The Chinese economy is holding up well, recording 6,7% growth at the end of June (against 6,6% in the first quarter). The industry slows down but less than expected thanks to the support of the weak yuan. The growth was ensured by investments in real estate and infrastructure supported by the increase in public spending (in June +19,9%). In any case, the macroeconomic data are all above expectations. A better picture than expected, which allowed the Asian markets to start to end the week on a high note: in Tokyo, the Nikkei index rose by another 1,2%, bringing the balance of the last five sessions to +9%. The other stock exchanges in the Asia-Pacific hemisphere are at an 8-month high.
Geopolitical tensions, including the latest, terrible attack in Nice, do not slow down the energy of Taurus much, repressed since the beginning of the year by the fear of a slowdown in US growth. With this fear gone, the markets picked up speed. In this context, the failure to cut the British discount rate takes a back seat. And Europe is betting that a solution to the problems of Italian banks, at this point, is only a matter of time.
RECORD ACCOUNTS FOR JP MORGAN. THE MONSANTO BATTLE IS LIGHTNING AGAIN
The American Stock Exchange thus broke other records. The Dow Jones index (+0,73%) updated the all-time high at 18.537,57. Ditto for the S&P 500, which hit 2.168,99 to close up 0,52%, while the Nasdaq was up 0,57%. The American stock market thus reached the fourth consecutive record day for the S&P500: a sequence of the kind has not been seen since 2004.
The macroeconomic data signal an absence of tensions in the labor market and a slight overheating of inflation. Weekly jobless claims remained unchanged at 254 versus consensus expectations of 265. Producer prices for final demand, on the other hand, rose by 0,5% in June and core prices by 0,4% (for both figures, the consensus forecasted an increase of 0,2%).
Money is leaving safe havens, risk appetite is picking up and US 5-year bonds are up 1,54 basis points to 2,4%, a two-week high. Brent oil finished up 47,4% at $XNUMX a barrel.
The push from JP Morgan's quarterly accounts (+2,5%) was also decisive, dragging the entire US banking sector up by 1,7%. The First Bank of the United States announced that it closed the second quarter with earnings per share of $1,55, 8 cents higher than expected thanks to better-than-expected trading revenues.
On the corporate front the Monsanto match is rekindled. The German Bayer yesterday made public the new offer for the US group: 125 dollars per share, or over 64 billion dollars. Complicating the operation is the possible inclusion in the Basf challenge. At stake is the creation of the world's largest agrochemical and seed supplier.
Japanese stocks shine on Wall Street. The shares of Line, WhatsApp's Japanese rival (but owned by a Korean company) recorded a 35% rise yesterday on the day of the US debut. The Nintendo stock rose by about 50% during the week after the extraordinary success achieved by Pokemon GO. Niantic, the Google subsidiary that collaborated on the project (of which it is a shareholder), anticipated that sponsored places will appear in the game, where users will have to go to catch rare Pokemon or to get PokéStop gifts.
BERNANKE SUGGESTS TOKYO A PERPETUAL BOND
As usual, the attitude of the central banks is supporting the advance in the price lists. Three members of the Fed board (James Bullard, Denis Lockhart and Robert Kaplan) argued yesterday that, pending Brexit developments, "there is no hurry to intervene on rates".
But attention is focused on the outcome of the visit to Tokyo by former Fed chairman, Ben Bernanke, dedicated, according to rumors, to fine-tuning new expansionary programs to defeat the now decades-long recession of the Japanese economy. Possible instruments could include a perpetual bond, i.e. without the provision of a repayment (basically free money) to be issued to give life to a vast program of public investments. According to Bloomberg, this is the project that Bernanke has illustrated to Japanese politicians in recent days, starting with Etsuro Honda, one of the minds behind Shinzo Abe's economic policy.
MILAN +1,6%: FIVE RAISED SEATS OUT OF SIX
Although conditioned by Brexit and even more so by the problem of bank recovery, Europe too has caught on to the market rally. Milan has scored five upward sessions out of the last six. Thus Piazza Affari is preparing to close a largely positive week: the Ftse Mib index rose by 1,6%, to 16.797 points. The rate on the ten-year BTP climbed back to 1,18%, after reaching 1,13% in the morning, just above the recent low of 1,12%, the lowest level since March last year. The Btp/Bund spread is confirmed below 130 basis points.
