Bad day for Piazza Affari which even today is the black jersey among the European stock exchanges with the tensions on the BTPs that are alarming investors. The Ftse Mib, already down by 1.90% yesterday, closed -5.17% at 22,547 points. For the leading index of Piazza Affari, these are the one-month lows, with prices that are still far from the 2022 lows reached in the intraday of March 7 at 21,060 points.
Investors are worried about the sharp widening of the BTP / Bund spread. Yesterday the ECB announced its intention to raise rates by 25 basis points in the next meeting in July and another hike will come in September with the possibility that it will be of a higher magnitude. Several analysts are now assuming that the rise in September will be 50 bp. Goldman Sachs expects the ECB to raise rates by 50bp each in both September and October, before returning to a 25bp hike in December. On the other hand, Barclays indicates 50 bp in September and 25 bp in October before stopping in light of the deterioration in growth (the UK house business expects a technical recession on the way for the euro area and a 2023 with only + 0.5% of GDP compared to the + 2.1% indicated by ECB economists.
Then there is the anti-spread shield issue. The ECB has not detailed how it intends to counter any excessive widening of spreads. Francois Villeroy de Galhau, governor of the Bank of France, stressed today that the will within the ECB is to prevent fragmentation. “We have always been able to counter this fragmentation: in 2010, in 2012, in 2020, each time with different tools – explains Villeroy -. Nobody should have doubts, even on the markets, about our collective will to prevent fragmentation ”.
Today it was then the turn of US inflation, which stood at 8.6% in May, accelerating from 8.3% the previous month and beyond analysts’ expectations. Greater flare-up than expected also for core inflation (+ 6%).
On the parterre of Piazza Affari today stands out the thud of Bper (-12.92% 1,699 euros) which approved the new 2022-2025 business plan “BPER e-volution” which foresees a net profit of 800 million euros by 2025. The capital position is expected to remain high, with a Fully Phased Cet1 ratio greater than 13% by 2025, supported by the strong generation of profits that will significantly increase the remuneration to shareholders, with a pay-out ratio expected to be 50% in 2025.
In general, banks have been under the eye of the storm in light of the possible fallout deriving from the surge in the BTP / Bund spread (which jumped above 220 basis points). Unicredit and Intesa closed with decreases of 7.38% and 9.1% respectively. Down by 12% Banco BPM:
Enel is also in difficulty today (-4.33% to € 5.481), the most important share of the Ftse Mib and which, together with the other utilities, is among those most sensitive to the risk linked to the rise in the cost of money in light of their high level of debt. Among the big names, ENI was also very bad with -5.6%.