EVIDENCE OF RECOVERY FOR THE MILAN STOCK EXCHANGE
BUT SPAIN'S CDS HOOKS ITALY
The Milan Stock Exchange, having exhausted its recovery attempt, recorded a loss of 12% at 30 on the Ftse Mib index at 1,43, just above the value marked at the start of the session at 17.467 points. The debt issue is stagnating on the markets and suffocating the emergence of risk appetite. The yield on the ten-year BTP rises to 17.400% after having reached 6,11%. The yield on Italian five-year bonds briefly reached the same level as Spanish bonds with the same maturity, for the first time since March 6,18.
At around 12,05 the yield on Spanish 5-year bonds was 5,68%, while that on equivalent Italian bonds was 5,64% The five-year CDS also extended the increase to 368 basis points, 37 points base since the start of the session, according to Markit. The differential with the German bund stands at 370 basis points, after reaching 380 basis points in the early stages of negotiations.
The market has once again taken off the race to purchase assets considered low-risk (and non-existent yield): the euro melts against the Swiss franc at 1,104 from last night's close at 1,117. The single euro currency also depreciates against the dollar to 1,416 (last night it was 1,426). In the face of the seriousness of the crisis, an initial reaction from politics is finally taking shape.
A meeting of the Financial Stability Committee has been scheduled for this afternoon. Giulio Tremonti and the representatives of Consob, Bankitalia and Isvap will meet at the Ministry of Economy. But the focus is already on tomorrow. After days of absolute silence, Prime Minister Berlusconi will report on the economic crisis first to the Chamber and then to the Senate. On the other hand, the meeting between Berlusconi and all the social partners has already been scheduled for Thursday: Confindustria, trade unions, ABI and numerous trade associations, which last week signed an appeal for growth.
“In Italy we have two problems: the credibility of the government which has ended up under the soles of our shoes and then we have very little time left”. This is what the director general of Assonime Stefano Micossi declares in an interview with "La Stampa" in which he underlines that "without new interventions as early as August, we could risk having to take that bitter medicine that Greece, Ireland and Portugal have already taken ” and addressing the government, he expresses the fear that “it no longer has the political resources and credibility to implement the necessary interventions and stop speculation on our government bonds”.
“If the yields on our government bonds were to exceed the psychological threshold of 7%, the sustainability of the public debt could be compromised. If we want to accelerate the rebalancing of the budget, we should privatize the public companies”, concluded the general manager of Assonime.
BANKS ACROSS EUROPE STILL IN DECLINE
FIAT (-3,76%) PAYS FOR THE DROP IN THE CAR MARKET
After a mid-morning rebound, Italian banks are back down again. At 12 Unicredit lost 15%, Intesa Sanpaolo, whose target price was cut by Société Générale to 2,51 euro from 1,7 euro, lost again 2,1%. Banco Popolare -2,01%, Ubi Banca 0,011%, Mediobanca -0,71%. Fonsai loses 0,41% after -0,6% yesterday. Today's board of directors will appoint the three members representing Unicredit: Ranieri De Marchis, Roberto Cappelli and Salvatore Militello.
During the day, the company's responses to the findings raised by Isvap (Insurance Supervisory Institute) on the procedures concerning real estate transactions with related parties should arrive. Concerns about capital adequacy are growing following the worsening of spreads on Italian government bonds.
Still weak, in the week of the board meeting, the performance of Generali down by 0,7%. It has been confirmed that the Solvency II regulation enters into force 12 months later than expected on 1 January 2013, also allowing for some changes capable of mitigating the effects on capital. The new capital ratios will in any case be calculated from 2013, however only starting from 2014 will there be an obligation to respect them.
Further extension of 2 years envisaged for smaller companies (with a budget of less than 500 million eu). Fiat is down by 4,89%, the worst stock in the main basket following the presentation of data on car registrations in Italy in July: -10,7% to 137.442 for the market and -12% for brands of the Lingotto. US market data for Chrysler will be released today. Reductions of more than 2% for Prysmian and Pirelli. The only stock in positive territory is Snam Rete Gas +0,1%. In Midex, Maire Tecnimont rebounds +5% and Brembo -3% falls again.
