Stock markets live today | Ftse Mib falls with Eni and Leonardo. BTP yields 3.8%: Fed rate cut postponed – MilanoFinanza News


European stock markets are cautious at the start of the session. Dax is only up 0.02%, Cac40 down 0.15%, Ftse100 down 0.27% and Ftse Mib down 0.12% to 30,405 points. The yield on the 10-year BTP rose to 3.88% and the spread with the Bund is trading at 170.61 basis points after the start of the new year, in light of a general rise in yields prompted by reduced expectations for further monetary easing. from the latest macro data. Indeed, stronger-than-expected US non-farm payrolls numbers in December prompted investors to cut their expectations for an overall Fed rate cut by the end of the year to 143 basis points from 160 two weeks ago.

Fed: rate cut expected in June, no longer in March

Economists at Unicredit expect the U.S. central bank to make its first cut in the cost of money in June, rather than in March, as some markets expect. Citing weakness highlighted by the services sector in December, Italian bank strategists believe the US economy is slowing “but probably not fast enough to force the Fed to intervene in the first quarter of 2024”. Dallas Fed President Lorie Logan warned markets on Saturday that it may be necessary to start raising rates again to prevent inflation from reigniting in the wake of the recent decline in long-term bond yields. Also on the ECB, market bets for a 25 basis point rate cut at the March meeting have fallen to 45%, with the cut fully factored into April. For the full year 2024, investors have priced in a decline of 142 bps from the 168 seen at the end of December.

Massive influx of new papers into the bond market

Contributing to the jitters in eurozone bond markets, Reuters explains, is the massive influx of new securities into the primary market – estimated by ING at 150 billion euros in January alone, on a net supply of 72 billion – which investors could struggle to absorb at current yield levels, while The ECB is starting to back down. Calendar supply in the bloc, Reuters adds, is around 21 billion euros this week, down from nearly 27 last week, but that figure could rise as operators expect, as usual at this time of year, the arrival of several syndicated deals, after the one launched by Portugal last week. Meanwhile, the Ministry of Finance announced that it will offer 12-month BOT for 8 billion euros in the first auction in 2024, scheduled for Wednesday. However, the details of medium/long term placement will be communicated the following evening. In the morning, the EU reopens two 5- and 10-year bonds, each worth up to 2.5 billion euros.

Eni and Leonardo are under pressure in Milan. Anima and Amplifon, promoted by Morgan Stanley, performed well

On the Milan list, Eni slumped (-0.90% to 15.40 euros) with Brent crude and Leonardo prices down (-1.39% to 15.98 euros), while airlines proliferated around the world, which decided to ground their Boeing 737 Max after the door crash on an Alaska Airlines flight. Turkish Airlines announced it had grounded five of its aircraft of the type, as did Aeromexico and Panamanian Copa Airlines with their 21 737 Max. Brazil’s National Civil Aviation Agency also announced the suspension of Boeing 737 Max 9 aircraft throughout the country. However, Leonardo aerostructures is Boeing’s supplier for the 787 and 767 aircraft, not the 737.

Among banks, Intesa Sanpaolo rose 0.65% to 2.8055 euros, with Compagnia di San Paolo foundation president Francesco Profumo in the lead to replace Gian Mario Gros-Pietro as bank president, according to press sources. Instead, Stellantis, which produced 77,000 units of the electric 500 in Italy last year, fell 0.51% to 20,405 euros, short of expectations of more than 90,000, partly due to the announcement of government incentives that have yet to take effect. At a parity of 5.975 euros, D’Amico International Shipping expects strong liquidity that will allow it to reduce its debt, President and CEO Paolo d’Amico said on Saturday at Milano Finanza. An interim dividend is also likely in 2024, he added.

Also worth watching are Enel (-0.06% to €6.687), Terna (-0.34% to €7.65) and Italgas (+0.39% to €5.14), given that Goldman Sachs increased its target price to 8 euros, 6.65 euros and 5.85 euros, respectively. Instead, Morgan Stanley intervened on Amplifon, up 2.36% to 31.28 euros, increasing its rating to overweight (target price to 35 euros). The same broker, on the other hand, lowered the target price on DiaSorina (+0.31% to 89.68 euros) from 85 to 83 euros. As for Anima (+0.96% to 3.98 euros), the group’s total collections in December were essentially stable (-0.012 billion euros), recording -4.137 billion in twelve months (at the end of 2022 they were +2.356 billion) . The collection of managed savings was better and was positive at €277 million in December 2023 (excluding Branch I insurance mandates), bringing the total for 2023 to -171 million (+1.60 billion in 2022). Total assets managed by the group amounted to 191.5 billion at the end of the year, from 177.1 billion a year earlier. Finally, the board of Brunello Cucinelli (-0.24% to 82.65 euros) will meet based on preliminary balance sheet (revenue) data.

