Elections, referendums, atomic threats. The wheel of geopolitics is turning again, somewhat at all latitudes, putting pressure on markets which have broken records with an almost monotonous frequency in recent weeks. Let's try to summarize a long day.
GERMAN VOTE: "BAD NEWS FOR ITALY"
The picture started moving starting from Germany, where the vote punished the parties of the outgoing Grosse Koalition more than expected. A long phase of negotiations between the parties begins which will put Angela Merkel's abilities to the test: she seems destined to interrupt the race for the euro for now. But, above all, it was noted that populism, already thought to be dying, is alive and well. The consequences? Germany does not suffer. On the other hand, the euro is holding back, traded this morning at 1,1856.
“The outcome of the vote – writes Lucrezia Reichlin – is bad news for Italy and for Europe… It clearly shows that Germany is rebelling both against the opening of confrontations with migrants and against an economic governance of the euro in which provides for more risk sharing between countries”.
THE KURDS RAISE THEIR HEADS. OIL AT THE HIGHEST FOR 26 MONTHS
The referendums for independence contributed to complicate the picture. In the spotlight, of course, the next (outlawed) vote of Catalonia.
But more relevant consequences, at least in the short term, promises to have the consultation that the Kurds celebrated despite the hostility of Iraq and Turkey. Erdogan has threatened to stop the transport of oil to the border with Iraqi Kurdistan, which will hold a referendum. However, the Kirkuk government, which controls 10 percent of Iraqi wells, does not intend to linger any longer on the request for independence of Kurdistan, legitimized by the role it played in the war with Isis.
This explains the sharp rise in oil: Brent rose this morning to 59,15 dollars a barrel, the highest since July 2015, Wti at 52,12 dollars. Oil companies also rose (Energy index +1,47%) Schlumberger and Halliburton, the two major oil service groups, both rose by 0,5%. In Piazza Affari Eni +1,16%, to 13,94 euros, on the highest for three months. Fly Saipem (+5,3%).
ROCKET MAN SHAKES APPLE AND FACEBOOK
The voice of Rocket Man, or the Korean dictator Kim, could not fail to be associated with this choir. Pyongyang's Foreign Minister Ri said that Donald Trump's latest statements amount to a declaration of war and that Pyongyang has the right to react by also shooting down one of the US fighters.
The announcement detonated Wall Street's downwards, starting with the Nasdaq (-0,88%), sunk by technology (-1,42%). Facebook collapsed (-4,55%). Microsoft (-1,55%), Alphabet (-1%) and Apple (-0,88%) are also bad. Apple reduced its orders to suppliers after the slow start of sales of the new iPhone X. The Dow Jones (-0,22%) and the S&P 500 index (-0,24%) are more resistant, awaiting the today's speech by Janet Yellen.
THE YEN BRAKES TOKYO. GOLD RISES TO 1312 DOLLARS
The Korean syndrome is also holding back Asian stock exchanges this morning. In Tokyo, the Nikkei index dropped 0,2% despite the expectation of pro-business measures in view of the elections at the end of October. The most massive decline is that of Hong Kong (-0,5%), also below Seoul and Australia. Chinese markets rose slightly. Gold is up $1.310, up 1%, is at $1.312 this morning.
BRAKE MILAN. DRAGONS: OUR STRATEGY DOESN'T CHANGE
Twists of fate: Angela Merkel's setback hits the markets of the countries that have contested the Chancellor most vigorously in recent years, starting with Greece. The Athens Stock Exchange loses 4,53% despite the closure of the excessive deficit procedure. Conversely, Frankfurt closed with a very slight gain, +0,02%.
In Milan, the Ftse Mib index falls by 0,63%, to 22.390 points, one of the worst performances in the Old Continent. Paris (-0,27%) and London (-0,13%) were also down. Madrid bringing up the rear (-0,86%), which is faced with the uncertainty of the Catalan referendum next Sunday.
The weakness of the euro characterized the session, falling against the dollar to 1,1856. The slowdown in the single currency is undoubtedly good news for Mario Draghi, who is waiting in vain for the time being for the recovery of inflation, Godot novel. “Overall – the banker said yesterday before the Economic Affairs Committee of the European Parliament – we are becoming more confident that inflation will eventually return to levels in line with our target, but we also know that a level is still needed of very significant monetary accommodation for the upward path of inflation to materialise”.
THE SPREAD GOES UP. TODAY THE CTZ AUCTION
The Italian secondary closed fractionally higher after a session straddling parity that saw Bunds outperform their eurozone counterparts. At the end of the session, the yield differential between the BTP and the Bund stood at 171 basis points, the highest since the end of August, from 166 at the end of Friday's session. The 2,11-year bond trades at 2,14%, at the level of the last closing, after having reached XNUMX% in the session, its highest level since the end of July.
The month-end auctions kick off today: Ctz and Btpei will be offered for a total of 3 billion. In closing, on the Mts platform, the May 2019 Ctz in auction tomorrow traded with a yield between -0,131% and -0,134%, up compared to the -0,139% of the placement at the end of August. In the auction on Thursday 28 September, the Treasury will offer between 4,5 and 6 billion euros in 5 and 10-year BTPs and in the Ccteu (1,5 billion).
According to Unicredit, October will be a rather heavy month for indexed investors: "We expect - reads the daily note - a new Btp Italia whose announcement will arrive shortly".
WEAK BANKS, STM SUFFERS ALONG WITH THE NASDAQ
Leading the decline in Piazza Affari were the banks: the index of the Italian sector (-1%) was worse than the European one (-0.7%). Among the individual titles, falls of more than two percentage points for Banco Bpm (-2,4%) and Bper (-2,22%). The Bigs are also down: Intesa -0,5%, Unicredit -1,4%. The exception is Banca Mediolanum, which closed the day at +0,07%. The worst stock was Stmicrolectronics down 3,9% in line with the performance of the tech sector on the Nasdaq.
The fall in Wall Street also weighed on Fiat Chrysler, which fell by about 2% after reaching new highs of 15,25 euros following the judgment of Mediobanca Securities which revised the target from 14 to 20 euros. The echo of the article in 'The Korea Herald' which on Friday resumed the hypothesis of an interest in a marriage between Hyundai and the Italian group has died out. Ferrari is also down, -2%.
FINCANTIERI SUPERSTAR: NEAR PEACE WITH PARIS
In evidence Fincantieri (+3,5%) in view of the Italian-French summit the day after tomorrow, from which positive results are expected on the Stx dossier.
RECORDATI NEW RECORD, THUD OF AUTOGRILL
Worth mentioning is Recordati: +1,7%, to new record. Heavy fall of Autogrill (-2,8%) after the revision to "hold" from "buy" of Kepler Cheuvreux. According to traders, the report downgrades the company's estimates due to the impact of the weak dollar and points to more caution on the organic earnings outlook.
