“India has a population of one and a half billion people and is growing by 9%. Why couldn't America do the same?”. So Donald Trump, last night in Davos, talking to bankers at a party. The US president corrected the statements of Treasury Secretary Stephen Mnuchin: other than devaluation, he said, the dollar will always be stronger, as it will reflect the economic power of the United States. But, beyond appearances, the message is the same: the United States intends to look after only its own interests, in open contrast to the leadership over the global economy exercised in the past.
It goes in this direction Mario Draghi's analysis who yesterday, while trying not to exacerbate the confrontation triggered by tensions on currencies, reported the "concerns" of the ECB directorate, a sentiment that "goes beyond the simple exchange rate but concerns the general state of international relations at the moment. If this were to lead to an unwarranted tightening of monetary policy, then we would have to rethink our strategy."
It is on this note of concern that the markets are preparing to end another positive week for stock markets and oil in contrast, while the pressure on the bond markets intensifies. The US GDP data will be in the spotlight tonight, but attention is already being paid to next week's Fed meeting, the last one chaired by Janet Yellen. Then the Trump era will also begin at the Central Bank: the declarations of Davos, in open violation of the commitment undertaken in October in which the Countries undertook "not to implement competitive devaluations and not to fix exchange rates to increase competitiveness" are just the starter.
THE EURO BOUNCES TO 1,241. TOKYO CLOSES AT -0,16%
This morning, on the Asian markets, the euro traded at 1,241, on the wave of Trump's easing statements. The dollar index, which measures the strength of the US currency against its main counterparts, dates back to 89,221. Yesterday it had touched the lowest since 2014 at 88,438. Stock exchanges most negatively affected by the weak dollar, such as that of Tokyo, are starting to close down: Nikkei index -0,16%. The week is also negative (-0,8%).
Instead, China's stock markets rose, also due to the small rebound of the dollar against the yuan: the cross rose to 6,33 from 6,32 yesterday. The Chinese currency is at its highest since 2015. South Korea's stock gains 0,4%, India's loses 0,3%.
DOW JONES AGAIN RECORDS, FLY INTEL
Yesterday evening the Dow Jones set another record with the Dow Jones: +0,5%. The S&P500 is just above parity and the Nasdaq is slightly down (-0,1%). US macroeconomic data came in slightly above expectations. In December, the leading indicator drawn up by the Conference Board, an indicator of future economic activity in the USA, recorded an increase of 0,6%.
After the stock exchange, Intel released the data for the quarter. Shares of the chip giant are up 4%. Strong decline for Ford (-3,98%) after the accounts. Brent oil corrects from 71 dollars a barrel, the highest since 2014. The WTI trades this morning at 65,39, down compared to the day before (66,66).
ONLY POSITIVE MILAN AND MADRID
Only Milan and Madrid closed higher despite the advance of the euro. The euro went so far as to exceed 1,25 dollars, at 1,2536, new highs since December 2014, during the press conference of ECB president Mario Draghi. When asked about the strength of the single currency, Draghi replied that the ECB does not have the exchange rate among its objectives.
In Piazza Affari, the Ftse Mib index rose by 0,41% to 23.720 points. Madrid follows (+0,41%). The other European stock exchanges, on the other hand, closed negatively, with London losing 0,36%, Paris 0,25% and Frankfurt 0,37%.
“EUROPEAN RATES WILL STAY STILL FOR A LONG TIME”
In the press conference following the directorate of the ECB, Mario Draghi confirmed that rates will remain at current levels for a long time and well beyond Qe, which the Bank is ready to increase in case of need, but he also emphasized the strength of the economy of the Old Continent which led the euro to appreciate. Draghi went on to add that exchange rate movements and recent volatility represent a source of uncertainty
According to Reuters, members of the European central bank's board of governors have split over the next steps in monetary policy. The split is a consequence of the stronger-than-expected strengthening of the euro, which complicates forecasts on the timing to exit the current stimulus phase.
The good performance of the Old Continent's economy received further confirmation this morning: in Germany the Ifo index stood at 117,6 points in January. The data beat the consensus of economists, who expected a reading of 117,1 points.
BTP IN SWING. A 9 BILLION AUCTION COMING SOON
Generalized decline in the prices of government bonds in the euro area after the Draghi conference. Among other things, the banker said that a large level of monetary stimulus remains necessary to allow inflation to consolidate in the medium term: the discussion within the board on the modification of the forward guidance (in particular on the elimination of the link between purchases of Qe and inflation) has not actually started yet.
During the press conference, the euro went as far as exceeding 1,25 dollars, at 1,2536, new highs since December 2014, before falling back below 1,24 dollars. There were also large fluctuations in the Italy-Germany spread, while the 1,875-year reference rate fluctuated between 1,990% and 0,579%. The yield on the 0,528-year Bund climbed to 0,551% (0,571-month high) from XNUMX%. At the end, the stock returned XNUMX%, the Schatz (two-year term) -XNUMX%.
The Ministry of the Economy will make available between 7 and 9 billion euros in 5, 10 and 50-year BTPs and Ccteu at the auction scheduled for Tuesday 30 January. In detail, the new ten-year February 2028, coupon 2%, will be offered for an amount between 4 and 4,5 billion euros. Between 1,5 and 2 billion of the Ccteu August 2025 will also be offered; 1,25 and 1,75 billion for the five-year August 2022, coupon 0,90%; between 250 and 750 million on the 50th year of March 2067, coupon 2,80%.