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08:15 Europe expects a slight decline. Business orders in Germany are disappointing

European stock markets are expected to be slightly lower at the start of the session (-0.09% Eurostoxx50 futures) following Asian ones and a negative week on Wall Street. American futures are also negative: the one on the Dow Jones loses 0.38% and the one on the S&P500 0.11%. In the currency field, the euro strengthened against the dollar by 0.11% to 1.094.

Business orders in Germany are disappointing

There is little data on today’s macro agenda. German industrial orders have already been released, rising only 0.3% in November against expectations of +1% on a monthly basis. The trade balance also showed a surplus of 20.4 billion in November against expectations of +17.9 billion. Month-on-month eurozone retail sales in November are expected at 11:00 (estimated -0.3% vs. +0.1% in October). “Even though markets have reached all-time highs, there are many economic unknowns looming in 2024. Unknowns that generate various questions for investors. Among them are the million-dollar questions of whether the U.S. economy will slide into recession and whether the Fed’s fight against inflation can be considered won. It is clear that the answers will help to determine the direction of the markets and the performance of the assets during the year”, emphasizes Antonio Tognoli of Cfo Sim.

Not all the good news is contained in the prices

As we enter 2024, the world faces two wars (in Europe and the Middle East), deteriorating relations between the United States and China, a slowing US economy, and the prospect of approximately 40 elections around the world. “In short, we have a lot of uncertainty for 2024,” says Tognoli, convinced that not all the good news is baked into prices. “A geopolitical resolution surprise, solid economic data that avoids a milder slowdown, earnings not only growing but accelerating further, inflation and interest rates falling more than expected – any miscalculation among these variables could lead to upside surprises,” explains the financial director of Sims Expert. «Broader participation across the capitalization spectrum, value-oriented sectors or more diversified participation could also help in the next phase of growth in 2024. Another key variable we are watching closely is the significant volume (around $6 trillion) in money market funds, which we believe it will be fuel for equities as interest rates and yields decline over the course of the year.”

Oil and gold prices are falling

Among commodities, oil prices fell after a sharp price cut by Saudi Arabia offset concerns about escalating geopolitical tensions in the Middle East. US Secretary of State Antony Blinken said the war in Gaza could spread across the region without a coordinated peace effort and will hold meetings in the United Arab Emirates and Saudi Arabia today, January 8, before traveling to Israel on a five-day diplomatic mission. . Israeli Defense Minister Yoav Gallant reiterated his country’s determination to destroy Hamas and deter other potential adversaries backed by Iran, including Hezbollah in Lebanon. WTI crude fell 1.26% to $72.88 a barrel and Brent crude fell 1.13% to $77.86 a barrel. Gold also fell 0.57% to $2,038 an ounce.

In Milan, watch out for Intesa Sanpaolo, Stellantis, Enel, Terna, Amplifon and Brunello Cucinelli

On the Milan list, pay attention to Intesa Sanpaolo with the president of the Compagnia di San Paolo Foundation, Francesco Profumo, who is in pole position to succeed Gian Maria Gros-Pietro as president of the bank, according to press sources, Stellantis, which produced 77,000 units in Italy from 500 electric in last year, down from expectations of more than 90,000, partly due to the announcement of government incentives that have yet to take effect to D’Amico International Shipping, which expects strong liquidity to allow it to reduce debt, President and CEO Paolo said d’Amico on Saturday at Milano Finanza. An interim dividend is also likely in 2024, he added. Enel, Terna and Italgas should also be watched as Goldman Sachs raised its target prices to €8, €6.65 and €5.85 respectively. Instead, Morgan Stanley intervened in Amplifon and increased its rating to overweight (target price 35 euros). The same broker, on the other hand, lowered the target price on DiaSorina from 85 to 83 euros. Finally, Brunello Cucinelli’s board of directors will meet for preliminary balance sheet (revenue) figures.

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