"Central bank communication will have to evolve gradually if the economy continues to expand." Therefore "the language related to monetary policy could be revised at the beginning of 2018". Thus, with the usual linguistic acrobatics, the minutes of the ECB meeting in December warn that the central bank is starting to be less "dovey" in the coming months.
The policy does not change for now, but, barring surprises, there will not be a queue of bond purchases after the September deadline. Frankfurt is thus catching up with Tokyo, which has already signaled a reduction in JGB purchases, while tonight William Dudley, the president of the New York Fed, said that the tax cuts and the positive economic situation suggest that "the Fed he will have to step on the brake pedal several times in the next year ”.
THE EURO RISES UP, THE ECB IS STUDYING LESS SOFT TONES
In short, a cautious turnaround by central banks is looming which, for now, it would be an exaggeration to define as a tightening. The markets, intoxicated by the earnings of the beginning of the year, take note of it.
In summary:
- the euro regained its strength, again above 1,20 (at the beginning of the day it was worth 1,2048, close to the highest since 2014);
- the fall of the euro gives the Bull a breather on Wall Street and in Asia, while the euro area is marking time;
- the exception is Piazza Affari, top list since the beginning of the year, pushed by the banks, certainly one of the cheapest stock exchanges after the long recession;
- the economic recovery favors the boom in gold (1.327 dollars an ounce, the highest in 4 months) and in raw materials, led by oil, but it has not yet translated into a recovery in inflation, as confirmed by US data. But wages are starting to rise: even Wal-Mart has announced an increase to 11 dollars in hourly wages.
CHINESE EXCHANGES ADVANCE, BITCOIN COLLAPSES
Stock market weather good weather ahead of the weekend. Chinese price lists are advancing. Hong Kong gains 0,3%. The CSI 300 index of the Shanghai and Shenzhen stock markets rose by 0,2%. The Beijing authorities have denied the news of the end of the purchases of T-bonds. Meanwhile, the trade surplus is growing to 54,7 billion dollars but in December exports rose by only 4,5% against 17% in November. Little movement in Tokyo and the South Korean Stock Exchange. The Indian BSE Sensex index rose slightly.
The dollar depreciates against the main Asian currencies. The Indonesian rupee dollar cross is at a 3-month low. Rupee dollar at 63,5. Dollar yen at 111,2, on the lows of the last six weeks.
Bitcoin tumbles down 14%. The anti-cryptocurrency front is growing. The South Korean Minister of Justice spoke of "great concern about virtual currencies". Meanwhile, China has asked local authorities to "actively guide" companies to abandon the mining activities at the heart of the virtual currency creation system.
POKER BOOSTERS FOR WALL STREET. TODAY THE ACCOUNTS OF JP MORGAN
Wall Street regained momentum after the slowdown the day before: the four main US stock market indexes broke new records: Dow Jones +0,8%, S&P500 +0,7%, Nasdaq +0,8%, Russell 2000 +1,7%.
Market attention is focused on the accounts of JP Morgan and Wells Fargo which will kick off the big bank corporate accounts season today. Positive reception yesterday to the numbers of Delta Airlines (+4,8%): the company expects big savings on taxes but also a strong recovery in corporate travel.
Bonds stabilized, with the US 2,53-year yield at 2,52%, from 71% yesterday. We are not satisfied with foreign investors' appetite for US government bonds. At yesterday's thirty-year bond auction, 2003% of the total allotted went abroad, the highest percentage since this figure was communicated (30). The yield on the 2,87-year US bond is 2,89%, up from XNUMX% the day before.
OIL AT THE HIGHEST, SAIPEM STAR IN MILAN
Brent oil yesterday reached a three-year high of around 69,7 dollars a barrel (+0,7%). US inventories fell for the eighth consecutive week.
It was the oil companies that drove the Wall Street rally. The sector index rose by 2%. The oil industry services sector is also under great tension due to the new five-year plan on offshore drilling presented by the Trump administration, which provides for the expansion of the areas where exploration for hydrocarbons is authorized. .
In Piazza Affari Saipem rises by 3,6% on the maximum since last May after breaking through the 4 euro threshold This morning Bernstein raised the recommendation to Market Perform (neutral) from Underperform. Tenaris +2,4%.
BUSINESS PLACE, SEVENTH CONSECUTIVE INCREASE
The publication of the minutes of the meeting of the Governing Council of the ECB last December is the basis of the new setback for a large part of the markets in the euro area. The expectation of higher yields in the Eurozone pushed the single currency upwards: cross above 1,204 (+0,7% compared to yesterday's close).
