The unpresentable Donald Trump, after conquering the White House, tamed the global stock exchanges, including Wall Street, in a matter of hours. Never, perhaps, in the history of finance has there been such a rapid U-turn in market moods: futures in deep red in the early morning as the hours went by gave way to a robust rise in Paris and Frankfurt, for don't talk about Moscow (+2,2%), where the Duma gave a real standing ovation to the new president. After a start down by almost 3%, the Piazza Affari session closed with the FtseMib index almost on par (-0,1%).
The change of direction of Wall Street was sensational, from -5% in futures, in free fall overnight as Hillary Clinton's defeat took shape, to robust gains that brought the Dow Jones to +1,4% , at 18,589 points, a quarter of a point off the all-time high. S&P 500 and Nasdaq also rose sharply, both +1,11%.
To what can this turnaround be attributed? The more conciliatory tone shown by Trump in his first speech after the outcome of the vote contributed to helping the markets recover. The markets then welcomed the fact that the new president will be able to count on a majority in both the House and the Senate, neutralizing the risk of an infinite conflict. But we still need to find a convincing interpretation for an unprecedented scenario, more unexpected than Leicester's victory in the Premier League or the success of Chicago Cube in the baseball World Series after 108 years of fasting, the signals that had anticipated that 2016 is truly the year of the Black Swan.
In this context, here are the first indications of Meteo Borsa of the Trump era, which promises to reserve many surprises.
PHARMA, DEFENSE AND BANKS RUN. BAD CARS AND UTILITIES
Strong recovery in Asia, hit cold yesterday by the shock of the outcome of the elections plunged into open lists. Tolyo (+5,7%) completely eliminated the losses (-5,4%) of the day before. Sydney is also up sharply (+2,8%).
In the evening, Standard & Poor's confirmed the AA+/A1+ ratings on US debt.
The race for pharma stocks has exploded on Wall Street, having escaped the price controls promised by Clinton in the event of her election. Pfizer advances by 7,07%. The Shares Biotechnology index does even better (+8,93%), the biggest rise in a day for eight years.
Financials also take off: JP Morgan +4,60%, Wells Fargo +5,38%. Finance counts on the reduction of constraints and rules introduced after the subprime crisis.
There is no shortage of losers: the real estate sector drops 2,28%, that of utilities 3,68%. Both sectors are sensitive to rising bond yields.
Companies that boast large investments in Mexico are also down, starting with car manufacturers such as Daimler, BMW and Fiat Chrysler (-2,2%). Mexican problems also for Brembo (-2,9%), which owns a plant in the Mquilladora strip, close to the US border (and the hypothetical wall that Trump has promised to raise between the two countries).
The worst reaction was registered by the Spanish bank BBVA, which managed to lose 7,6%, being the most exposed to Mexico among European institutions. The Mexican peso tumbled 13%.
THE DOLLAR RISES UP, YIELDS ON T BONDS SKY
The dollar rebounds from the lows reached on Tuesday night: against the euro, the currency trades at 1,094, from 1,102 at the previous close. The yen also rose to 105,83 (from the previous night's low of 101,19).
The yield on the T bond 10 rose sharply, jumping to 2,09%, the highest since January and the lows of 1,71% overnight. The movement of the German Bund was significant, with the yield even rising to 0,20% in the evening, from 0,18% the day before. It had fallen to 0,09% before the open this morning. Stable the Btp at 1,75%.
Oil recovering, with Brent now trading at 46,8 dollars a barrel (+1,8%).
UNDER FED, RATES WILL GO UP IN DECEMBER
Some trends can be identified from these signals. The reaction of government bonds shows that the market is once again believing in the US rate hike in December. But the Fed's framework has completely changed. In fact, target practice against President Janet Yellen has already begun. The operation was initiated by Judy Shelton, a member of the new president's staff who accused Yellen of having created a "false economy". Similar judgments have come from other economists close to Trump, who however underline that the president will move with caution. Provided, of course, the Fed board complies. Otherwise it is not excluded that Yellen will have to leave before the expiry of the mandate next January. Malpass, Kudlow and Taylor are preparing to take over, that is, the three most likely candidates who will call for a hike in December and four or five hikes next year, then that's it.
ENERGY, WE CHANGE: MORE COAL, RENEWABLES UNDER FIRE
Vestas, the Scandinavian giant of renewables, left 6% on the ground. Not surprisingly, because Trump, who intends to denounce the climate agreement, is determined to revive the production of all forms of energy. Deregulating production, transportation, processing and consumption in a country like America, so rich in every imaginable energy source, will mean lower prices along the entire supply chain. For American companies, the shock will be cushioned by lower regulatory costs and increased volumes. “Best wishes to Middle Eastern producers”, notes Alessandro Fugnoli with irony.
BUZZI, LEONARDO AND TENARIS LEAD THE PRO TRUMP MARCH IN MILAN
In Piazza Affari, the stocks of sectors most linked to the Trump effect shone. The strong increases of the Construction and Defense companies are highlighted: Buzzi +7,9%, Salini Impregilo +7,7%, Leonardo +7,6%, Fincantieri +5,8%.
Oil stocks are also doing well: Tenaris +6,5% and Saipem +5,7%: Trump expects massive investments in the energy sector. Eni closes slightly down (-0,3%).
Among pharma, Recordati rose by 3,3%, to 27,41 euro, in line with the +3,5% of the Stoxx index of European pharmaceutical companies. Diasorin, which has a US exposure of 55% of EBITDA, grew by 1,5%. the change of tenant in the White House could restart the consolidation of the sector, hindered in every way by the Obama administration because the suspicion had emerged that the objective of the cross-border mergers was of a fiscal nature.
UNICREDIT, TODAY OFFERS FOR PIONEER
Contrasted the performance of the banks. Banco Popolare loses 3,7% after the presentation of the accounts: the Bank announced that it had closed the third quarter with a loss of 332 million euros, double what the consensus estimated.
Unicredit advances (+0,7%): binding offers for Pioneer will be delivered today. Intesa unchanged, Ubi -2,1%. Monte Paschi closed slightly lower (-0,6%) after risking another collapse in the morning (-20% in early trading).
Generali also recovered, gaining 2,1%. Unipol -0,4% (from -4,5%).
EVIL SNAM AND ITALGAS. MEDIASET TO NEW LOWS
Snam down (-4,5%). Goldman Sachs cut the target price to 4,7 from 5,65 euros. For Italgas (which adds another -6,9% to the losses of the first two days of trading) the broker has started hedging with a "neutral" rating and a target price of 4,35. Sales spread throughout the European utility sector, which dropped by 1,3%.
Mediaset dropped 3,8% after the disappointing results announced last night. Enel -2,3%, Telecom Italia -1,5%.
