It is not an easy time for the stock markets. The confusion caused by the contradictory announcements of Fed members, more divided than ever a week before the meeting that will have to decide on rates, was added yesterday by the alarm for oil: the International Energy Agency predicts that the imbalance between demand and global offering is expected to last next year, for the fourth consecutive year. The same diagnosis from OPEC, less than two weeks before the summit which could agree on a new ceiling on extractions. In the meantime, however, Saudi Arabia has overtaken the US as the world's leading producer.
Concerns about the Italian referendum contribute to complicating the picture. A victory for No, according to the rating agency Fitch, would cause a shock. Analyses confirmed by the US embassy: “It would be a step backwards for foreign investments in Italy”. Particularly Unicredit, the most exposed and fragile financial institution awaiting the capital increase, is paying the price.
But, surprisingly, good news comes from the US. The average income of American families increased significantly: 56,500 dollars (+5,2%), the largest increase since 2008, according to the Census Bureau, the highest ever net of inflation since 1967, when the first stats. President Obama's economic policy, combined with the Fed's low rates, worked.
WEIGH OIL AND RATES. BAYER ONE STEP FROM MONSANTO
Asia is holding back, but not too much, under the pressure of the drop in oil stocks. In Tokyo (-0,3%) yields on debt securities fell again: the two-year JGB traded at -0,265%. The Nikkei Times reveals that the government is preparing a series of interventions to support the market: the negative interest rate policy is destined to last. Hong Kong flat (-0,08%).
Rates on 10 American T-Bonds also rose to 1,75%, the highest since the days of Brexit, confirming that the tension in view of the Fed meeting of 20-21 September is increasingly high. The rush to sell long-dated bonds shows that the market expects a gradual rise in interest rates over the medium term. The percentage of economists expecting a rate hike at the next Fed meeting on Sept. 20-21 has dropped to 22%, from 30%. The percentage rises to 50% if referring to the meeting that the Fed will hold in December.
The US stock indexes fell sharply: the Dow Jones fell by 1,41%, the S&P by 1,46%. The losses of the Nasdaq also exceeded the percentage point (-1,09%). With the stock exchange closed, the news arrived that the deal of the century is in the pipeline: the agribusiness giant Monsanto is about to pass under the control of the German Bayer for 66 billion dollars, or 130 dollars per share.
APPLE FLY: IPHONE 7 FILL UP
To limit the damage, Apple (+2,55%) took care of it, driven by the excellent data on sales of the new iPhone7 in the first three days. The Cupertino company lives up to its promise not to provide indications on the first week of sales, but the mobile operator Sprint has revealed that the requests have been overwhelming, four times higher than those recorded in the same period of time for the 'iPhone 6S. Indications of a great success of the new Apple mobile phone have also arrived from T-Mobile.
The hypothesis of a rate hike, on the other hand, disturbs the currencies of emerging countries. The Brazilian real loses almost 2% against the dollar, while the São Paulo stock exchange loses 2,7%. Oil falls and drags down oil stocks (European Stoxx of the sector -2,2%). Brent is traded at 47,1 dollars a barrel (-2,4%), Wti down 3% to 44,8 dollars. Eni loses 3,2%, Saipem -4,6%, in Paris Total drops by 3%.
ITALY SLOWS DOWN, MILAN STILL BLACK JERSEY
A slightly higher opening is expected for European stock exchanges, after a day of declines in the wake of Wall Street. Piazza Affari is confirmed, for the second day in a row, as the black jersey among the European lists: Milan closed at -1,7% at 16.548 points. A short distance from Madrid (-1,4%), followed by Paris (-0,9%). On the other hand, Frankfurt (-0,3%) and London (-0,3%) limited the reductions.
The Minister of Economy Pier Carlo Padoan anticipated the downward revision of growth estimates. In particular, according to Reuters, the increase in GDP should be reduced this year by either +1,2% to +0,8/+0,9%, practically the same performance with which Italy closed 2015. Net debt should be raised slightly, from 2,3% of GDP indicated in mid-April to 2,4%, while the goal of a debt/GDP ratio slightly down from 132,7 is increasingly at risk % of 2015. 2017 does not offer many margins: GDP should be set at +1/+1,1% against the previous estimate of +1,4%.
CANNITA: THE 2016 NEEDS ACHIEVED BEFORE THE REFERENDUM
Government bonds are practically unchanged. The session was characterized by the Treasury's placement of four BTPs – three, seven, twenty and thirty year olds – for a total of 8 billion euro. Compared to the previous placement - dating back to mid-July - the rise in yields was equal to two cents over the 3-year April 2019.