BANKS ADVANCE, SPOTLIGHT ON CATTOLICA
The words of Mario Draghi, together with the corporate accounts, characterized the session in Piazza Affari. In particular, the mention of possible future changes in monetary policy favored the banking sector (+1,53% the sector index) and the insurance sector but had a negative impact on the most indebted companies.
In great evidence the big names in credit. Intesa gains 1,3%, to 3,12 euros, one step away from the maximums for the period (3,16). Barclays has strengthened the Overweight recommendation, raising the target to 3,50 euros pending the industrial plan. In great evidence Unicredit (+2,2%) beyond the bar of 8 euros. The former Popolari are also doing well. Banco Bpm (+1,99%) extended in the final: the management is working for a maxi transfer of non-performing loans, there is talk of a package from 3,5 to 5 billion euros. In the control room of the operation Mediobanca, Banca Akros and Prelios. Barclays analysts confirmed the Overweight rating with a target price of 3,8 euros from the previous 3,7 euros. Bper Banca (+1,8%) and Ubi (+1,38%) also rose.
Among the insurance companies, expectation is growing for the presentation of Cattolica Assicurazioni's business plan next Monday +4,99% to 10,73% on the maximum for three years. Since the beginning of 2018, the stock has gained 17% (6,8% the European sector index). Interlocutors session for Generali +0,1 to 16,20 euro. Barclays upgraded the rating to Overweight from Market Weight (Neutral). Edizione Holding is preparing to double its stake to 2%.
GREAT VOLATILITY ON FCA: PROFIT UP 93%
Industrialists in the spotlight on the day of the Fiat Chrysler accounts which experienced the stock market session under the banner of high volatility. The final balance records a closing slightly below parity at 19,42 euros, but immediately after the publication of the quarterly the price reached a minimum of 19,02 euros and then recovered up to a maximum of 20,18 euros. The day excursion exceeded 6%.
The group led by Sergio Marchionne closed last year with a net profit up 93% to 3,5 billion euros. Adjusted net profit is up 50% to $3,8 billion.
The number of cars sold has remained the same but the growth of models with higher added value has allowed greater profitability while net industrial debt has halved. The last quarter closed with revenues down by 2,8% year on year, at 28,88 billion euros (one billion less than expected). Operating profit at €1,72 billion, against a consensus estimate of €1,92 billion.
Cnh Industrial advances (+1,17%) on the wave of the excellent results of Caterpillar +0,615 after strong fluctuations on Wall Street.
BROKER REWARDS STM
Session in the name of volatility on the day of accounts also for Stm (+0,7%) in the final at 18,94 euros, after -6% yesterday. The stock recorded an opening high at €19,45 and a low during the session at €18,57 for a total excursion of approximately 5%. Fourth-quarter revenue was $2,47 billion, better than analyst estimates and above the company's growth guidance. The gross margin improved more than expected, to 40,6% from 37,5%. The first quarter of 2018 is expected to end with a sequential decline in revenues of approximately 10%, slightly worse than forecasts. Leave as expected Carlo Bozotti, the deputy managing director Jean Marc Chery, will be the next president and managing director. Positive comments from brokers. Barclays, Bryan Garnier, Banca Akros, JPMorgan, Credit Suisse confirmed the buy recommendation.
DOLLAR EFFECT FOR BUZZI AND LUXOTTICA
The dollar effect was also felt. The exchange rate trend pushed Buzzi Unicem (+0,5%) and Luxottica (+1,38%). Conversely, Prysmian (-1,23%) and Leonardo (-0,73%) penalized.
The utilities have paid the price for Draghi's words, which have had negative repercussions on the most indebted companies. Enel fell by 0,39%, A2A by 0,94% and Italgas by 0,89%.
TELECOM APPLIES TO MATTARELLA
Telecom Italia is also holding back (-1,22%). Kepler Cheuvreux reduced the target price of the stock from 1,1 to 0,9 euro, confirming the buy recommendation but the news of the day concerned the board of directors flashed (a quarter of an hour long) which voted appeal to the President of the Republic against the golden power exercised by the government and the decision of the executive vice president Giuseppe Recchi to leave the operating powers, while remaining on the board of the company, to assume the leadership of a European private equity.
Contrasted the luxury. Moncler-1.6%: Société Générale has cut the rating from Buy to Hold, however raising the target price to 30,0 euros from 28,0 euros. The broker also decreed a sell on Salvatore Ferragamo (-0,3%). Tod's (+0,3%) closed the fourth quarter with 241 million euros in revenues, down 2% year on year, +0,7% at constant exchange rates. Even if the last three months of the year were better than the first nine months, the result is slightly below analysts' estimates. In the press release, the company says that sales will only rise again in the second half of 2018.
NORTHERN RAILWAYS RECOVERS AFTER THE DISASTER
Poligrafici Editoriali is still euphoric (+11,55%). It moves in the opposite direction Monref: -3,02%. Ferrovie Nord (-0,13%) limited the losses recorded in the afternoon in the afternoon, after the dramatic accident of the train of the investee Trenord which derailed near the Pioltello station.
