Robert Kaplan, the president of the Dallas Fed very close to Jerome Powell, reiterated that it is appropriate to plan new US rate hikes (“3 or 4”, he added) to prevent the engine of the economy from overheating. It is the central bank's response to Donald Trump, who said he was "not enthusiastic" about the Fed's policy. But the markets do not seem to fear the consequences of a tightening. On the contrary.
Yesterday the S&P 500 index hit a new all-time high at 2.872,87 during the session. Meanwhile, the Bull has established another record. Since the lows of the crisis (666 on 9 March 2009), the index has recorded the longest upward streak in history: 3.452 days, for a growth of 325%. A nice visiting card for the president on the eve of talks with China on trade, capable of obscuring the internal political difficulties of the White House due to the judicial troubles of two close collaborators of Trump: the lawyer Michael Cohen admitted having paid two women on behalf of the president, lobbyist Paul Manafort risks 5 years in prison for tax fraud and irregularities in the management of electoral funds.
TOKYO RISES, US YIELD CURVE INCREASINGLY FLAT
But these drawbacks, for now, do not disturb the upside. Tokyo's Nikkei index is up 0,7%. Hong Kong also rose +0,5%, while the CSI 300 index of the Shanghai and Shenzhen stock markets fell by 0,4%.
Dollar yen cross at 110,4 from 110,1 yesterday. The Chinese currency market was not moved: the dollar-yuan exchange rate was 6,84.
Flat gold at $1.195 after three consecutive days of appreciation.
The US government bond yield curve remains flattened, the two-year-ten-year differential drops to 22 basis points, a new low since 2007.
All Wall Street indices closed higher: Dow Jones +0,25%, Nasdaq +0,49%. The PMI index also rose, the Russell 2000 +1,1%, to a new high.
OIL, FOURTH DAY OF RISE
Brent oil gains 0,4% to 72,9 dollars a barrel, the fourth consecutive session of increases arrived yesterday: data on strategic inventories signal a drop of 5,2 million barrels (three times forecasts). In the last few hours, attention has returned to the ongoing clash between the United States and Iran.
SAIPEM SUPERSTAR: +7% IN MILAN
Saipem's star shone in Piazza Affari: +7% to 4,57 euros. The group has been awarded several contracts for the development of the second phase of the Liza field in Guyana for a total value of 700 million dollars on behalf of Exxon.
TOP BUSINESS PLACE IN EUROPE (-5% IN 2018)
The easing of US-China trade tensions has also brought peace to the skies of European finance. The trend was favored by the clear strengthening of the euro above 1,15 dollars following the criticisms expressed by President Donald Trump on the rate hikes planned by the Fed.
Trading in Europe was led by Piazza Affari, with the Ftse Mib which left behind the lows reached last week, closing up 1,5% at 20.783,79 points. The main index of Piazza Affari returned from three negative weeks in a row during which it definitively burned the advantage in relative terms that it had accumulated in the first months of this year.
At this point, the FtseMib index has recorded a red performance of 2018% since the beginning of 4,9 against -3,8% of the Frankfurt Dax and -3,8% of the Eurostoxx 50, only to remain in the Eurozone. If we cross the Atlantic Ocean we are faced with the brilliant +12% recorded by the S&P500 index, the most representative of the US Stock Exchange.
The other European markets are in tune: Paris +0,54%, Frankfurt +0,5%, Madrid +1,1%.
Only London is in negative ground (-0,34%). EU leaders are likely to hold an emergency meeting in November to consider a possible deal on Brexit terms with Britain, missing the informal October deadline. This was reported by diplomatic sources in Brussels.
THE SPREAD NARROWS TO 263 POINTS
The secondary market session opened and closed with a plus sign, still in the wake of the 'moratorium' obtained by Moody's, which will no longer pronounce itself on the sovereign rating on 7 September but by the end of October.
The spread closed the session at 263 basis points after a drop to 262 cents, the lowest since August 10th.
The yield on the Italian 2,95-year February 2028 bond remains in the 2,966% area, ending at 2,939% after a low of 2%. The XNUMX-year rate fell further with a consequent stiffening of the curve.
The ten-year BTP is also recovering ground against the Spanish and Portuguese equivalent, with the gap on Bono at 166 basis points from 170 yesterday at the end and that on the Portuguese ten-year one at 122 from 126 cents.
Today there will be the reopening of the German ten-year August 2028 for 3 billion euros.
BANKS IN RALLY: BAD LOANS DOWN
The recovery of debt securities has allowed the banking sector to rebound (+2,2%), which has fallen sharply since the beginning of the year (-20% in line with the rest of Europe). Moreover, the fundamentals signal a progressive improvement, despite the uncertainties on the evolution of the public finances. In the first six months of 2018, the stock of net NPLs (bad loans) decreased by 22,8 billion euro (-35,6%) to 41,3 billion, while gross NPLs decreased by 35,7 billion (-21,3 .131,8%) to XNUMX billion.
And these values do not yet include the portfolio sales announced but not yet completed such as the 10,8 billion of Intesa Sanpaolo (+2,8%), the 3,5/9 billion of Banco Bpm and the 2,8 billion of Ubi ( +3,5%).
DBRS: THE TURKISH IMPACT ON UNICREDIT IS MODEST
Even the crisis in Turkey, with the halving of the value of the Lira, should have modest impacts on the capital ratios of the banks most involved such as Unicredit +2,2%. This is what we read in a report by the DBRS rating agency.
Poste Italiane (+3,3%), after three weeks of weakness, and insurance companies: Unipol +2,7%, UnipolSai +1,8%, Generali +1,4%.
ATLANTIA, DENIAL OF THE INTERVENTION BY CDP
Atlantia also recovered (+2,2%) on the day of Extraordinary BoD of Autostrade per l'Italia, convened to take stock of the situation after the collapse of the Polcevera overpass. Economy Minister Giovanni Tria has denied the rumor of an intervention by the CDP in the capital.
The company could be hit by the boulder of a class action. The law firm Bronstein, Gewirtz & Grossman "is examining potential claims on behalf of buyers of Atlantia" after news of the possible revocation of the concession and a fine. The law firm announced this in a statement.
FCA STARTS AGAIN: DUTIES ARE LESS SCARY
Fiat Chrysler +1,50%, Ferrari +2,25%. According to the Wall Street Journal, it is likely that the car tariffs, wanted by US President Donald Trump, will be postponed.
Hera +2,8%. The Italian authorities have asked the hydroelectric concessionaires to provide all the information regarding the state of conservation of the dams.
Leonard +1,8%. Yesterday evening the company presented the new indications on the portfolio by the end of the year, revised in the light of the orders in Qatar.
Realizations on Campari and Moncler (-0,97%).
