Fear makes 190. An easy but adequate joke in the face of the rise in the spread of BTPs against German bonds, once again the most explicit and effective measure of the worries that inspire the Bel Paese, burdened by a mass of 2.300 billion in debt which risks jeopardizing the balance of the entire eurozone. The markets, in addition to pricing in the unknown Italy, also signal the first tensions on the front of Spain, Portugal and even on the bonds of Paris (the spread with the Bund widens to 40 points).
THE RATING DAM UNDER PRESSURE
The alarm of the European partners and the judgments arriving from the rating agencies weigh on Italy. Yesterday Fitch's note came out: "The policies agreed by the 5 Star Movement and the League - we read - two of Italy's most populist and Eurosceptic parties, increase the risks for the nation's credit profile, above all through fiscal easing and potential damage to trust”. The Italian rating is currently only two steps above the level of a junk title according to Fitch itself (which will pronounce it on 7 September), Moody's and S&P's. Only the Dbrs agency evaluates Italy's rating above 3 points from the relegation which could mean the closure of access to the financing channels of the ECB. But Dbrs, which will pronounce itself on July 13, has already defined the program of the new majority as "disappointing".
SONY CONQUERS ENI. BABIES PUSH SHANGHAI
The international panorama is much less agitated. The markets are trying to interpret the consistency of the less tense climate between Beijing and Washington: the euphoria is however held back by the fear of a rapid increase in interest rates, anticipated by the levels reached by the US XNUMX-year bond.
This morning Tokyo is down by 0,2% after six consecutive days of depreciation, the yen on the dollar rebounds, to 110,9.
Big hit by Sony (-0,7%) which has secured the share of capital still not controlled by Emi, the music major for two billion dollars. The record company controls a library of 2,1 million songs.
The governor of the Boj, Haruhiko Kuroda, has opened up the prospect of a less expansionary monetary policy: for the first time he has recognized the collateral damage caused by the continuous injections of liquidity into the system.
Hong Kong closed for a holiday, the Csi 300 index of Chinese stock exchanges falls. Construction companies are down, while companies that produce baby food are up: Beijing is preparing to cancel the rules on the maximum number of children within a family unit, the measure could arrive by the end of the year.
BOEING FLIES THANKS TO BEIJING. US PMI IN THE LIGHT
The euro moved little against the dollar at 1,178, yesterday it closed with a slight rise at 1,179.
On Wall Street, yesterday the companies of large industry stood out above all, such as Boeing +3,6% which sells a quarter of its aircraft in China, Caterpillar and General Electric. The indices are positive: Dow Jones +1,21%, S&P 500 +0,74%, Nasdaq +0,54%. Fourth consecutive record for the Russell 2000, the small cap index.
Oil rose to 78,3 dollars a barrel, under pressure from the measures announced by the US for the next embargo to be imposed on Iran. It is stable in the number of US shale oil drills. Contrasting performance for oil companies in Piazza Affari: Eni down by 0,79% while Saras leaps by more than 6%. Saipem's rally continues +2,16%.
COUPON EFFECT ON MILAN. WEAK START TODAY
Italy remains the special observer of European lists, under the pressure of the spread on a day with reduced volumes due to the absence of Frankfurt and Zurich, closed for the Pentecost holiday. A slightly negative start is expected today for European lists, with the exception of the German Dax (+0,7%).
The Milan index closed down by 1,52% at 23.092 points, the worst place in Europe. But the result is distorted by the dividend distribution of 19 out of 40 blue chips plus a robust patrol of smaller stocks.
Net of coupons (estimated impact -1,65%) the index was practically flat. Since the beginning of the year, the performance of the FtseMib remains the best in Europe with +7%, in the same period the Eurostoxx index rose by +2,5%.
In the other markets, London (+1,15%) stands out, setting a new historic record at 7868.06 points, +1,15%. Thanks also to the weak euro, Paris gains 0,41%, Madrid loses 0,48%.
WEBER, THE FIRST WARNING FROM BERLIN ARRIVES
After the lunge of the French Economy Minister Bruno Le Maire came the warning of the German Manfred Weber, leader of the European People's Party (PPE) who in a statement to the German media indirectly addressed the League and the M5s: "You are playing with fire because Italy is heavily in debt”. And he added: "Irrational or populist actions could provoke a new euro crisis." The single currency fell yesterday for the sixth consecutive day against the dollar to 1,175.