Frankfurt (+1,5%), Paris (+1,3%) and Madrid (+0,6%) did well. London lost 0,1% on the day of the unexpected decision by the Bank of England to confirm interest rates at 0,5%: the consensus expected a cut of 25 basis points, it would have been the first reduction in the cost of money since 2009. The pound goes up to 1,334 from 1,314 yesterday against the dollar, the maximum in the last two weeks. In the statement, the UK central lender says it is ready for action, postponing any new stimulus measures, even on multiple fronts, until August. The decision was voted by a large majority, 8 members against 1.
UNICREDIT OPENS TO THE CAPITAL INCREASE
In Piazza Affari, in the wake of the rumors about the negotiations on the credit system, the banks have put the turbo on. The index of the Italian banking sector rises by 3,64%. Leading the race was Unicredit, which closed with a leap forward of 6,5% to 2,15 euros. This morning Citigroup raises its recommendation to Buy from the previous Neutral. The target price was raised to 3,15 euros from 2,40 euros.
But the propellant for the increase was provided by the president Giuseppe Vita, telling Reuters that Unicredit will have to study a capital increase because the recent sales may not be sufficient to satisfy the requests of the European Central Bank. The market expects new CEO Jean Pierre Mustier's next move to come from Turkey. After the sale of the stakes in Fineco and Bank Pekao, it could soon be Yapi Kredi's turn.
MPS, THE CURE FOR NPLs CLOSER
Monte Paschi was also among the best blue chips with an increase of 4,25%, to 0,3432 euros: it was the fifth positive session in a row. The loss since the beginning of the year is reduced to 70%. The main issue on the market concerns the disposal of MPS NPLs and the hypothesis of intervention in the Bank's capital by the State. The Sienese bank is working with the Atlante fund on the plan to reduce the burden of non-performing loans, an operation that is destined to become the point of reference for the entire sector. JP Morgan should manage the maxi securitization of non-performing loans on which a form of state guarantee could be applied. Overall, the deal could involve a package of NPLs (non-performing loans) with a nominal value of at least 10 billion, but it is possible that the final amount will be higher.
The institutions most penalized in the previous session also recovered: Ubi Banca +5,3%, Banco Popolare +5,5%, B. Pop. Emilia-Romagna +4,4%. The top management of Carige (+2,9%) asked Apollo and the former management for damages of 1,25 billion euros. The first hearing to deal with the case has been set for the first ten days of May next year. Insurance companies also stood out: Generali +2,6%, UnipolSai +3,1%.
BOUNCE FCA. HSBC TELECOM CUT
The utilities are weak: Snam -0,5%, Terna -1%. Citigroup cut both stocks to Sell from Neutral. Telecom Italia rebounds (+1,6%). “I find that the market prices of our stock do not correspond to the real values of the company, current and prospective. The facts will speak for us shortly. I have nothing else to add”, declared the CEO Flavio Cattaneo. Yesterday HSBC cut the Hold da Buy recommendation, lowering the target price to €0,75 from €0,80.
Leonardo Finmeccanica (+2%): the company will supply an integrated avionics support service to the British Eurofighter Typhoon fleet, the contract has an estimated value of over 600 million euro. The automotive sector did well: Fiat Chrysler advanced by 3%.
RCS AT THE FINAL RUSH: BONOMI OVER 30%, CAIRO BETS ON THE FUNDS
Today is the grand finale of the battle for control of RCS Mediagroup, which lost 7% yesterday. The reason for the fall lies in the fact that the shares purchased since yesterday afternoon can no longer be delivered to the tender offer by Andrea Bonomi's consortium or to Urbano Cairo's public offer.
The Bonomi&C consortium has achieved the first objective, namely the achievement of the minimum threshold for acceptance of the tender offer launched at 1 euro. Acceptances of the takeover bid rose yesterday to 30,35%, thus overcoming the 30% obstacle. Yesterday evening the takeover bid promoted by Cairo Communication registered subscriptions equal to 22,03% of the share capital. But the appeal is still missing several funds and other investors who could allow Cairo to bring the minimum threshold of the offer, ie 35%, closer.
