The Fed's bazooka is back in action. Yesterday evening the US central bank announced that today it will resume purchases of corporate bonds on the secondary market, one of the measures envisaged to deal with the pandemic. The news largely overcame fears about the new cases of Covid -19 discovered in Beijing, which are still under control. THE Asian lists they enthusiastically welcomed the entry into the field of the US central bank, which came into action at the first signs of fatigue in the Bull.
- Tokyo's Nikkei gains 4,5%, Hong Kong's Hang Seng 3%, Seoul's Kospi 4%, Sydney's S&P ASX 4%. Less brilliant, but on the rise, the stock markets of China.
- The future of Wall Street's S&P500 index is up 1,5%, in the aftermath of a recovery session after the strong recovery data of the Empire Stare index on the US economy.
POWELL DRAWS ON ETF LINE OF CREDIT
Central banks are once again the real protagonists of the markets. Today, Jerome Powell will be able to illustrate the lines of his strategy in his hearing in Congress. The new resources put in place will be provided by a hitherto little used credit line, that for ETFs: only 5,5 billion have been purchased since March, compared to a firepower of 250 billion dollars.
To carry out the operation, an index was developed internally, which includes bonds with the right characteristics, but what the parameters of the choice are for now is not known. The Fed also officially launched its direct financing program for small and medium-sized businesses.
THE BOJ ALSO ON THE FIELD. FLY THE NIKKEI +4,5%
- The Bank of Japan also took action this morning. There are, as expected, no news on rates but the bank has made it known that it is ready to strengthen and extend its support plans, if necessary: the emergency budget to be put in place has been expanded to 110.000 billion yen (US$1000 trillion), from the previous 75.000 trillion yen.
- The central bankers' parade will continue with the meetings of Brazil, Indonesia and Russia. Tomorrow it will be the turn of the Bank of England which could vote for interventions of up to 150 billion pounds.
- The US markets rose yesterday: Dow Jones +0,62% S&P 500 +0,83%. The Nasdaq rose 1,43%.
ISRAEL ADOPTS MODERN THERAPY
- The modern biotech stands out +7,4% after Israel has decided to adopt its anti-Covid drug.
- In addition to the usual protagonists, the US market is driven by the purchases of members of Robinhoods, the free platform that has become a mass phenomenon thanks to the purchases of "orphans" of sports betting sites, stopped due to the epidemic. It seems that a large part of the income support (1.200 dollars each) given by Washington has fueled the trend that has invested stocks generally overlooked by professionals.
- Brent oil is just below $40 a barrel, down 0,3%, closing up 2,5% yesterday.
- The dollar weakens, against the main counterparties, as often happens when risk appetite rises. The euro dollar moves to 1,133.
IN MILAN THE BULL SUFFERS, THEN REDEEMS
The European stock exchanges started down and then picked up speed during the session, as the fear of the new wave of the epidemic subsided. Meanwhile, the maneuvers for the visit of the European summit on Friday are taking shape.
Piazza Affari in strong recovery from the -3% of the opening, even closes in positive territory: +0,43% at 18.969 points.
TAX REVENUE: THE PLATE CRYING
Istat has analyzed the prospects of companies after the Covid-19 emergency: 57% of companies that asked for liquidity are still waiting for an answer, over half foresee difficulties in meeting the expenses that will arise until the end of 2020, 70% would have resorted to layoffs (.
According to the Bank of Italy, in April the tax revenue recognized in the state budget amounted to 24,2 billion, -20,4% compared to the same month in 2019, affected by the suspension of some tax payments and the worsening of the macroeconomic situation. Prime Minister Conte has assured that the government has no intention of introducing a property tax.
BERLIN INCREASES CONTRIBUTIONS TO THE EU
Germany, which will assume the rotating presidency of the Union at the end of the month, is accelerating: the government is ready to accept a 42% increase (or 13 billion a year) in Berlin's contribution to the common budget.
The other European markets also limited the losses in the final: Frankfurt -0,39% on the wave of the decline of the stocks most linked to exports.
Paris -0,49%. The disappointment over the lack of recovery in consumption in China held back luxury: Lvmh -2,03%, Kering - 1,41%. Madrid -0,39%.
BREXIT, THE STALE CONTINUES
The worst stock exchange is London -0,73%. Nothing new on the Brexit front: nobody wants to take responsibility for the break but it doesn't show the willingness to reach an agreement. “The parties agreed that a new impetus is still needed. They backed the plans agreed by the negotiators to step up talks in July and create more favorable conditions to ratify a deal before the end of 2020,” a joint statement read.