THE PERSPECTIVE OF MINI BONDS IS WORRY
Finally, the declarations on mini bonds, the instrument with which the State should be able to settle its debt with suppliers, have contributed not a little to arousing alarm. Yesterday the economic manager of the League, Claudio Borghi confirmed that they will arrive soon. The judgment of the investment houses was not long in coming: Credit Agricole believes that they are a way to dribble the EU rules. Ing claims that it is, in fact, a parallel currency. BNY Mellon points out that Greece had already thought about introducing this instrument.
In this context, the pressure on the BTPs waiting to know the next moves of the President of the Republic Sergio Mattarella who will receive the presidents of the chambers is not surprising. For the post of the head of government it will have to wait until tomorrow.
THE "SCISSOR" AT THE HIGHEST SINCE JUNE 2017
The ten-year benchmark yield reached 2,42%, the highest since the end of March last year. That on two-year maturities returned to positive territory (as it did briefly last week), rising up to 0,21%, the highest since December 2016.
The 10-year BTP/Bund spread widened to 190 basis points, the highest since June 9, 2017, with a jump of 26 points compared to Friday's levels.
Since last Tuesday's close (131 points), when the first contents of the government program emerged, the Btp/Bund spread has widened by around sixty basis points.
ITALY/ SPAIN, A DIGIT OF 90 POINTS
The Italy/Spain spread rose to 90 points, reaching new highs since February 2012. The volatility of the Italian bond market is reflected in the entire government sector of the 'peripheral' countries of the euro area, Portugal and Spain in the lead. Going against the trend was Greece, about to get the go-ahead from creditors in the last exam on reforms before exiting the bailout, scheduled for August.
THE AGNELLI SCUDERIA SHINES IN THE BUSINESS SQUARE
The session in Piazza Affari was conditioned by dividends. But the most brilliant stock was Fiat Chrysler (+2,6%), which did not detach any coupon. However, the market is already in fibrillation awaiting the announcements of the Investor day on June 1st. Like the concentration of the luxury pole in Italy, Banca Imi does not exclude incoming indications of new alliances.
CNH Industrial is even more lively, driven by the indications coming from the John Deere quarterly and by the lull in the trade war between the United States and China. Ferrari (+1%) and Brembo (+1,1%) also performed well in the automotive sector.
BANCA INTESA RECEIVED THE CEDOLA OSCAR (6,7%)
A day of respite for bankers, despite the pressure on BTPs. Ubi Banca (+1,7%) and Bper Banca (+1%) rose. UniCredit +0,5%. Intesa San Paolo slows down (-0,6%), net of the generous coupon (0,203 euro per share, yield equal to 6,7%). Worth noting is the slump in Creval (-6%) and the sharp decline in Do Bank, held back by fears about revisions of the law on credit recovery. But the Swedish Hoist Finance has announced to strengthen its presence in Italy, says the managing director of the company specializing in the management of non-performing loans.
According to data from Assogestioni, the collection of PIRs (2 billion) continued in the first quarter. The industry scored a net inflow of 13,9 billion. Assets under management amount to 2.082 billion lire.
Telecom Italia -1,2% weak: Equita Sim however confirmed the buy recommendation with a target price of 1,02 euro.
ELLIOTT ALSO WINS AT ANSALDO. LAZIO SUFFERS
Fincantieri rebounds (+4,4%) after Friday's crash. The Australian Strategic Policy Institute has published a document in which it analyzes the models proposed by the three companies competing in the tender for Australian frigates: BAE Systems, Fincantieri, Navantia.
Also Erg (+3,98%) on which Banca Imi maintained a positive view (add, target price 23 euros) after participating in the company's roadshow held on Friday in Geneva.
Ansaldo Sts rose by 1,6%. Hitachi Rail chairman Alistair Dormer said Hitachi was ready to buy Elliott's shares in the company "but at a fair price".
Different destinies for listed Roman clubs. SS Lazio left 6,2% on the ground after failing to qualify for the Champions League.
On the first day of the capital increase, the AS Roma share gained 1,8%, while the rights lost about 29%.
