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- 08.20am Europe expected to rise in the wake of Wall Street records. Brent over 83 dollars
European stock markets fall (Dax -0.06%, Cac40 -0.18%, Ftse100 -0.27%), except Milan (Ftse Mib +0.13% to 35,413 points). In the session of May 15, the S&P 500 and the Nasdaq reached heights never explored before, underlines Fabrizio Barini of Integrae Sim, catapulted by an unexpected dynamic in consumer prices (which fell more than expected) and retail sales (stationary compared to forecasts growth), which has spurred hopes of Fed stimulus action within the current year. «While stock markets continue to show signs of strength and resilience, volatility remains a constant presence even if at period lows, reflecting the changing dynamics and reactions of investors to a series of economic and geopolitical factors capable of changing the scenario very quickly as demonstrated by the attack on the Slovak prime minister”, adds Barini.
Btp/Bund spread stuck at 131 basis points
The BTP/Bund spread is stuck at 131 basis points. The Ministry of Economy and Finance has announced the details relating to the issue of the new Btp Green, a financial instrument with maturity on 30 October 2037, enjoyment from 30 April 2024 and an annual rate of 4.05%, distributed in two semi-annual coupons. «The amount issued amounts to 9 billion, while the placement price was established at 99.865, corresponding to a gross annual yield of 4.104%. Final orders reached a total value of over 84 billion, an unprecedented result for an Italian green government bond. This implies that demand has exceeded supply by more than 9 times”, specifies Barini.
In Milan Bper Banca, Snam and Ferrari did well. Eni, Tim, Iren and D’Amico under pressure
On the Milanese stock exchange, Eni lost 2.9% to 14.67 euros. The 2.8% share of the capital sold by the Mef with the accelerated sale procedure earned the ministry 1.4 billion euros. The shares were sold at 14.85 euros each with a discount of 1.7% compared to the closing price of the stock. According to Treasury data, similar operations recorded an average discount of 5% over the last year. The one offered by the Mef is the second lowest of the period at an international level. In Italy the recent placement of a share of MPS in March took place at a discount of 2.49%. JP Morgan raised the target price on the stock to 19.5 euros. Instead, Barclays intervened on Salvatore Ferragamo (-0.51% to 9.71 euros), cutting the target price to 9 euros.
Tim also fell by 0.58% to 0.2414 euros. KKR will present remedies next week in an attempt to obtain the EU Antitrust’s approval for the purchase of the telecommunications giant’s fixed network infrastructure.
More quarterly reports under the microscope. Snam (+2.51% to 4.61 euros) closed the first quarter with an adjusted net profit of 335 million euros (+11.3% year on year), due to the growth in ebitda (+17, 8% to 703 million), partly absorbed by the greater depreciation associated with the entry into operation of the investments made and the devaluations of assets in progress, as well as by the increase in financial charges mainly attributable to the increase in interest rates. Total revenues amounted to 895 million (-1.9% year-on-year). Ferrari also highlighted (+1.13% to 385.6 euros)
Remaining in the utilities sector, the successor to the CEO of Iren (-1.80% to 1.859 euros), Paolo Signorini, will probably be appointed on June 27th, when the shareholders’ meeting will meet, while three days earlier the multiutility will present the new multi-year industrial plan, as stated by the executive president, Luca Dal Fabbro.
Among the banks, Bper Banca’s +1.32% to 5.078 euros stands out, having successfully concluded the placement of the second green bond issue intended for institutional investors. The amount placed was equal to 500 million, with a maturity of 7 years and the possibility of early repayment (call) after 6 years. Orders exceeding 2.4 billion were collected. The well-diversified demand made it possible to reduce the initial spread level, equal to 155 basis points above the mid-swap to 125 basis points. The annual coupon is 4% with an issue/re-offer price of 99.791%.
Finally, D’Amico International (suspended with a theoretical -13.77%) successfully completed the sale of 6.2 million shares of D’Amico International Shipping, equal to 5% of the share capital. The operation was carried out through an accelerated bookbuilding procedure reserved for certain institutional investors. The placement was carried out at a price per share of 6.5 euros, for a total value of 40.3 million euros. D’Amico International now holds 60.65% of the company’s share capital and voting rights and remains the controlling shareholder. The purpose of the placement was to increase the liquidity of the stock.
08.20am Europe expected to rise in the wake of Wall Street records. Brent over 83 dollars
European stock markets expected to rise (+0.12% future on the Eurostoxx50) at the start of the session after the historic highs reached simultaneously on 15 May by the Dow Jones, S&P500 and Nasdaq on Wall Street. The yield on the 10-year US Treasury falls to 4.32%: data on US inflation keep alive hopes of a first rate cut by the Fed in July. «For this to materialize, however, it would be necessary for these small but positive steps back in the direction of inflation moderation to be rapidly supported by a combination of more significant positive news on inflation itself and/or by more concrete signs of weakness of the labor market in the next 10 weeks”, underlines Greg Wilensky, Portfolio Manager at Janus Henderson.
