China meets forecasts. In the third quarter of the year, the second largest economy on the planet grew at a rate of 6,7%, in line with the objective of closing 2016 with an increase of 6,5-6,6%. This is good news for the markets, even if the real estate bubble is lurking behind the rise. However, nothing that, at least for now, could disturb the good mood of the financial markets, supported by the data arriving from the US quarterly reports and by the awakening of the European banks.
In this context, the prospect of a rate hike, justified by the recovery in inflation, is not frightening. Even the political unknown does not alarm much: tonight in Las Vegas Hillary Clinton could inflict the knockout blow on Donald Trump, who just has to blame the media for his fall in the polls. Even Europe, galvanized by the comeback of Italian banks, is confidently awaiting tomorrow's ECB executive. The Borsa weather report reports sunny variable (better not to trust).
THE BRICK BOOM SUPPORTS BEIJING
The Asian stock markets advanced, supported by news arriving from Wall Street and Beijing: in Tokyo Nikkei +0,2%, Seoul +0,2%, Taipei +0,5% and Mumbai -0,2%. Sydney +0,4%, in line with Chinese price lists: Shanghai +0,3%.
"It went better than expected", is the comment of the Chinese statistical institute on the GDP data. But there is also a note of caution: "The transition from an old to a new development model is still weak and exposed to domestic and international risks". Of particular concern is dependence on the real estate sector (+7,1%), the main engine of growth together with infrastructure (+19,4%), supported by public demand, while industrial production slows down (+6,1%). The brick and mortar boom was driven by the increase in house prices (+25% in the last year in Shanghai and Beijing), which the authorities intend to counter with anti-speculation measures.
QUARTERLY RECORDS GREAT PERFORMANCE BY GOLDMAN SACHS
Nice stable weather over Wall Street. The main indices thus closed up: Dow Jones +0,42%, S&P 500 +0,62%. Even better was the Nasdaq (+0,85%). 81% of S&P 500 companies that have already reported results (52 in total) beat analysts' estimates. 11 of the 12 segments of the list closed in positive territory.
Prominently highlighted by Goldman Sachs (+2,2%), which for the first time in six quarters has registered an increase in double-digit profits. Revenues from bond trading rose 47%, beating analysts' estimates. Assets under management rose to a record $1.350 trillion, including $14 billion in net long-term asset inflows. All of the major Wall Street banks that have already released quarterly data beat their estimates. Citigroup climbs 1%.
The Oscar of the day goes to Netflix (+19%), thanks to the sharp increase in the number of subscribers: 3,2 million outside the US against the 2 million expected. The company expects 1,45 million new subscribers in the United States and 3,75 million outside the states for the final three months of the year.
The black jersey goes to Intel: -5,4% after the Stock Exchange after the results. IBM is also bad (- 2,6%): no sign of recovery in revenues, flat compared to a year earlier, they have not risen for 18 consecutive quarters.
OIL RISES AGAIN. INFLATION REVIEWED
Consumer prices rose by 0,3% in September (+2,2% on an annual basis), the largest increase in the last five months due to the increase in petrol prices. Oil prices rise ahead of US weekly inventories data. WTI light crude rose 35 cents to 50,76 dollars a barrel. Brent trades at 52,15 dollars.
In Piazza Affari, among the oil stocks, Eni rises by 1,8%. Tenaris +1,4%: the broker Piper Jaffray raised its rating to Overweight from Neutral, bringing the target price of the ADR (a certificate representing two Tenaris shares) to $33 from $21. Implicitly, the target price of a share is 14,9 euros.
MILAN QUEEN OF EUROPE. BTP ITALIA REMAINS BELOW 2 BILLION
Euro on the sly (1,0987 against the dollar) and stock markets rising on the eve of the ECB meeting. Not many believe that the meeting ends with significant news. Nonetheless, a certain optimism spread on the market yesterday evening: the belief is that the ECB will continue with the bond purchase program even after the March 2017 deadline.
