TOKYO, THE CRISIS CONTINUES. TENSION ON THE BONDS. HOT WEEK FOR FIAT, RCS AND TELECOM
The landslide of Tokyo does not stop. Even this morning, after the shock session on Thursday (-7,3%) and the extreme volatility on Friday, the markets continued to suffer: Nikkei index -2,8%, yen rising +0,3%. Even more significant and bitter is the battle over government bonds, which rose by half a point in the last month to 0,825. JGB yields, despite central bank efforts to the contrary.
The old saying “sell in may and go away” has taken its revenge. After an effervescent start to May, the markets were hit by the wave of declines, which started in Japan, partially cushioned in the USA, stronger in Europe.
The rise in Japan bond yields risks having a perverse effect on the sovereign debt of Italy and Spain. Tokyo's strategy, based on broadening the monetary base, was supposed to stimulate purchases of higher yielding securities. But the backtracking of operators, already burned in the past by the rise in Japanese stocks, could signal the end of the honeymoon
BTP 0 RISING RATES. 18 BILLION AT AUCTION. BUT THE EU PROMOTES US
The tension on the debt securities front returned on Friday. The yield on the 10-year BTP rose to 4,17%, the highest since January, with the spread widening beyond 280 and then closing at 278. At the same time, the German 1,4-year benchmark saw its yield rise to 1,38% from XNUMX%.
In this situation, anticipation for the month-end auctions is growing. On Tuesday the Treasury will offer Ctz for 2-2,5 billion, on Wednesday 29 it will be the turn of 6-month BOTs for 8 billion, on Thursday it will be the turn of 5-year BTPs for 3-3,5 billion and 10-year BTPs for 3 billion. In all, an 18 billion exam, which falls simultaneously with Italy's promotion that on Wednesday from the procedure for exceeding the deficit.
TITLES UNDER THE GLASS IN THE MARKET SQUARE
Telecom Italy -3,3% last Friday. The markets reacted negatively to the downgrade of S&P and, above all, to the postponement of decisions on the network. The wait could end, however, in Thursday's board meeting. In reality, the board will only start examining the reorganization of the group. But there is an arm of defect between the Italian shareholders of Telco and Telefonica, the industrial partner hostile to the separation of the network.
This morning the union pact meeting of RcsMedia group to choose a new president after the resignation of Giampiero Pesenti. But the wait is focused on Thursday's meeting. John Philipp Elkann, like Enrico Cucchiani and Federico Ghizzoni are optimistic about the outcome of the proposed increase. But the predictions are still open. After the no to the operation by Della Valle and the Benettons, the vote of the Rotelli group will be decisive: in case of no by the hospital entrepreneur (strong by 16,8%) the operation could fail. The renegotiation of the clauses of the bank loans which should follow the increase is underway.
Fiat it gained 4,2% on Friday with a leap towards the end. An article by Saturday offered the explanation The Wall Street Journal from which it emerges that the countdown has already started for the Fiat/Chrysler wedding and the related listing on Wall Street of the new company, an operation that will mobilize 20 billion.
After the purchase of the 41,5% stake in Chrysler held by the Uaw union (a price to be fixed by the Delaware judge between the range of 1,75 billion offered by Fiat and the 4,27 billion requested by the Veba fund) Sergio Marchionne, if he wants to use Detroit's cash, he will have to renegotiate the loan (1,9 billion) made by Chrysler in 2011 to repay the US Treasury which sets the maximum amount that the US company can transfer to the parent company at 500 million. Not only. It will be necessary to pay off another 3,2 billion loan. Before then, Fiat will have to secure a new loan for the purchase of the stake: the Lingotto has sufficient cash on hand but risks, in the event of its use, the downgrade by the rating agencies. This brings us to the total of twenty billion, just under the 23 billion mobilized for the landing of GM on Wall Street: the investment banks are in great fibrillation.
THIS MORNING CHINA RECOVERS. WALL STREET TOWARDS A STABLE OPENING
The market reaction was not homogeneous. Hong Kong +0,22% and Shanghai +0,1%. But, while premier Li Ka Sheng is about to meet Angela Merkel in Berlin this morning, the only European stop in a capital of the eurozone, president Xi Jingping gave an important speech to party cadres: China can slow down the growth of economy, he said, in order not to compromise the fight against environmental pollution. The recovery, he added, must come from reforms not from new monetary stimuli.
S&P index futures signal a stable start for US stocks. Wall Street has absorbed without too many jolts the signals sent by Ben Bernanke: monetary stimulus can slow down, even in the short term. On Friday, the S&P index recorded a drop of 0,06%, symmetrical to a similar rise in the Dow Jones. The Nasdaq is also in balance at -0,01%.
However, the S&P 500 index closed the week with a loss of around one percentage point, the first for five weeks: the increase since the beginning of the year fell to 15.7 percent. The withdrawal of Japanese purchases and the slowdown ahead of the Fed weighed much more on Europe.
Down for the Milan Stock Exchange after four consecutive weeks of rising. With today's new drop (-0,6%), the FtseMib index recorded a 4% drop in five sessions, which halved the performance since the beginning of the year, reducing it to +4%. The Stoxx 600 index closed the worst week of the last ten months.
All European stock markets closed lower on Friday: London fell by 0,6%, Paris -0,2%, Frankfurt -0,5%. The worst stocks were those of the auto industry (Stoxx of the sector -0,8%) and banks (-1,1%).
MILAN, FIRST RED AFTER FIVE WEEKS
Down for the Milan Stock Exchange after four consecutive weeks of rising. With today's new drop (-0,6%), the FtseMib index recorded a 4% drop in five sessions, which halved the performance since the beginning of the year, reducing it to +4%.
Mount Paschi -1,2% after Alessandro Profumo's curt "no comment" on the hypothesis of commercial agreements (non-share) between the institute and Banco Poste.
In Piazza Affari, the banks almost all ended up in decline: Unicredit lost 1,5%, Understanding -1%. They came down heavily Ubi -2,5% and Banco Popular -3,2%. positive Mediobanca + 1,3%.
Generali gained 0,3%. Jp Morgan raised the recommendation to "overweight" from "neutral". Fondiaria-Sai it lost 1,2%. Heavy reductions of Finmeccanica -2,4% and StM-1,7%. Enel was up 0,2%, sharply down by A2A -2,6%.Eni fell by 1,4%, Saipem it lost 3,1%.
