ECB week, the Paris Motor Show kicks off and today’s other stories
European stock markets expected to move little at the start of the session. The future on the Eurostoxx50 marks -0.06%. Investors’ attention is obviously focused on the ECB meeting on Thursday 17 October, in which a reduction in interest rates by 25 basis points is expected. «Last week marked the second anniversary of the current bull market, with stocks up about 60% in the U.S. from 2022 lows. Historically, most bull markets come at the end of the third year, but yields they tend to moderate. We expect the same this time, as fundamental conditions are still solid but slowing down,” warns Antonio Tognoli of CFO SIM, adding that “although US inflation in September was slightly higher than expected, it is unlikely to prevent the Fed to continue its easing campaign. We expect rate cuts of a quarter of a point at each meeting until Fed policy settles at around 3.%-3.5%.”
The reaction to Fitch’s cut in France’s outlook should be monitored
In a session that will see more contained trading due to the closure of US bonds for the holidays, the yield of the 10-year BTP falls to 3.54% and that of the French Oat to 3.042% after Fitch lowered the outlook for the bond on Friday evening France to negative from stable, referring to the increase in risks in political and budgetary terms. Rating unchanged at AA-. «The worsening expected for this year for France at budget level places it in a more complicated position and we expect an increase in the deficit, harbinger of a sharp increase in debt/GDP towards the 118.5% threshold by 2028 », underlined the rating agency. Paris’ public finances have worsened sharply this year as tax revenues turned out to be lower than expected and expenditures turned out to be higher. Paris unveiled a 2025 budget law on Thursday that includes 60 billion euros in spending cuts and tax increases for the wealthy and larger corporations. On the primary sector, France offers 3.1-3.5 billion Btf 22/1/2025, 1.5-1.9 billion Btf 9/4/2025, 300-700 million Btf 21/5/2025 and 1.8-2.2 billion Btf 8/10/2025. Germany is also active, placing 3 billion Bubill 10/15/2025.
Oil prices fall with deflation in China
In the absence of macro data, the euro rose by 0.28% to 1.092 dollars. Instead, among raw materials, gold is stable at 2,674 dollars an ounce, remaining close to historical highs, and the price of WTI oil drops 1.36% to 74.53 dollars a barrel and that of Brent rose 1.32% to 78 dollars a barrel. Macro data showing a falling inflation rate in China and a lack of clarity on the country’s economic stimulus plans have fueled concerns about fuel demand in the world’s largest crude oil importer. Negative news from China outweighed concerns that an Israeli response to Iran’s October 1 missile attack could disrupt oil production, although the United States warned Israel not to target Iranian energy infrastructure. “China’s consumer price index indicates a sustained deflationary trend and weaker domestic consumption, despite the authorities’ announcement of more aggressive monetary stimulus,” said Priyanka Sachdeva, an analyst at Phillip Nova.
In Milan, watch out for Intesa Sanpaolo, Mps, Unicredit, Stellantis, Eni, Leonardo, Cir and Campari
On the Milanese price list, pay attention to Intesa Sanpaolo which reported on Sunday that one of its employees was fired for having illegally consulted data regarding some customers, apologizing in a statement for an incident that “must never happen again”. Prime Minister Giorgia Meloni is among the thousands of customers spied on. The bank also announced the appointment of Antonio De Vita, a former senior Carabinieri officer, as chief security officer.
Among the other banks, pay attention to MPS because Banca Finint is apparently working on a consortium of Italian investors interested in taking over about a fifth of the capital. Meanwhile, Barclays has eliminated its potential stake in Monte, according to the latest Consob findings. While Germany is working to stop a possible takeover of Commerzbank by Unicredit, a position that puts Berlin on a collision course with Rome and European regulators, several sources close to the government told Reuters. The German trade union Verdi has already spoken out against a cross-border merger for Commerzbank, even if the bidder was not an Italian bank such as Unicredit.
Instead, Stellantis does not want to sell the plants in Italy because “we need them”, said the CEO, Carlos Tavares, adding that “we want to keep our plants in Italy because we want to maintain the capacity to produce 1 million vehicles”. Morgan Stanley has cut the target price on the stock from 20.75 to 15.3 euros. While Leonardo should benefit from the fact that tomorrow the signing ceremony of the birth certificate from the 50% joint venture with Rheinmetall will be held. The new company is expected to initially focus on the supply of armored vehicles to Italy.
As for Eni, US investment funds show confidence in the major’s strategy of spinning off some activities to attract financial resources, as the CEO, Claudio Descalzi, said. Furthermore, Cir, the company headed by the De Benedetti family, has decided to promote a partial voluntary public purchase offer, concerning a maximum of 131,147,541 ordinary shares of the company, equal to 12.524% of the share capital, at the price of 0.61 euros per share and for a maximum value of 80 million euros. The consideration incorporates a premium of 6.9% compared to the price recorded at market close on 11 October 2024. In consideration of the launch of the takeover bid, the board of directors decided to interrupt the treasury share purchase plan. Cir owns, as of 10 October 2024, a total of 32,915,016 own shares, equal to 3.143% of the share capital.
Finally, Campari should be monitored because Citi has reduced the target price from 10.10 to 10 euros and confirmed the buy rating. «The combination of variable weather in Europe and a sluggish US alcohol market has led us to revise downwards our estimates in view of the third quarter of 2024: we now expect growth of +6.7% in the quarter» , we read in the Citi note. The more difficult context, together with the doubts linked to the unexpected departure of the CEO, has led to a clear under-performance of the stock in recent weeks. «But we believe that the recent decline is excessive. We therefore reconfirm our buy rating on the stock”, Citi indicates.
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