Piazza Affari reconfirms itself as the leader among the stock exchanges of the Old Continent with an increase of 2,02%, to 16.967 points. The other price lists are also positive: Paris +1,27%, Frankfurt +1,17%, Madrid +1,42%. London advances by 0,70%. The strongest increases are those of commodity stocks (Stoxx of the sector +1,7%) and banks (+2,2%).
The second day of the offer reserved for the retail of the new Btp Italia 650, which has a guaranteed minimum annual coupon rate of 2024% and is indexed to national inflation, closed with orders for 0,35 million. The total amount therefore rises to 1,85 billion euros. This is a figure lower than the second day of the offer of the security with the same characteristics - but with a coupon rate of 0,40% - launched in April, which on the second day of subscription collected requests for 1,4 billion, which led to the amount including the previous day's requests to 3,7 billion. The offer will continue today, while the window dedicated to institutions will open on Thursday with the possibility of allocating.
MPS, CONTINUE FOR NOW WITH JP MORGAN. WILL GO TO CONSOB
It was an extraordinary day for Italian banks, punctuated by the wait for the outcome of the Monte Paschi board of directors, yesterday in flight to Piazza Affari (+12,8%) on the wave of rumors about the Passera plan. After an eight-hour meeting, the top management of the Monte Paschi bank decided to "continue the implementation of the recapitalization operation and the simultaneous sale of the non-performing loans previously communicated to the market". That is, we proceed under the direction of JP Morgan and Mediobanca in search of investors who are currently on the run.
But Corrado Passera has nonetheless collected a result: “The Board of Directors – we read again – has taken note of the non-binding proposal received from Dr Passera on 13 October last. The Board has decided to continue, immediately after the presentation of the business plan, the in-depth studies initiated, through its advisors". In short, not quite a draw, but almost. And the confirmation that, for now, the only investors willing to put money into MPS have been found by the former minister. With a caveat: Passera's partners, who attended Consob yesterday to present the offer, want control of the bank.
BANKS IN FLIGHT. MERGER FEVER GROWS
The go-ahead for the merger between Banco Popolare (+2,5%) and Pop. Milan (+2,4%) has unblocked a situation "frozen" by various factors, starting with political uncertainty. The Italian sector rises by 2,7%, better than the European index (+2,3%). And the expectations of new initiatives for the consolidation of the sector are growing. From this point of view, the market continues to push Banca Pop in the first place. Emilia (+5,1%) and Credito Valtellinese (+4,3%).
The two Bigs are also accelerating, driven by the Bank of America report, which raised the rating on European banks to Overweight. Unicredit +2,6% on the wave of the possible sale of Banca Pekao and Pioneer: at this rate, the institution will be able to lower the extent of the capital increase necessary to comply with the Basel parameters for systemic banks. Entente +2,2%.
On the other hand, Poste Italiane slows down (-1,4%), engaged in the search for a loan of 2 billion for the acquisition of Pioneer in competition with the French Amundi. Mediobanca Securities shows some skepticism about the logic of the operation at certain prices.
THE BUDGET LAW REWARDS UTILITIES
Brilliant Telecom Italia (+3,4%). Mediobanca Securities has reduced the target price of the stock from 1,27 to 1,23 euro, a level which is still higher than the current market prices. The recommendation is confirmed at outperform.
It is probable that the budget law approved by the government could have a positive impact of 4-5% on the profits of Enel (+2,3%), Terna (+2,98%) and Snam (+3,26%). Barclays has started hedging with "overweight" and a target price of 5,5 euros.
Leonardo's rally continues (+3,2%) after the news that the Italian group's radar has been chosen by the US Navy. StM +1,7%.
FCA WITHDRAWS 74 THOUSAND CARS IN NORTH AMERICA
Downturn for Fiat Chrysler (-0,61%). The company announced last night the recall of 74.833 vehicles in North America for alternator defects. The news of the shutdown of a Ford plant to deal with the drop in demand also weighs heavily.
Luxury is back, affected by the weakness of the Burberry accounts. Ferragamo -2%.
