The stock market race continues, indeed accelerates. Wall Street opened the fourth quarter of 2017 with a poker of records, under the impetus of exceptional economic data and the expectation of tax reform. The strength of the US locomotive gives a boost to the dollar, which is strongly recovering against the euro, to its six-week low at 1,1710 under the pressure of the Catalan crisis. Thus the most serious unknown factor for the growth of the strongly expanding Eurozone is eliminated.
Not even geopolitics seems able, for now, to undermine this picture. Indeed, the carnage in Las Vegas (59 dead, hundreds injured) had the effect of relaunching the sales of rifle manufacturers (+3,5% Sturm Ruger, American Outdoor Brands -3,2%).
In the meantime, the Bull is also galloping in Europe regardless of the signs of crisis arriving from Barcelona where the general strike will take place today. It is a photograph with strong colors that emerges from the examination of the price lists. Of course, as speed increases and prices skyrocket, the risk of an abrupt stop increases. But for now, no one intends to get off the train.
TOKYO AT HIGHEST SINCE AUGUST 2015
Stock markets are also healthy in Asia. In Tokyo, the Nikkei index scored a rise of 0,8% to its highest level since August 2015 thanks also to the decline in the yen. The Indian stock market is up 0,5%. Hong Kong, Shanghai and Seoul are closed for public holidays. Slightly down Sydney (-0,4%) awaiting the decisions of the central bank.
GM +4,4% PREPARES TWENTY ELECTRIC MODELS
Guinness Book of Records day for the US markets. The Dow Jones rallied 0,69%, S&P 500 +0,39%, Nasdaq +0,32%. The Russell 2000, the American PMI index, also hit a new record.
The rumors about Donald Trump's next choices regarding the Federal Reserve contribute to helping the run of the dollar. The candidacy of Kevin Wash, a Republican who was already a member of the board of the central bank in the past, aligned with the hawks, takes off.
The conditions of the manufacturing industry in the United States are more than flourishing: the ISM index on the expectations of purchasing managers of industrial companies rose to 60,8 points in September, the highest since 2004. The increase is higher than expected.
Exceptional session for Gm (+4,4%). CEO Mary Barra has announced that the group will launch around twenty electric car models by 2020.
The landslide of Intercept Pharmaceuticals continues on the Nasdaq, a freshman controlled by the subsidiary of Genextra (founded by Francesco Micheli and Umberto Veronesi), after the news of the death of 19 patients who had taken its drug, Ocaliva. Three years ago Intercept Pharmaceuticals had reached a market capitalization of 6 billion, 450 dollars per share, while on 2 October it closed the trading session at 58 dollars.
OIL HOLDING DOWN: SAIPEM -1,1%
Oil is down: Brent at 55,88 dollars a barrel, Wti at 50,42. Exploration activity has restarted in North America, after 7 weeks of decline, there has been an increase in active drilling rigs. Meanwhile, Moscow has announced that the King of Saudi Arabia Salman bin Abd al Azizl Saud will travel to Russia on Thursday 5 October. It is the first visit by a Saudi ruler to the country and comes a month after the next OPEC meeting, which will discuss an extension of the production cuts, which expire in March.
Weak in Piazza Affari Eni (-0,2%) and Saipem (-1,1%). Saras (-1,5%) closed at 2,23 euros. Barclays raised the target price to 2,20 euros from 2,0 euros, but lowered the rating to Underweight from Equal Weight.
EUROPE SNOBES THE CATALAN CRISIS. FUTURES ON THE RISE
The European Stock Exchanges, with the exception of Madrid, are advancing despite the dramatic tug of war in Spain. Paradoxically, the weakness of the euro contributed to supporting the lists, which fell to 1,1730 against the dollar. Futures on European stock exchanges anticipate a slightly higher start.
In Milan, the Ftse Mib index closed the first session of the fourth quarter of 2017 up by 0,51% to 22.811,19, touching up the maximum for the year. The other price lists in the Eurozone also performed well: Paris +0,39%, Frankfurt +0,58%. London is up 0,6%, while the pound weakens against the dollar to 1,32 (-1%). The only square in red is Madrid: -1,38% in the aftermath of the Catalan referendum and the confrontation with the central government.
Justice Minister Rafael Catala said on TV that Spain could use its constitutional power, applying article 155 to suspend Catalan autonomy if the regional parliament declares independence. In the afternoon, Catalan governor Carles Puigdemont asked for mediation from the international community and invited Rajoy to clarify whether the central government is willing to dialogue.