The director of public debt, Maria Cannata, recalled that the Treasury issuance program for 2016 is well advanced and will be almost completed when the constitutional referendum is held. Meanwhile, the Italian Treasury continues to probe the ground for the possible issue of a 50-year BTP.
CHANGE OF THE GUARD IN MPS. GENEROUS WITHDRAWAL FOR BPM-POPOLARE
The banking sector is always in the spotlight. Target practice continues on Unicredit (-4%), awaiting decisions on the sale of Pioneer. Monte Paschi also fell (-1%) on the eve of the changing of the guard. Yesterday the green light came from the ECB for the appointment of Marco Morelli to the position of managing director and general manager and for the review of the recovery plan developed by the advisors, JP Morgan and Mediobanca (-0,5%). Today the Board of Directors of the Sienese bank will proceed with the appointment of the new CEO.
The birth of the Banco Popolare-Bpm pole is of "extreme importance", said Prime Minister Matteo Renzi, blessing the forthcoming merger. Meanwhile, both Banco Popolare (+1%) and B. Pop. Milan (+1%). The two institutions have announced a price of the right of withdrawal higher than the latest quotations. The unit liquidation value of Banco Popolare ordinary shares subject to withdrawal was set at 3,156 euro, +38% compared to the current quotation. Bpm has set the price of any right of withdrawal in the context of the merger with Banco Popolare at 0,4918 euro per share. This is a price 28% higher than the current quotation
Generals -3,5%.
JUMP THE IPO 2 OF POSTE. BROKER LIKE THE PIONEER HYPOTHESIS
Poste Italiane shines (+1,7%), after the declarations of various government officials announcing the postponement of the placement of 29%. The Undersecretary for Economic Development, Antonello Giacomelli, declared that the placement of the second tranche of postal services by the Treasury (equal to 29,7%) was put on standby by the government. In his speech, the undersecretary then added that "every strategic decision on the Post Office cannot be separated from a decision by Palazzo Chigi". In the meantime, brokers are promoting the possible acquisition of Pioneer to be carried out together with Anima, a commercial partner of Poste (+3,7%).
TELECOM COLLAPSES: THE EU WITHDRAWS THE ROAMING REFORM
A day to forget for Telecom Italia, the worst TLC in Europe with a drop of 4%, triggered by rumors about the aggressive expansion in Italy of the French Iliad and by the news arriving from Brussels. Telecom companies suffer after news that the European Commission will withdraw its proposal on the revision of roaming charges.
The project envisaged the suspension of any charge for 90 days a year for those traveling within Europe, a period after which the costs for using the service would return. The greatest impact is not to be identified in the loss of roaming revenues, but in the effects of erosion of domestic tariffs, which could converge towards minimum levels in every European country. Today the average revenue per user (Arpu) of the Vodafone contract in Romania is 11,7 euros per month against 30,5 euros in the Netherlands.
Among the utilities, A2A did well (+0,2%): the chairman of the company, Giovanni Valotti, declared that the dialogue is open "with all subjects", also with Enel (-1,4%). The memorandum signed with Telecom Italia, added Valotti, is "a non-binding and non-exclusive agreement".
LUXOTTICA AND MONCLER ON THE SHIELD. M&A PUSH STM
Good luxury. Luxottica +1,5%, promoted by Deutsche Bank to Buy a Hold. Bryan Garnier confirmed the hold recommendation with a target price of 54 euros. Moncler's rally continues (+1,5%): according to Mediobanca Securities the share will reach 20,4 euros (outperform). Ynap is also positive (+0,1%). Ferragamo drops by 0,2%, Tod's -0,3%. Hermès data will come out today.
Among industrial stocks, StM rose by 1,2% supported by the M&A appeal. Renesas, a Japanese company focused on the design and production of semiconductors for the automotive sector, has acquired the American group Intersil for 3,2 billion dollars. Leonardo -0,1%, Fiat Chrysler -1,4%.
Buzzi also fell (-2,5%), downgraded by Mediobanca and Neutral by Outperform with a target price raised to 19 euros from 18,60 euros. However, the new target price promises an upside of 6,7% on the current share price and is 5,3% lower than the 20,1 euro indicated by the consensus. According to the analysts of Piazzetta Cuccia, after years of growth the US market could stop and this would have repercussions on the share highly exposed in the US.
