The shadow of Jerusalem, the drop in oil (the boom in US production weighs more than tensions in the Middle East) but also in other raw materials, affected by signs of a slowdown in the Chinese economy, profit-taking after the euphoria triggered by the announcement of US tax reform. Several factors serve to explain the momentary uncertainty of the price lists that emerges from the performance of the bond market one week after the increase in US rates.
Pending the decisions of the Fed, the yield on the two-year Treasury Bill continues to rise, reaching its 11-year high of 1,80%. But the yield on the Treasury Bill does not rise, rather it falls, to 2,34%. It follows that the yield curve is increasingly flat, the difference between two years and ten years is 54 basis points, the lowest in the last ten years, confirming that the markets find it hard to believe in an increase in inflation.
TOKYO RISES UP, CHINESE PRICE LISTS STILL WEAK
Stock Exchange forecast signals contrasts on the horizon of the markets. Tokyo is starting to close higher, recovering after four consecutive sessions of declines, yesterday was the worst session since March. The Nikkei index climbs 1%.
China's stock markets are weak, Hong Kong is on par (but rebounding Tencent +3,9% and AAC +2,5%, Apple's supplier), the Shanghai and Shenzen price lists are down: CSI 300 -1%, on the lows of the last month and a half. China's stock markets rose to their highs for the period close to the Communist Party Congress, from then on, even if there was confirmation of the current institutional and political arrangements, there was a correction. South Korea's stock market is down 0,3%.
SHALE OIL PRODUCTION INCREASES, US STOCKS AT THE TOP
Seat without history on US price lists. The Dow Jones index falls by 0,16%, the S&P is almost flat (-0,01%). The Nasdaq recovered (+0,21%), thanks to the rebound around 1% of Microsoft, Facebook and Alphabet after two days in deep red.
Oil prices are down sharply. Brent -2,6% to 61,2 dollars a barrel under pressure from the increase in US gasoline inventories, much more than what analysts had expected: +6,7 million barrels. US oil production hit 9,70 million barrels a day, a level never seen in history. We are in the seventh consecutive week of increased production.
Oil weighs on energy prices: Schlumberger, Exxon and Chevron lost between 0.6 and 2.17%. In Piazza Affari down 0,5% Eni e Saipem. Tenaris unchanged.
THE VIRTUAL CURRENCY DOESN'T STOP ANYMORE
In the meantime, the mad rush of Bitcoin continues, reaching $14.000. The most important banks, through the FIA (Futures Industry Association), have warned against the risks presented by the forthcoming start of trading in virtual currency at the Cme, the Chicago Mercantile Exchange: "We are not able to transparently manage the entry of Bitcoin in a regulated price list”.
EUROPEAN SQUARES IN RED. JUNCKER LAUNCHES A PLAN FOR THE EU
Day of declines on European stock exchanges, intimidated by geopolitical tensions in the Middle East. However, the lists partially recovered in the final, thanks to the strength of the dollar against the euro. Milan, already distracted by the feast of Sant'Ambrogio, leaves 0,49% on the ground, the Ftse Mib index at 22.307 points. Frankfurt (-0,38%) and Madrid (-0,3%) were also weak. Paris almost even (-0,02%) after recovering in the final.
Only London is doing well: Ftse100 +0,28%. The euro appreciated slightly against the pound, at 0,882. In the next 24 hours, Theresa May is expected to present a new border regulation proposal to Ireland and the European Union, after the previous plan was rejected by unionist parties in Northern Ireland.
The European Commission has proposed creating a euro area fund to help countries deal with economic crises beyond their control, to support investment and provide cash incentives for structural reforms leading to the adoption of the single currency. The Commission also proposed the creation of a role of Minister of Economy and Finance from November 2019 and to transform in 2019 the euro area bailout fund into an EU institution, the European Monetary Fund, under the supervision of the European Parliament and which would be a backstop for the €60 billion resolution fund.
Germany's slowdown was immediate. Berlin does not believe that the EU summit on the future of the eurozone scheduled for this month will produce any decisions. This was stated by Peter Altmaier, the interim German Finance Minister, adding that he is not convinced of the need to create new financial reserves at European level, as proposed by the EU Commission.
The debt market was weak, conditioned by the dollar/euro cross, which slipped below 1,18. A climate of general aversion to risk once again dominates which favors purchases of German government bonds.
BOND, PORTUGAL AND GREECE ARE IN FASHION
Slight rise, as a consequence, in the yields of BTPs. The Italy/Germany spread travels to 143 (against 140 on Tuesday). The August 2027 BTP – which dropped to 1,68% in the morning, the lowest since the beginning of November 2016 – eventually paid 1,726%. The Greek and Portuguese benchmarks hold decidedly better than the Spanish BTPs and Bonos. The Greek 10-year yield slipped to below 5%, its lowest in eight years.