US inflation data keep alive hopes of a first rate cut by the Fed in July
«Combining the specific components of this week’s PPI and CPI data, this month’s core consumer price index reading supports a decline to 0.2%. The market is pricing in two cuts for 2024, a forecast we see as reasonable. However, we think that not enough cuts are expected for 2025 and 2026. December 2026 futures contracts suggest that Fed Funds will still be around 3.8%,” he predicts. «We believe the Fed will bring the Fed Funds rate significantly below this level, both because inflation will return toward its target in the event of a soft landing and because a weaker economy will cause inflation to fall below of the objective.” Speeches from Barr and Barkin of the Fed are expected at 4pm, Harker’s at 4.30pm, Mester’s at 6pm and Bostic at 9.50pm. instead, for the ECB they will speak at 11am Panetta and at 2.15pm Villeroy.
The agenda of the European primary offer is rich
The yield on the 10-year BTP also fell to 3.71%. The details on the placement of the BTP Green released by the Treasury highlighted that 76.9% of the October 2037 bond was placed with foreign investors. Around 350 investors from around 35 countries were involved. The agenda of the European offer is rich, dominated in the medium and long term by France and Spain. Paris offers up to 12 billion Oat on 2027, 2029 and 2030 maturities together with 2 billion indexed, Madrid offers up to 5.5 billion Bonos 2027, 2029 and 2042.
Numerous US macro data
The macro agenda is also rich, especially on the US side. At 10am Italy’s final April inflation (preliminary: +0.2% month on month, +0.9% year on year), at 11am the total trade balance in March (previous: 6 billion euros) and the EU trade balance in March (previous: -0.9 billion euros). While weekly requests for unemployment benefits are expected from the United States at 2.30pm (previous: +22,000 to 231,000), import prices in April (previous: +0.4% month on month; consensus: +0.2% month-over-month), April residential starts (previous: 1.321 million units; consensus: 1.413 million) and April building permits (previous: 1.467 million units) and the Philadelphia Fed index in May (previous: 15 ,5 points). Instead, at 3.15pm industrial production in April will be published (previous: +0.4% month on month; consensus: +0.2% month on month) and the plant utilization rate in April (previous: 78, 4%; consensus: 78.4%).
Brent over 83 dollars a barrel
Among raw materials, oil prices rise (WTI +0.41% to 78.95 dollars a barrel and Brent +0.35% to 83.04 dollars a barrel), while the clashes in Rafah intensify, while the Palestinian victims now number over 35,000 and talks for a ceasefire mediated by Qatar and Egypt are at a standstill. Speaking to CNBC, Benjamin Netanyahu said that the Israeli army’s operation in Gaza, which will proceed step by step in a “responsible” manner, will take “weeks”. Meanwhile, President Xi Jinping met with Vladimir Putin in Beijing, pledging to work to “rejuvenate” their respective countries, stating that China will “always be a good partner” of Russia. Putin’s two-day visit to China will include talks on Ukraine, Asia, energy and trade. Gold takes a breather after attacking the highs again: -0.07% to 2,393 dollars an ounce.
In Milan, watch out for Eni, Snam, Tim, Bper Banca, Iren, Salvatore Ferragamo and D’Amico
On the Milanese price list, pay attention to Eni. The 2.8% share of the capital sold by the Mef with the accelerated sale procedure earned the ministry 1.4 billion euros. The shares were sold at 14.85 euros each with a discount of 1.7% compared to the closing price of the stock. According to Treasury data, similar operations recorded an average discount of 5% over the last year. The one offered by the Mef is the second lowest of the period at an international level. In Italy the recent placement of a share of MPS in March took place at a discount of 2.49%. JP Morgan raised the target price on the stock to 19.5 euros. Instead, Barclays intervened on Salvatore Ferragamo, cutting the target price to 9 euros.
Focus also on Tim. KKR will present remedies next week in an attempt to obtain the EU Antitrust’s approval for the purchase of the telecommunications giant’s fixed network infrastructure.
More quarterly reports under the microscope. Snam closed the first quarter with an adjusted net profit of 335 million euros (+11.3% year on year), due to the growth in ebitda (+17.8% to 703 million), partly absorbed by the major depreciation related to the entry into operation of investments made and the devaluations of assets in progress, as well as the increase in financial charges mainly attributable to the increase in interest rates. Total revenues amounted to 895 million (-1.9% year-on-year).
Remaining in the utilities sector, the successor to the CEO of Iren, Paolo Signorini, will probably be appointed on 27 June, when the shareholders’ meeting will meet, while three days before the multi-utility will present the new multi-year industrial plan, as he said the executive president, Luca Dal Fabbro.
Among the banks, Bper Banca successfully concluded the placement of the second green bond issue intended for institutional investors. The amount placed was equal to 500 million, with a maturity of 7 years and the possibility of early repayment (call) after 6 years. Orders exceeding 2.4 billion were collected. The well-diversified demand made it possible to reduce the initial spread level, equal to 155 basis points above the mid-swap to 125 basis points. The annual coupon is 4% with an issue/re-offer price of 99.791%.
Finally, D’Amico International successfully completed the sale of 6.2 million shares of D’Amico International Shipping, equal to 5% of the share capital. The operation was carried out through an accelerated bookbuilding procedure reserved for certain institutional investors. The placement was carried out at a price per share of 6.5 euros, for a total value of 40.3 million euros. D’Amico International now holds 60.65% of the company’s share capital and voting rights and remains the controlling shareholder. The purpose of the placement was to increase the liquidity of the stock. (All rights reserved)
