A new crash on the stock markets, accompanied by the heavy drop in oil prices, is preceding the start of the Federal Reserve meeting, the first since the rate hike in December.
Asian stock exchanges under fire this morning: Tokyo -1,4% in anticipation of the weekend central bank meeting. Hong Kong -2,1%. Shanghai and Shenzhen also fell despite a robust injection of liquidity by the central bank.
Wall Street, after the weekend rebound, resumed its downward path yesterday evening: Dow Jones -1,29%, S&P 500 -1,56%, Nasdaq -1,58%.
IRAQ INCREASES PRODUCTION. STOCKS TO THE STARS
The new drop in oil prices caused the wave of sales: -5,7% for WTI crude, -5,2% for Brent. Triggering the new sell-off was news of Iraqi production surging to record levels, fueling already excess global inventories.
Wall Street's reaction was immediate: the S&P Energy index lost 4,5%. Exxon and Chevron are down 3%. Conoco Philips fell 9,2% after Barclays speculated on a dividend cut.
MILAN -2%. TREASURY AUCTIONS UNDERWAY
Thus a new difficult day is looming for European lists after yesterday's declines. Milan -2%, hit by the pressure on bank stocks, was the worst. The Paris Stock Exchange fell by 0,5%, Frankfurt -0,2%, Madrid -1,9%.
The government bond market was confirmed to be more stable on the eve of the month-end auctions. We start today with the offer of 2,5 billion Ctz and Btpei. Tomorrow will be the turn of 6-month Bots (6,5 billion). In the medium-long term auction on Thursday 28 January, the Ministry of the Economy will make available to investors an amount between 5,5 and 7 billion euros in 5- and 10-year Ccteu and BTP.
The spread between 116-year BTPs and Bunds is around XNUMX basis points.
NEW SALES ON BANKS. UNICREDIT IN THE SIGHT
On the eve of Minister Gian Carlo Padoan's mission to Brussels, today in confrontation with Margrete Verstager, Commissioner for Competition, banks, especially the Italian ones, are back in the sights of sellers.
The European Stoxx index of banks fell by 3,1%. Among the most affected titles Deutsche Banks -5,7% Santander -4,3% and BnpParibas -3,2%.
The declines of Italian banks are even more violent. Still under pressure Unicredit -6,4%. "At the moment everything is calm" replied Federico Ghizzoni, to those who asked him for a comment on a possible reorganization at the top which, according to rumors, would see him move to the role of president of the institute. "We'll see in the future," he added. In heavy pushups too Banco Popular -7% Pop.Milano -6,1%.
The declines complete the picture MontePaschi -3,3%, already up sharply in the morning, Understanding -2,8% Mediobanca -3,2%.
THE EU: NPLs WILL ALSO WEIGHT ON THE PUBLIC ACCOUNTS
Complicating the picture was the dissemination of a report by the EU Commission, which says that in the short term the amount of "non-performing loans" (Npl) in the belly of Italian banks could lead to additional liabilities on the state budget, even if not there are considerable dangers on Rome's public finances. From a medium-term perspective, the report continues, Italy's high level of public debt exposes it to a considerable impact in the event of a shock to growth and interest rates.
Meanwhile, before the German Parliament, Mario Draghi defended the central bank's monetary expansion policy. “Too low inflation affects consumers and damages the credibility of the European Central Bank,” he said. "Achieving our goal is a question of credibility - he added - If a central bank sets itself a goal, the stakes cannot be moved when it does not achieve it".
DEPARTURE CONTESTED FOR THE SAIPEM INCREASE
The declines in crude oil affected the performance of Eni -1,2% Tenaris -2,5%. However, it is on the rise Saras +5,5%. The average refining margin in the Mediterranean area for the past week increased to $5 a barrel, from $4,9 the previous seven days.
But the attention of Piazza Affari was concentrated on the launch, far from brilliant, of the 3,5 billion euro capital increase of Saipem followed closely by the task force of Borsa Italiana and Consob for the characteristics of the operation: the shareholders who will not subscribe will be diluted to 96%.
On the first trading day, options closed 20% lower at €2,94 after failing to price throughout the day. The performance of the share was diametrically opposed, which however now weighs very little: it jumped by 18,5% but is only worth 0,627 euros. Numbers in hand, the combined stock more straight fell by 15% compared to Friday's prices when the title had already suffered a loss of 20,5%.
CONTRACTS WITH IRAN MAKE DANIELI FLY
Saipem was also among the main protagonists of the agreements signed yesterday evening in Rome by the Iranian delegation following President Hassan Rouhani. The company has won a contract to build a 2.000km pipeline, a source familiar with the matter says, worth $4-5 billion.
In the meantime, the agreements with Tehran have made people fly Danieli which closed the session with an increase of 21,02% to 17,33 euros. These are three agreements in the steel field, for a total of 5,7 billion dollars including a joint venture called Persian Metallics worth 2 billion.
Other listed companies have been affected by the agreements for a total of 17 billion dollars: Eni, Enel, Finmeccanica, Fincantieri and Trevi.
According to Sace, the insurance-financial group of CDP, the removal of the sanctions should allow Italy to reach an export level of more than 2018 billion euros in 2,5, against 1,16 in 2014.
JPMORGAN: IT WILL BE A DIFFICULT YEAR FOR CNH
Under fire among the industrialists Cnh Industrial -3,9%, affected by the crisis in emerging countries. JP Morgan confirmed the Underweight recommendation on the Exor-controlled farm tractor, truck and bus company. The target price is 4,62 euros. The negative opinion on the stock is contained in an extensive report which predicts a difficult year for companies in the sector, afflicted by a persistent problem of high inventory levels. The company will release its 2015 data on Friday, January 29.
Even heavier on Wall Street was the closure of Caterpillar -5% after the rejection of Goldman Sachs which issued a sell opinion on the stock.
Weak other industrialists: Finmeccanica -1,4% StM + 0,6%. Fiat Chrysler -1,9%. Prysmian -3,1%.
Buzzi -2,21% was also in line with the market. The stock is among the 'Top Four for 2016' among the Italian mid caps chosen by Exane Bnp Paribas, which confirmed the outperform recommendation and the target price at 23,5 euros.
Telecom Italy fell by 2,8%, Mediaset -3,2%.
A2A, MILAN AND BRESCIA COULD DROP BELOW 50%
They hold utilities: Enel -0,5% Snam +0,4%. Instead it goes down A2A -1,7% after the mayor of Milan, Giuliano Pisapia, said that the two municipalities of Milan and Brescia, which today control the company with 25% each, could reduce their overall share below 50% to favor the development of the company, which sooner or later will need a capital increase.
Finally, in the luxury sector, they go up Yoox +1,7% and Tod’s +0,9%. Low discounts for Ferragamo -0,49% and Luxottica -0,53%.