Portuguese bonds instead benefit from the latest buyback operation worth around one billion completed yesterday which allows Lisbon to extend the average life of the debt and save on interest costs. On the occasion of the placement on Tuesday 12 December - the last currency auction for 2017 - the Ministry of the Economy will make 4,75 billion euros of 12-month BOTs available to investors, the same amount as maturing funds.
DEBT REDUCTION MISSION FOR TELECOM ITALIA
At Piazza Affari the star of Telecom Italy (+3,3%), best blue chip of the day the day after the board of directors. Amos Genish reiterated the goal of reducing the debt / EBITDA ratio to 2,7x: "By the end of 2018, rating agencies should look positively to bring us to an investment grade rating". The river board of directors that took place in Rome also gave the green light to continue negotiations with Mediaset for a new multi-year agreement on content (films, TV series, news) which could be active as early as 2018 but also on what remains of the spring season of Serie A, the UEFA Champions League 2018 and other international football events offered by Premium. Finally, the company communicated that it will evaluate, in the next two-three months, the possibility of separating the network, as requested by the institutions. This morning Mediobanca adjusted the target price to 1,34 euro from 1,30 euro. Outperform rating confirmed.
Mediaset -0,3%. The agreement with Telecom Italia should close on figures exceeding 400 million spread over 5-6 years.
STOP LUXURY SALES ON AMAZON, YOOX GOES ON
Among the titles at the top also figure Yoox (+3,03%), galvanized by the decision of the European Court which established that luxury brands can prevent retailers from selling their products on third-party web platforms such as Amazon or eBay to protect their image. Furthermore, Deutsche Bank confirmed the buy recommendation on the stock.
The black jersey of the day is instead up to Stmicroelectronics (-3,73 to 18,08 euros), in the second week of heavy realisations, as is happening to stocks linked to the semiconductor sector, already protagonists of a robust rise (the company led by Carlo Bozotti still boasts a 66% rise from beginning of the year). The European Stoxx closed its worst week of the year on Friday with a loss of 5%. Even on Wall Street, the Sox index of the semiconductor sector lost more than 6% over the week, its worst balance of 2017.
THE COMMISSION WILL HEAR GHZZONI (AND THE OTHERS)
Red day for financials. The basket of bank stocks dropped 0,76%. The bicameral commission of inquiry into banks has decided to proceed with the hearing of the former CEO of UniCredit, Federico Ghizzoni. But in front of the parliamentarians, who will renounce the Christmas holidays, the heads of the Veneto banks now under investigation by the judiciary, the governor of Veneto Luca Zaia, the ministers of the economy from 2011 to today, but also the European commissioner for the market Margrethe Vestager and European Banking Supervision member Ignazio Angeloni.
In the evening, the results of the capital increase (560 million) by Carige (-0,99%). The shareholders have subscribed to only 66% of the offer, but the parachute defined on the eve of the operation will open on the unopted shares. Around 46 million will in fact be covered by Intesa Sanpaolo Vita, Generali and UnipolSai who have chosen to convert part of the subordinated bonds into equity. Another 120 million will come from industrial subjects who have signed agreements for the purchase of the institute's assets. In fact, Credito Fondiario, Sga and Chenavari Investment Managers, the fund that was awarded the subsidiary Creditis, will intervene in the auction of the unopted shares. Approximately 200 million were raised from institutional and retail investors, another 130 from historical shareholders (Malacalza, Spinelli, Volpi, Coop Liguria). with subjects
Down the other banks: Bpm bank-1,7% Where's Banca -1,1% B for Bank -1,3% Mediobanca -1,5%. The Bigs are also down: Unicredit -0,76% Understanding -0.93%. Minus sign for insurance: Generali -0,53% maybe -1,3%, UnipolSai -1,03%. Asset management also loses out: General Bank -1,83% Finecobank -1,12%.
UTILITIES, IREN IS GROWING
Among the utilities it stands out Iren (+4,58%) close to buying Acam La Spezia. Equita Sim, confirmed the buy recommendation and the target price at 2,9 euros. On positive ground triad (+0,2%), Enel (+0,1%) ed Italgas (+0,4%.
After two sessions suffering following the announcement of the acquisition of General Cable, Prysmian found the plus sign again: +0,93%.
Orizzonti Sistemi Navali, the mixed company set up 51% by Fincantieri (+3,7% at new highs) and 49% by Leonardo +0,91% could be the vehicle of an alliance in the military sector with the French Naval Group . This is the proposal put forward by Alessandro Profumo.
Campari +0,9%. In a note on the European beverage sector, JP Morgan confirmed its neutral recommendation on the stock, with a target price set at 6,5 euros.
ROME FALSE STEP
De Longhi +2,45% promoted by Kepler Cheuvreux from hold to buy, with a target price rising from 27 to 29 euros.
gamenet +1,5% on the day of its debut in Piazza Affari.
Dig the title ofAs Roma (-17,46%). The speculation withdraws after two positive news: the next round in the Champions League and the approval of the new stadium project.