THE BTP/BONOS SPREAD CLOSES TO 52 POINTS
The effects of the Spanish crisis were seen on the debt market. All session in negative for the BTPs which, starting with the minus sign, accentuated the correction in the afternoon in a climate of growing risk aversion. The Btp/Bund spread stood at 175 basis points from 171 on Friday evening, while the difference between Bono and the German card is 124 cents. Between the Italian benchmark in August 2027 and the Spanish benchmark in October 2027, the spread is around 52 basis points, down by around 4 points since Friday's close. The Treasury has announced an exchange operation for tomorrow 4 October, the fourth of the year, in which it will offer the BTP 2 November 1, coupon 2026%, for a maximum of 7,25 billion euros.
THE EURO INDUSTRY AT THE TOP SINCE 2011, IMPROVES EMPLOYMENT
Still positive notes on the performance of the economy in the euro area. Manufacturing activity grew to its highest level since the beginning of 2011 in September and the momentum seems set to continue in October thanks to an acceleration in new orders. The IHS Markit manufacturing PMI rose to 58,1 from 57,4 in August.
The positive trend of the Italian labor market also continues. The unemployment rate fell by 2 tenths over the month to 11,2%, in line with economists' expectations. The rate is getting closer to the 5-year low recorded in June (11,1%). Paolo Mameli, Intesa Sanpaolo economist, underlines however that the new temporary occupation in August was presumably driven by tourism, which suggests a correction in September-October.
SOCGEN PUSHES BANKS: UBI +4,2%
Thanks to Socgen's assessments, the banking sector closed in positive territory at Piazza Affari +0,21%, much better than the European index, down by 0,39%. The top stock of the day was Ubi Banca: +4,2% to 4,57 euro, the highest since January 2016. The new leap forward (since January the stock has gained 80%) is linked to the SocGen report which upgraded the judgment to Buy from Hold. Target raised to 5,60 euros from 4,0 euros. At the beginning of August, French analysts had cut from Buy to Hold.
The transalpine broker has also given the charge to Bper Banca (+1,78%) by starting hedging with a 'buy' rating and a target price of 6 euros. Banco Bpm, on the other hand, was weak (-0,97%) after hitting the record for the last 3,57 months at 15 euros. The company expects to sell two billion euros of non-performing loans in the short term. With this disposal, the total NPLs sold since the beginning of the year rises to 4,7 billion euros. Socgen revised the target price upwards to 4,80 euros from 3,90 euros, Buy judgment confirmed.
Among the Big Intesa Sanpaolo drops 0,1%: Royal Bank of Canada has cut the recommendation and the target: from Outperform to Sector perform, from 3,30 euros to 3,10 euros. Unicredit -0,2%.
STM AT THE HIGHEST SINCE 2004
In the industrial securities sector, the day's Oscar goes to Stm: +3,77 to 16,98 euros, the highest price since 2004. In September, the increase was 12%. The performance of the whole semiconductor sector made the rally possible: yesterday the Sox index of the main producers listed in the USA jumped to its highest level since 2000. The return to the Cac 40, the stock exchange's basket of blue chips, also benefits the stock Paris which took place on 18 September.
FCA, THE SPIN-OFF OF MAGNETI MARELLI KICKS OFF IN 2018
The Magneti spin-off will only start in 2018, but the Fiat Chrysler board of directors (+0,86% to 15,29 euros, a new historical record) will already discuss it at the next meeting. Nothing to do instead for Alfa Romeo and Maserati: "It's premature to talk about them, they don't have enough substance". So said yesterday Sergio Marchionne, who graduated as an engineer Honoris Causa from the University of Rovereto. Meanwhile, the group's sales in Italy are holding back: +5,2% in September against +8,13% in the market. The CEO threw water on the fire as regards the future of the electric car, a sector in which FCA has invested less than the others ("I lose 20 dollars for every 500 electric I sell" he said).
Ferrari (+2,62 at 95,95 euros) and Cnh Industrial (+1,97%) are doing better.
FERRAGAMO SHINES. TREVI: A BLOOD BATH
Worth noting are the purchases on Salvatore Ferragamo: +2,4% to 24,32 euros. HSBC has lowered the target price from 32 to 29 euros, a level which is still well above current stock market prices. As a result, the buy recommendation remains.
The black jersey goes to Trevi, -17%. The drilling company closed the quarter with a loss of 31 million at the Ebitda level, 102 million euros in the red. In a press release, the managing director Stefano Trevisani speaks of "results significantly below our expectations mainly due to the persistence of the difficult situation on the Energy market, the scarcity of investments and the cancellation of an important order scheduled for this period in the Oil & Gas sector”. Trevi has also warned that he will ask the banks to be able to restructure the debt.
Gedi -6,6%. The publishing company has settled with the tax authorities: as a result of the agreement it will pay 175 million euros. Landi Renzo's rally continues, +10,98%: B&C Speakers has signed a binding agreement to acquire 100% of the share capital of Eighteen Sound from Landi Renzo for a consideration not exceeding 7,4 million euros.