Piazza Affari continues to be the positive exception. The Ftse Mib index closed the session with an increase of 0,64% to 23.305 points, after going up to 20.320, the highest since August 2015. It was the seventh positive session in a row. YTD gain widens to 6,5%, best balance sheet in the eurozone. On the technical front, however, the next hurdle is located at 24.000 points, a level tested several times in the first half of 2015.
The other Eurozone price lists are much more cautious. The worst was Frankfurt (-0,59%, +2% since the beginning of the year), weak Paris (-0,29%); flat Madrid (+0,07%). Outside the common currency area London +0,19%.
BUND: RETURNS FLYING, THE SPREAD IS REDUCING
The ECB minutes have steered the bond market in a "hawkish" direction. More affected than the Italian secondary is the German one, with the rate on the ten-year Bund rising up to 0,58% (+5 bp) for the first time since August.
The yield on 10-year BTPs rose slightly, reaching 2,06% from 1,98%, but the spread with the German rival collapsed by 6,52%, to 146.20 basis points.
The trend reversal of the Italian benchmarks was less strong, taking into account the successful outcome of the offer of 6 billion three- and seven-year BTPs in the aftermath of the 9 billion of the new twenty-year September 2038, placed for about three-quarters from foreign investors.
UNICREDIT: 2018 BILLION BTP IN 225 (-40 ON 2017)
Updated estimates by the UniCredit research office give gross issues in 2018 - excluding BOTs - close to 225 billion, about 40 billion less than last year. “The net offer – write the strategists Luca Cazzulani and Chiara Cremonesi – will be covered mainly by Qe, leaving private investors to absorb only an amount of 10/20 billion and in this way limiting the potential widening of spreads, as far as compared volatility in terms of spreads is potentially set to increase in recent years”.
RECORD FOR FINECOBANK, AGREEMENT AT THE HIGHEST SINCE 2015
At the origin of the excellent performance of the Milan stock exchange, in defiance of the opaque tone of the Eurozone equity market and the impending political elections, there is naturally the large presence of banks in the FtseMib basket.
However, the rally was mainly driven by asset management securities, driven yesterday by FinecoBank (+2,5%) to the sixth consecutive historical record at 9,715 euros. The consensus of analysts was displaced by the violence of the rally: the average target price (six searches) is in fact stopped at 8,94 euros. Kepler-Cheuvreux is the most optimistic with a target price of 10 euros. Soul+5%.
Returning to the banks, the basket rose by 1,1%, better than the European sector. Intesa (+0,7%) scaled back the gain in the final, after reaching the highest levels since December 2015, at 3,01 euros. Intrum Justitia, the Scandinavian Npl giant, has “an ongoing dialogue with Intesa Sanpaolo regarding the acquisition of the servicing platform and a Npl portfolio”. This is what we read in a note from the company. "These discussions - continues the statement - are in an initial phase and no other details will be made public". The arrival of the Danish competitor weighed on Banca Ifis (-5,3%), so far the undisturbed protagonist of the Npl market.
Unicredit and Ubi Banca are also brilliant, both +1,8%. Mediobanca is flat after the placement of the Pirelli stake.
CATTOLICA SUPERSTAR (+9,5%), CREDIT SUISSE PROMOTES STM
Insurance companies are doing well, supported by the increase in market yields which is favoring the entire financial sector. Cattolica Assicurazioni flies with a leap of 9,5% which pushes the quotation to the highest since 2014. The presentation of the new 29-2018 Business Plan of the group will be held on 2020 January.
A Credit Suisse report on the positive prospects of the European semiconductor sector gave a boost to STM (+2,2%) at the close, below the highs of the day. For the broker, the stock of the Italian-French jv will continue to benefit from robust growth in revenues (about 10% CAGR) and maintain margin expansion: the rating rises to outperform” from “neutral” with a target price of 24,5 from 19,5 euros.
THE FCA RALLY CONTINUES
After some profit-taking in the morning, with the opening of the US markets, Fiat Chrysler started to rise again (+2%).
The European telecommunications sector suffers (-1,7%), one of the most sensitive to the increase in the cost of debt. Telecom Italia -0,3% limits the damages. The appreciation of the euro weighs on the luxury sector: Yoox -3,5%, Moncler and Ferragamo -1,5%.
Outside the main basket, Danieli's performance (+3%) should be underlined: Kepler Cheuvreux has raised the rating to Buy.
