It really was a super Tuesday for the financial markets. Driven by the positive data from manufacturing activity and, above all, from investments in the construction sector (at its highest level since October 2007), Wall Street experienced its best session of the year, dragging European stock markets upwards in a rally which continues this morning in Asia.
After suffering its worst start to the year ever in January, Wall Street redeemed itself yesterday by posting the best March start in history, thanks to the push from banks, technology companies and oil producers.
FLY THE TECH. APPLE RETURNS ABOVE 100 DOLLARS
The S&P 500 index gained 2,39%, trimming its year-to-date losses to 3%. Equally brilliant is the Dow Jones (+2,11%). The Nasdaq did best of all (+2,89%), driven by the revival of technology stocks. Apple (+3,84%) is back above $100 after more than a month. Alphabet also rose (+3,5%) despite the first accident involving a Google car without a driver.
The auto sector also shines, driven by sales in January: Ford advances by 4,6%, does even better than Wall Street Fiat Chrysler (+7,15%). But the plus sign abounds somewhat in all sectors, starting with financials. The utilities are an exception (-0,49% the sector index), the classic safe haven in difficult times. Signs of an upturn are also coming from the oil front.
TOKYO RUNS. MOODY'S CUTS CHINA
The bull run continues this morning in Asia. Tokyo marks a leap of more than 4%, and remains in positive territory. Hong Kong (+2,5%) and Sydney (+2%) also did well. China is no exception: both Shanghai (+1,4%) and Shenzhen (+1,1%) are up, but the decision by Moody's to lower the outlook on China from stable to negative (rating Aa3) weighs on the markets.
The worst is over? Too early to say. The prospect of new interventions by central banks, starting with the ECB, is helping to support the increases. But the US locomotive pulls away, dispelling fears of recession. The recovery in manufacturing and technology stocks demonstrates that the effects of the strong dollar have been absorbed.
BUSINESS PLACE OVER 18 THOUSAND. IN SIGHT OPENING BULL
The drop in the euro contributed to the recovery of the European stock exchanges, to its lowest level in a month at 1,08340 against the dollar. On the other hand, the impact of the slowdown in the activity of the manufacturing sector in the euro area, recorded by thePMI index, down to 51,2 from 52,3 in January.
Thus a session of brilliant rises for Piazza Affari and the other European stock exchanges matured. In Milan, the FtseMib index rose by 2,2%, returning above 18 thousand. The Paris Stock Exchange gained 1,2%, Frankfurt +2,3%. Futures anticipate a new positive start: London +47 bp, Paris +45, Frankfurt +90 bp.
SPREAD AT 125, THE FASHION OF ZERO INTERESTS IS SPREADING
On the debt securities front, the gap between the BTP and the Bund narrows to 125 bp. The 1,404-year yield is 4%. While waiting for the ECB, the practice of rates below zero is spreading. A percentage of around 2.700% of the European market of "investment grade" corporate issues, with a total value of around 105 billion euro, currently corresponds to a rate below zero. The amount - according to calculations based on TradeWeb data - is more than two times higher than three weeks ago. This is about 48 billion compared to 8 billion as of XNUMX February.
FIAT CHRYSLER TO THE RESCUE: SALES BOOM IN ITALY AND THE USA
The automotive sector is in the spotlight. Fiat Chrysler accelerates (+5,2%), thus extending the rebound from the lows of February to +30% even if the stock still loses 22% since the beginning of 2016. Out of 30 analysts surveyed by Bloomberg, optimism prevails: 14 they recommend buying the FCA stock and 11 keeping it in the portfolio, selling the remainder. The average target price is 9,0 euros. On current consensus estimates, the expected P/E for this year is set at 4,28x.
The fortissima contributes above all to fueling the optimism of the market sales growth in February in Italy (+ 27%) and in the USA (+12%). These data offset the negative news from Brazil where the market fell 26% in February compared to a year ago. CEO Sergio Marchionne said that there is no negotiation with Peugeot. “We decided to go it alone” he added, revealing that he had had unsuccessful contacts with various producers in recent months.
The sales on the US market are also encouraging optimism. A decline was feared, justified by the long rally that has lasted since 2010. On the contrary, thanks to the drop in fuel, the movement of Jeeps and SUVs has even picked up speed.
This applies to FCA but also to Ford (+3,8%) which archived the best February ever in the history of the car manufacturer. Compared to an average sales increase forecast of 13%, Ford did better in all three categories, cars, SUVs and pickups, with an average increase of 20%.
Returning to Milan, Ferrari rose by 0,3% to 35,72 euros. On Wall Street, the stock of the red rose by 2,3% at the end of the session. president Marchionne said he expects sales in China to grow again this year, but at a contained rate. Brembo also did well (+1,97%).
BLUE CHIPS TO THE RESCUE: FINMECCANICA AND ATLANTIA AT THE TOP
A largely positive day for most of the blue chips. Finmeccanica +6,8%: the stock benefits from the announcement that the Kuwaiti Parliament has given the go-ahead for the purchase of the Eurofighters, a contract worth around 8 billion dollars, half of which is the share of the Italian group.
Atlantia +4,4%, galvanized by the hypothesis of the sale of up to 30% of Autostrade per l'Italia. Autogrill also shines in the Benetton team (+4,12%). The group, through its subsidiary HMSHost, has been awarded two new contracts at the Baltimore/Washington and Greensboro airports, which should bring revenues of over 180 million dollars over the ten-year duration of the concessions.
Campari +3,5% after the positive results in 2015. Revenues rose by 2,5% year on year to 512 million euros, 5 million euros above consensus expectations. Operating profit before extraordinary items amounted to 112 million euros, the margin on revenues was 21,9%.
The 2015 financial year closed with a net profit of 175 million, exactly in line with analysts' estimates and up 36% on 2014. At the end of the year the debt was 826 million euros.
THE BULL ALSO PUSHES MEDIA, TLC AND OIL
Mediaset also shines (+4,5%) after Morgan Stanley revised upwards the recommendation on the Spanish subsidiary from underweight to overweight. RCS (+7,97) also did well in the media: the market is betting on an agreement with the creditor banks by March.
Important increase also for Telecom Italia (+3,3%), thanks to the purchases of Vincent Bolloré. Vivendi, with an investment of 120 million, has risen to 23,80% of the capital from the previous 22,80%, now one step away from the target of 25%. The purchases have so far been made through Mediobanca, of which Bolloré is the second largest shareholder.
MontePaschi's rebound (+5%) should be noted in the credit sector. Intesa +1,8%: CEO Carlo Messina has again denied that he is working on acquisitions in Italy. The manager confirmed that everything unrelated to the core business will be disposed of by 2017. Including the stake in Saipem, acquired following the 3,5 billion euro capital increase closed this month. Messina explained that the stake will be sold, without haste, when the conditions are right.
Mediobanca runs in the rest of the sector (+4%). Ubi +3,6%l Unicredit +2,3%,
Oil companies supported by the rise in crude oil prices: Eni +3%, Saras takes off (+7,74%). Brokers reacted positively to the balance sheet data. SocGen (target €2,30), Kepler-Cheuvreux (target €2,50) and UBS (target €1,95 from €2,05) confirmed the Buy rating. Barclays instead reiterated the Overweight recommendation with a target of 2,30 euros.
