RECOVERY TESTS FOR THE BAGS
EURO SUMMIT CONFIRMED
The European stock exchanges accelerate upwards after yesterday's black day with Milan leading the recovery: +2,1%, ahead of Frankfurt (+1,52%) and Paris (+1,23%)%. The convening of an extraordinary summit of EU heads of state and government for Thursday also contributes to the improvement of the climate, after German Chancellor Angela Merkel had canceled a similar meeting last week. The confirmation of the summit suggests that behind the scenes European diplomacy has reached an agreement on new initiatives to be taken to deal with the crisis in Greece, the main sufferer of the euro zone.
ITALIAN BANKS TO THE RESCUE
REBOUND OF FIAT AND ATLANTIA
The banks, overwhelmed yesterday by a violent wave of sales, are now trying the road to recovery. The Milan stock exchange accelerates the rebound. Intesa Sanpaolo, after having climbed over 6%, gains 4,61% followed by Unicredit, (+3,71%). Mps and Ubi gain more than 3% after yesterday's rain in sales while Pop Milano rises by 1,37% % (yesterday -4,65%) on the day of the Board of Directors on the industrial level. Yesterday Exane lowered the target price of the bank in Piazza Meda to 1,75 (-245) and of Mps to 0,60 (-14%). The French bank also downgrades the rating of Bper and Credem, both from neutral to underperform.
Down targets also for Intesa (to 1,8 from 2,25 according to Nomura) and Unicredit (from 2,20 to 1,75 again for the Japanese bank) Small rebound also for Fonsai and Milano Assicurazioni after yesterday's heavy drops. On the industrial front, the purchases of Fiat and Industrial were significant, Parmalat jumped by 2,3%, which yesterday fell by almost 9%. Pirelli falls by 3,3%, punished by the downgrade of Bank of America. Indesit was also down (-1,8%) after the announcement of negative results for Electrolux (-12%) Atlantia was on the rise (+1,95%) following the upgrade of Credit Suisse. Edison rises by 2,2% after the go-ahead from A2A +0,8% to the negotiations with EDF.
THE BTP/BUND SCISSOR FALLS, THE BONOS AUCTION OK
BUT THE EURIBOR IS AT THE HIGHEST SINCE MARCH 17, 2009
The three-month Euribor reached 1,609 per cent. It is the highest since March 17, 2009, the most acute moment of the post-Lehman crisis. The tension on Italian BTPs has eased, but not too much, but the situation still remains high-risk. The yield differential between the Italian ten-year Treasury bill and its German equivalent (Bund), according to Bloomberg data, is currently in the area of 315 basis points, against 326 for Tradeweb. Yesterday the Btp-Bund spread had touched 337 basis points, not far from the record (347 basis points) reached last week. At the same time, the yield on the 6-year BTP, which yesterday crossed the 4% threshold, opened this morning down by 5,96 bp to XNUMX%.
The same trend also for Spain, with a 5-year yield down by 6,29 bps to 8% and a spread on the bund narrower by 362 bps to 12 bps. The auction of 18 and 3,788-month Spanish bonds has just ended. The Iberian Treasury placed 12 billion euros of 3,702-month bonds with a yield of 2,695% from the previous 661% and 18 million euros of 3,912-month bonds with a yield of 3,26% from the previous 2,2%. Placed the maximum of the expected fork. The demand is very high, equal to 5,5 and XNUMX times respectively.
ISSUERS STAY AWAY FROM THE EURO
NORWEGIAN KRONO BONDS ARE FOLLOWING UP
“Does the euro still exist?” If you ask Lorenzo Raffo of Effemagazine who analyzes the trend of the bond issue market on the magazine's website in the week from 11 to 15 July, the offers, in absolute numbers, have dropped to 14 debuts against 53 a year ago, one only in euros, demonstrating that issuers are fearful of the possible evolution of the current crisis and many are postponing any decision, probably until the end of the summer. “The increase in yield on fixed-rate Italian government bonds – comments Raffo – is a problem, not only for public finances, but also for those who manage bonds. By now the differential on corporates and also on many high yields has disappeared, making the question of whether it is better to choose in one direction or the other more than justified”.
In this picture there are, globally, only two positive exceptions. Switzerland, first of all, which has once again obtained the triple A rating from Fitch, having survived the financial and economic crisis well and not suffered too much from the impressive strengthening of the franc. And Norway, another “strong” country on the European continent, a stronghold that international capital looks to, as demonstrated by the lively issue of new bonds in its currency. An example is the issue of General Electric in Norwegian kroner which gained well over half a point on the secondary market in a few sessions, with fairly brisk trading.
