italia (-2,5%) and utilities. Atlantia loses 2,8%, Enel -0,8%, Terna -3,7%, Snam -2,4%. The good results announced on Friday boosted Exor (+3,2%). Backtracking by Fiat Chrysler (-2,8%), Cnh Industrial climbs (+0,7%). Brilliant performances for StM (+2,1%) and Leonardo (+1,9%).
