The stock market rally doesn't stop. But the baton of the rise passes from Europe to Wall Street, where yesterday both the Dow Jones (+0,2%) and the S&P 500 and Nasdaq, both +0,1%, set new historical records despite the trend disappointing Apple (-0,8%). The dollar (1,878 against the euro) and oil have thought of favoring the recovery, but the real driver is political. After the budget agreement, Democrats reached a second understanding with President Trump, this time on immigration. At this point Wall Street once again believes that the tax reduction plan (rate decreasing from 35 to 15%) that Treasury Secretary Stephen Mnuchin will present on the 25th could be successful.
Rising dollar and oil guarantee new energy for the Bull, but this time China will take care of curbing the euphoria: In August, Chinese industrial production rose by 6%, less than the 6,6% estimated by the consensus. Retail sales were also below expectations, which however rose by 10,1%. Hong Kong drops by 0,4%. The CSI 300 index of the Shanghai and Shenzen stock exchanges lost 0,2%. The Japanese Stock Exchange is down slightly in the final session: Nikkei -0,2%. Up Mumbai (+0,3%) and Seoul (+0,2%).
But today the spotlight will be on inflation and its effects on rates. This morning the Bank of England will have to decide whether or not to raise the cost of money to cope with the increase in prices (+2,9%). In the early afternoon, the data on US inflation could give a "strong" boost to the dollar and US rates.
MORE CUTS THAN EXPECTED, OIL RAISES ITS HEAD
Oil accelerates higher by about one percentage point. Brent is traded at 54,60 dollars, the Wti at 48,60 dollars on a three-month high. The International Energy Agency (IEA) has revised upwards its 2017 estimates for global crude oil demand to 1,6 million barrels per day from the 1,5 million barrels previously forecast. Meanwhile, he signaled that the production cuts implemented by non-OPEC countries have exceeded the expected targets.
Overall, the cuts have in fact reached 118% of what was set. Kazakhstan exceeded its goal by nearly three times, cutting production in August by 54.000 barrels per day with a target target of 20.000. Azerbaijan cut production in August by 78.000 bpd on a quota of 54.000 bpd. Mexico cut production by 170.000 barrels against a quota of 100.000 barrels. Russia has reached 105% of its target, reducing production by 316.000 barrels against a quota of 300.000 barrels per day.
On Wall Street Chevron (+1,5%) was the best blue chip. Eni +0,1% to 13,6 euros after the Italian energy giant signed a collaboration agreement with the China National Petroleum Corporation (CNPC). Saipem +1% and Tenaris +1,6%.
EU EXCHANGES FLAT, JUNCKER LAUNCHES THE EUROPEAN MONETARY FUND
Flat Piazza Affari, European stock markets moved little on the day in which the president Jean-Claude Juncker announced new proposals to strengthen the structure of the Monetary Union. The main idea is to transform the European Stability Mechanism into a European Monetary Fund. In Milan, the Ftse Mib index closed unchanged on its highest level since 2015, just a whisker from 22.300 points.
The rest of the Eurozone also showed little movement: the best stock exchange is Madrid, +0,34%. Spanish consumer prices rose by 0,2% on the month in August, after -0,7% in July, and by 1,6% on the year, up from 1,5% the previous month . Frankfurt +0,23%. Also in Germany, consumer prices recorded an increase of 0,2% on the month and 1,8% on the year in August. Paris +0,16%. In negative ground London, -0,28%. Today the Bank of England will have to decide whether or not to raise rates after the surge in inflation (+2,9%). On the eve of the board seems more divided than ever. In the Eurozone, industrial production increased in July by 0,1% on a monthly basis and by 3,2% on an annual basis.
THE EU TAX LOST 5,4 BILLION FROM GOOGLE AND FACEBOOK
European Union member states may have lost €5,4 billion in tax revenue from Google and Facebook between 2013 and 2015, according to a report by an MEP responsible for a reform project that could increase the amount of taxes paid by the giants of the web.
The document, anticipated by Reuters, will be published on Thursday, on the eve of the meeting of European Union finance ministers in Tallinn, where they will discuss ways to increase the tax levy on giant online companies, accused of paying too little to Europe.
PRAET (ECB): QE IS STILL NECESSARY
More major maneuvers on the ECB's monetary policy. After the foray of German Finance Minister Wolfgang Schaeuble in favor of the "normalization" of rates came the reply of Peter Praet, chief economist of the Frankfurt bank. “It is crucial to maintain very accommodative financing conditions, which depend on the current monetary policy,” Praet said. "Therefore, keeping a steady hand continues to be critical to encouraging sustained inflation convergence towards our target."
BTP RATES RISE ON AUCTION DAY
Closing down for the Italian bond market, committed to digesting the round of medium-long term auctions. Also pushing eurozone government bond yields higher is the prospect that the European Central Bank will announce a reduction in the monthly amount of quantitative easing next month. The Italian 2,050-year rate stands at 2,019% from 164% at the end of yesterday's session; the spread with the similar maturity of the Bund widens to 162 basis points from XNUMX basis points yesterday evening.
