This time the stock exchanges have to say thanks to Zhou Xiaochuan, the powerful and legendary governor of the People Bank of China who, in an attempt to counter the slowdown in the Dragon economy, cut rates by one point, the largest measure since 2008. Mario too Draghi took advantage of the move of his Beijing colleague: the push coming from China also gave strength to European lists, Frankfurt in the lead, thus easing the tension on the front of the Greek crisis. But the emergency remains. Yesterday, according to the Bloomberg agency, the Athens government approved a decree obliging local authorities to transfer all cash reserves to the Hellenic Central Bank.
Meanwhile, however, the stock exchanges have canceled most of the effects of last week's slowdown. Curiously, Beijing's decision has had more effects in the West than in Asia. Hong Kong advances this morning (+1,4%), but Shanghai loses 0,3%. Shenzhen +0,9% , but did not recover Monday's losses. The performance of the Business indicator weighs heavily, a sort of thermometer of the moods of business executives, which has been declining for 4 months. But according to Merrill Lynch it is clear that China is pushing businesses and households to the stock market. Meanwhile, Tokyo is up (+0,9%).
OIL RISES ON WALL STREET. MILAN RECOVERS 1,25%
New York is making a decisive recovery: the Dow Jones index advanced by 1,17%, the S&P 500 by 0,93% and the Nasdaq by 1,27%. The boost came from the oil companies and the quarterly reports of Morgan Stanley (+0,6%), Hasbro (+12,6%) and Halliburton (+2,2%).
Yesterday was a day of recovery also for the European price lists. In Milan, the Ftse Mib index recovered 1,25%, closing at 23.333 points. The most robust rebound was that of Frankfurt (+1,74%). Paris also performed well (+0,9%), ahead of Madrid (+0,22%). London, the market most sensitive to the trend of raw materials, also rose (+1,6% the Stoxx index for the sector): Rio Tinto and Bhp Billiton rose by 2,5%.
BTP IN RECOVERY BUT NOT TOO MUCH. WEIGH THE GREEK UNKNOWN
The recovery of the debt market was less brilliant, under stress from the news that (not) came from Athens. After a difficult start, Italy, together with the other peripheral countries, recovered ground but reduced the drop recorded last week only to a small extent: the yield on the ten-year BTP stood at 1,432% (against 1,50%), the spread around 140 points compared to the Bund. Meanwhile, the landslide of Greek titles continues. Yesterday, the seventh consecutive day of strong selling, the Greek three-year, the most sensitive to default risk, rose to a yield of 28%.
COSTANCIO (ECB): GREECE WILL NOT LEAVE THE EURO. SOLVEN BANKS
In this context, the speech by the vice president of the ECB, Vitor Constancio, took on particular value: “At the ECB – he said – we are convinced that Greece will not leave the euro zone. The treaty (of the European Union) does not provide that a country can formally, legally be expelled from the single currency. We think it shouldn't happen." The banker underlined that the possible default of a sovereign issuer does not have an automatic fallout on its banking system, thus hinting at the existence of a plan B: yes to default, but without this involving Greece's exit from the currency unique. In short, great willingness, "but I can't promise that we will finance Greece regardless of the circumstances, the amount and the conditions".
MOODY'S: WITH REFORMS, A PROMOTION OF ITALY IS POSSIBLE
The happy news for Italy comes, for once, from the rating agencies. Moody's could consider upgrading Italy's government bonds "in the event of an effective strengthening of the economy's growth prospects thanks to the positive implementation of economic and labor market reforms". This is what we read in a Credit opinion of the agency which has a Baa2 rating on government bonds.
The report defines Italy's economic strength as "high", thanks to the entrepreneurial fabric and the relatively low indebtedness of the private sector as well as the high financial wealth of households. However, the Italian economy has recorded lower real GDP growth than other euro area partners over the past two decades due to structural problems: low productivity, labor market rigidity, lack of competition in service sectors and high taxation. On Friday 24th the Fitch agency's rating update on Italy will be announced.
In Piazza Affari, yesterday, a great rebound in bank stocks which, however, only partially recovered last week's losses: compared to the previous Monday, the FTSE Italia All-Share Bank index still shows a drop of 4,6%. The race is led by Bpm (+4,53%) driven by rumors about the contacts between the Milanese bank and Banco Popolare (+1,47%) for a possible merger. The merger between the two banks would create the third largest Italian banking hub, behind Unicredit and Intesa, with assets of 170 billion euros, more than 2.500 branches and 10 billion in capitalization.
Unicredit also rose (+3,59%) on the wave of the deal between Pineer and Banco de Santander. On also Understanding (+2,58%). The exception is Bper (-0,13%): the market does not like the hypothesis of an aggregation with the unlisted Venetian Popolari (Pop. Vicenza and Veneto Banca).
OIL RISES, OIL STOCKS GOOD. IN FERMENT A2A
In an interview with the Financial Times, ENI CEO Claudio Descalzi predicts the recovery of oil at 70 dollars. Crude seems to be moving in this direction: Brent rose to 64 dollars a barrel (+1%) and Wti to 56,8 dollars (+1,7%), a new high for the year. The prices are supported by data on drilling in the US (number of wells in operation), which last week recorded the nineteenth consecutive weekly drop, falling to the lowest since 2010.
Eni goes up by 0,5%, Tenaris +0,8% and Saipem +1%. Saras closed the session with an increase of 6,6% % to 1,77 euros. The stock resumes its run after doubling in value since the beginning of the year and having lost about 12% in the last 5 days. Last week the average refining margin of the Mediterranean area (EMC benchmark) recovered to around 3,4 dollars a barrel from 3 dollars the previous week.
The utilities front was also positive: A2A+ 2,1% at 1,055 euro. the mayor of Milan, Giuliano Pisapia, one of the two strong shareholders of the Lombard super-utility, called for mergers: "There is growth prospects at the metropolitan city level and subsequently at the regional level and beyond". Enel Green Power also rose +1,93%. The CEO of the group, Francesco Venturini has made it clear that the company is not studying any solar pole with F2i.
LUXOTTICA'S TARGET RISES, TOD'S HOLDS DOWN
Luxottica shines in the luxury sector (yesterday +1,8% to 60,25 euros) thanks to the double rise in the share's target price. Citigroup analysts have revised the target price bringing it to 64 euros from the previous 60, confirming the Neutral judgment. According to Citigroup, from last Friday's closing Luxottica could go up again by 8%. For Berenberg's analysts, however, Luxottica would have run out of steam. In a report this morning, the English house raised the target price of the stock to 56 euros from 46, confirming the Hold judgment. Since the beginning of the year, the Luxottica share has gained 30% of its value, also supported by the strength of the dollar. At the bottom of the list Tod's (-0,7%) together with Campari (-1,3%).
LEAP FORWARD OF SOGEFI AND UNICEM
On the industrial front, Sogefi should be mentioned (yesterday +8,5%) after better-than-expected quarterly results. Little move Fiat Chrysler (+0,47%). In the red Cnh Industrial (-1,68%), which pays the detachment of the dividend. Buzzi Unicem closed up 4,6% at 14,25 euros. UBS raised its target price to 16,5 euros from the previous 13,3 euros, confirming the Buy judgment.