LSE DOES NOT DO DISCOUNTS IN BRUSSELS
Meanwhile, a twist marked the start of negotiations with Brussels to have the go-ahead for the Refinitiv operation which could lead to London's sale of Borsa Italiana. The London Stock Exchange will not offer concessions to EU antitrust authorities reviewing the $27 billion offer, a move likely to trigger a four-month probe. Next Monday is the deadline within which the LSE can propose concessions in response to the competition issues raised during the preliminary investigation by the EU authorities, which will end on 22 June. Traders welcome the emergence of a competitor for Bloomberg. It is likely that a process will be triggered that will lead to sale of the Italian Stock Exchange, controlled by Lse.
BTP IN EXCELLENT HEALTH, RATES AT THE LOWEST SINCE MARCH
The Italian bond market holds, supported by the parachute of ECB purchases.
The spread is practically unchanged, -0,15%, 184 points; but the rate of the 10-year BTP decreased compared to Friday to 1,43% at the levels of the end of March.
The yield on the two-year bond, maturing in April 2022, slipped to a record low since the beginning of March, while for the ten-year rate, the decline was limited to the levels seen at the end of March.
The long end of the curve remains behind, with the XNUMX-year benchmark losing ground against its Bund counterpart. The tendency towards stiffening must also be seen in relation to the adjustment of positions in view of the Tltro III operation.
The Ministry of the Economy has announced that it has used 717 million euros from the sinking fund for government bonds to partially repay the BTP of 15 June 2020, three-year coupon with a 0,35% coupon.
The Bund trades at -0,45%. Bloomberg reports that the German government will ask Parliament for the go-ahead for a new increase in public debt by 62 billion euros, a measure that brings the total new debt to be issued to 218 billion euros.
INTESA: MORE BRANCHES FOR BPER, BANCA GENERALI SHINES
At Piazza Affari, focus on Intesa Sanpaolo +0,28% and Bper +0,92% later the agreement in the context of the ops on Ubi +2,01%, which envisages a revision of the sale price and an increase in the number of branches that will be acquired by the Modenese institute. Mediobanca did well +1,47%, while Unicredit decreased -0,59%.
In assets under management, Banca Generali shines with +2.05% in contrast with the sector (Azimut - 0,81%) on the wave of the promotion of Ubs. Nexi also rose +3,43%. The number one of the Supervision (SSM), the Italian Andrea Enria, announced that the banks will not be subjected to stress tests this year, given the emergency situation, but to a special vulnerability assessment to establish the resilience of individuals institutes. The ECB's decision puts less pressure on institutions, at least in the short term, in the management of loans.
EXOR FLYES, SPAIN LENDS FCA/PSA A HAND
Contributing to the increase was the performance of Exor +3,77%. Also Fiat Chrysler +1%. The Spanish government has presented a 3,7 billion euro plan to revitalize the national automotive sector, based on incentives for the transition to electric power. FCA and PSA Peugeot together have 27% of the Spanish car market.
Still under fire Atlantia -1,5%. Transport Minister Paola De Micheli said the government could make a decision on the concession "in 15 days".
FERRAGAMO IS ALWAYS IN FASHION
Big movements on the luxury front. Limit Moncler damage -0,44% thanks to the recovery compared to the initial -2%. Bernstein strengthened the Outperform rating by raising the target price by approximately 18% from 34 to 40 euros.
Brunello Cucinelli does worse -2,7% (but -4% halfway through the session). Goldman Sachs cut the judgment from Buy to Sell, setting a target price of 27,10 euros.
On the contrary, Ferragamo flies +2.4%. The Florentine house is at the center of attention after the return of Michele Norsa. Speculation is betting that Lvmh could give up after the epidemic Tiffany is en route to the fashion houses (But Bernard Arnault can achieve both goals).
DIASORIN READY TO APPLY AGAINST THE TAR
Highlights are Pharma stocks: Recordati +2,44%. Diasorin +1.74% after the confirmation of the company's decision to appeal to the Council of State on the recent ruling of the Tar which prepares the annulment of the agreement between the San Matteo hospital in Pavia and the company led by CEO Carlo Rosa who underlined how the ruling by the TAR could create a serious precedent capable of jeopardizing investments in clinical research in Italy.
FROM SNAM A PLAN FOR TARANTO, LEONARDO MAKES AVIO FLY
In the rest of the list:
Amplifon +2,86% Equita Sim confirmed the hold and target rating of 23 euro per share
Snam stands out among the utilities + 2,75%: the company could invest 40 million euros in Taranto in interventions to accelerate the energy transaction and the reduction of gas emissions. Mediobanca Securities confirmed the outperform and target rating of 4,8 euro per share. A2A +2,28% and Terna +2,15%.
Note Avio +6,58%: Leonardo's stake has risen from 3,75% to 29,6% after the latest purchases.