At yesterday's auction, the Ministry of the Economy raised the maximum amount of 8 billion euros in BTP spread over 3, 7 and 20-year maturities. Rates were all down, albeit at levels higher than those seen on the secondary market last week. The Italian Treasury thus completed 75% of its 2017 funding. It was a session full of offers in the Eurozone: the Italian issues were joined by 2,446 billion from the reopening of the German 850-year bond and 100 million by Portuguese paper, also with a ten-year bond, while Austria debuted on the 3,5-year segment with an issue of 1 billion. Today Ireland will make available up to €9 billion in 20 and XNUMX year bonds.
The Greek government expects to post a better-than-expected primary surplus this year and plans to return to the capital market again within seven months. Athens returned to issuing for the first time after three years in the medium-long term segment in July, when it launched a 3 billion euro five-year bond, in parallel with the repurchase of securities issued in 2014.
VEGAS DISPUTES BOLLORÉ'S CONTROL OF TELECOM
“Following an in-depth analysis of the legislation in force and of the factual elements, Consob has concluded that Vivendi's investment in Tim must be qualified as a de facto controlling interest pursuant to art. 2359 of the civil code and art. 93 of the TUF, as well as the regulations on transactions with related parties". This is how Consob ruled on the relationship between Vivendi and Tim. A real blow for the French group which, according to the decision, should now consolidate Telecom Italia's debts (-0,9% to 0,78 euros) in its group balance sheet.
Vivendi replied immediately. "From a preliminary examination - reads the note from the group - it is found that the provision deviates significantly from the consolidated interpretation on corporate control, which Tim (and reasonably the entire market) has always consistently and rigorously complied with". Hence the decision to "put in place the legal actions for one's own protection in the competent offices, sure of the correctness of one's behavior and of the solidity of one's arguments".
19,9% OF THE BISCIONE TO A TRUST
In the meantime, AgCom has taken note of the "compliance plan" presented by Vivendi regarding the choice between the shares held in Tim and those in Mediaset. The transalpine group has proposed to transfer 19,19% of the stake held in Mediaset to a trust. The Authority reserves the right to make the necessary assessments on the plan presented by the French by April next year.
A REPORT BY MACQUARIE SINKS MEDIASET
Mediaset yesterday suffered a heavy setback in Piazza Affari, falling to 2,94 euros (-5%). The action was penalized by the rejection by Macquarie, which brought the rating from outperform to underperform, with the target price cut from 4,3 to 2,1 euro. For the experts, in the light of the uncertainties relating to the participation of Vivendi, it is necessary to refocus on the stand-alone company. And the stock is approaching the levels of early December, i.e. before the rally following the takeover of the capital by the French.
"Our previous outperform rating - explained the broker - was based on a potential bid for 100% of Mediaset shares by Vivendi, but the regulatory hurdles appear greater than expected", observed the analysts. Furthermore, according to Macquarie, the Italian political scenario in view of next year's elections is mixed and in this context "Vivendi's approach to Mediaset is less predictable".
RATES STRESSES: BANKS UP, UTILITIES DOWN
Piazza Affari was held back by the utility sector: the financial structure of these companies is normally characterized by high debt, consequently the securities are among the most sensitive to rate hikes. Enel falls by 0,7%, Terna -1,3%, Snam -0,5%. Weak, but close to the historical record, Atlantia -0,4%.
On the other hand, the signs of an increase in interest rates continue to favor the recovery of the banking sector. “In the absence of significant external shocks”, observed Equita sim, “banks can approach the cost of capital in 2019, given that the improvement in asset quality explains about 4 points of improvement in the ROTE. In line with the European index, Banco Bpm led the race (+1,68%) on which Ubs started hedging with "buy". The institute has mandated a group of banks to manage talks with investors aimed at launching a Tier2 subordinated bond.
On positive ground Intesa (+1%) and Unicredit (+0,1%). The two banks sold the Eramet shares, already owned by Romain Zalesky's Tassara, taking advantage of the nickel boom, supported by Beijing's decision to focus on electric cars. Ubi +0,6%.
MONCLER AND YNAP ON THE STARS, THE EU HOLDS BACK LUXOTTICA
Among the industrial stocks, Fiat Chrysler +0,5%, Stm unchanged, Leonardo -0,4%. Buzzi +1,4%: Mediobanca Securities raised its recommendation from neutral to outperform, with the target price going from 24,5 to 24 euro. Experts point out that in August there was a series of unfortunate adverse events, including precisely Hurricane Harvey in Texas and the weakness of the dollar, which led to a 2017% lowering of 2019-4 EBITDA estimates.
In luxury, Moncler +1%, marks a new historic record at 25,13 euros.
Since the beginning of the year, the increase is 50%, one of the best performances among the blue chips of Piazza Affari. Ynap continues to rise (+2,21%). Richemont Holdings restored its stake in the company to 25% of the voting capital. Instead, Luxottica slows down (-2,4%): the merger with Essilor (-2,23% in Paris) is at risk due to the constraints imposed by the Antitrust.
Cairo Communications +1,43%: Mediobanca Securities raised the target price on the stock from 4,25 to 4,55 euro, reaffirming the neutral rating after the results of the first half of 2017.
