Mario Draghi has lit the fire, now the torch passes into the hands of the Fed president, Jerome Powell, who has the honor (and the burden) of feeding the fireworks of the Stock Exchanges called to drive away the shadows of the recession. Meanwhile, the charge of the Bull in Asia is gaining speed, triggered by the intervention of the president of the ECB and fueled by the words of Donald Trump, who confirmed that he will have "a long operational meeting" with President Xi at the G20. Drugged by these injections of adrenaline, the Stock Exchanges of the East continue the rally.
HONG KONG FLYS (+2,4%), WALL STREET CELEBRATES
Tokyo's Nikkei +1,7%, even as Japan's exports fell in May for the sixth consecutive month.
Hong Kong's Hang Seng is doing better (+2,4%), back to doing good business after the wave of protests in defense of the status of the former colony. The Chinese price lists are also in great shape. The CSI 300 of Shanghai and Shenzhen is up 2%. The Kospi of Seoul (+1%) rises, Sydney (+1%) marks a new high.
Yesterday there was a festive atmosphere also on the US markets: Dow Jones +1,35%, S&P 500 +0,97%. The Nasdaq posted a 1,39% gain.
They particularly celebrate chips and tech giants. Big leap forward for Boeing (+5,4%) after the announcement of a maxi order for 24 billion for the 737 Max, the aircraft indicted after the fatal accidents.
OIL ALSO UP, ON SAIPEM AND TENARIS
Oil is also gaining share. Brent crude is trading at $62,2 a barrel, up 0,2%. Yesterday, after the confirmation of the Trump-Xi Jinping meeting, crude oil in the North Sea gained 2%.
Oil prices soar. At Piazza Affari, Saipem gained 3,72%, also on the wave of the mega merger in the USA between Keane Group and C&J Energy Service which gave rise to the third largest US group in the services sector after Schlumberger and Halliburton. The transaction, in shares, is worth $1,8 billion, including debts of $255 million. Tenaris +3,18%, Eni +2,06%.
TODAY IT'S THE FED'S TURN, BUT THERE WILL BE NO RATE CUT
With these premises, the markets begin another field day waiting for Jerome Powell's press conference at 19 pm Italian time. The Fed president does not have an easy task: on the one hand, he must safeguard the independence of the central bank, threatened by pressure from Trump who yesterday launched, for the first time, an attack on the ECB, accused of using the weapon of devaluation , as does China, in an anti-US function. On the other hand, he must live up to his commitment to the markets over the last few months, setting the stage for two, perhaps three, rate cuts implied by bond prices. The 10-year Treasury Note yields 2,06%.
Most economists expect confirmation of the current levels of the cost of money, but with clear indications of a willingness to proceed with an easing of the tightening, as early as July.
So much for the Fed. What about Europe? How will the ECB move after yesterday the central banker announced that “the asset purchase program still has considerable room” and that “further rate cuts and measures to mitigate any side effects continue to be part of the tools at our disposal”?
It is very probable that at the end of the board meeting on 26 July, or at the latest on 12 September, the ECB deposit rate will be brought down to -0,5% from the current -0,4%. Next month, the Central Bank could move its commitment on low rates to the end of 2020, and even beyond. Mario Draghi's successor could have the task of restarting QE in 2020.
The euro yesterday lost 0,2% against the dollar, at 1,119, this morning it was little moved.
THE SPREAD DROP TO 243 POINTS, THE FRENCH TEN-YEAR BELOW ZERO
Meanwhile, the effect on the debt market was felt. The Italy-Germany spread on the 10-year segment fell to 243 basis points with a minimum of 238, the lowest since mid-April from 254 on the eve.
The ten-year rate (which closed at 2,11%) fell to 2,06%, the lowest since May 2018 from 2,29%. The German 0,327-year yield hit a new all-time low at -XNUMX%.
Historic day for French 0,02-year bonds, which fell below parity at -XNUMX%, as already happens to Holland and Sweden.
The world stock of securities with a negative yield exceeded the threshold of 12 trillion yesterday. The yields of Spain and Portugal fall below 1% up to 15 years.
The rally affected all parts of the curve. The 2-year BTP rate fell to 0,447% from 0,649%, the lowest since February. The 30-year yield dropped to 3% from 3,16% last year, to its lowest level since mid-May.
UTILITIES TAKE FLIGHT IN MILAN
Roaring day also for the European Stock Exchanges. Piazza Affari closes the session with a rise in the FtseMib index of 2,2% to 21.100 points.
Paris and Frankfurt also achieved increases of more than 2% despite the sharp fall in the business confidence index, the Zew, which fell to -21,1, undoubtedly one of the alarm signals that prompted Draghi to act . Madrid +1,19%. London +1,17%.
ENEL AT THE HIGHEST FOR 11 YEARS, BANKS IN RECOVERY
Utilities led the race, electrified by the new drop in the cost of money.
The best blue chip was Iren: + 5,2% at 2,42 euros. Italgas rises by 4%, A2A +3,4%.
Enel +2,6%, on 11-year highs at 6,3390 euros. Kepler Cheuvreux raises the target price to 6,8 euros. The consensus is very optimistic. Out of 31 analysts surveyed by Bloomberg, as many as 26 recommend buying. Average target 5,87 euros.
Snam +2,7%. Mediobanca increases the target to 4,5 euro.
Hera (+2,34%), which it has acquired, also markedly increased retail customers in the distribution of electricity and gas of Ascopiave (+4,80%, on historical highs). According to Equita, this operation increases the probability of a merger between the two utilities.
The banks, after a timid start, adapted to the general euphoria from mid-session, when the Btp-Bund spread narrowed below the threshold of 240 points.
Intesa Sanpaolo +2,32%, Banco Bpm +3,49% and Unicredit +3,78%. Also in evidence is Ubi (+1,83%). Bper +2,25% after the Unipol group increased its stake by purchasing a further 1,2% of the capital, thus reaching 18,5%.
In assets under management, Banca Generali stands out (+4,2%), which is still benefiting from expectations for an acquisition in Switzerland.
CNH AND STM FLYWHEEL
Among the industrialists, a two-sided session for Stm, below 2% in the morning after the profit warning of Siltronic which dragged down the chip producers to then recover and close at +3,09% thanks to the recovery of the chips from Wall Street. The effect of the start of coverage by SocGen was also felt with a Buy judgment and a target price of 23,60 euros.
A sharp rise also for Cnh Industrial, which rises by more than 4,72%, driving the price of Volkswagen's heavy vehicle division.
Fiat Chrysler also recovers the plus sign (+0,89%). The group's car registrations in Europe show a stable trend in May after eight months of declines. Meanwhile, negotiations continue between Nissan and Renault pending the assembly of the Japanese group: in exchange for the yes to the new statute, the French have been offered two seats in the new committee that will lead the company.
