home  › Markets

Piazza Affari plunges 2.95% as financial and energy stocks take a beating

by Paolo Paronetto

Confusion regarding U.S. immigration policy following moves last Friday by U.S. President Donald Trump and subsequent condemnation by international organizations, businesses and federal judges in 16 U.S. states weighed on investors sentiment on Monday causing widespread losses.

In Europe, Milan was the biggest loser, with the FTSE MIB down 2.95% on heavy losses by bank stocks. Energy was also weak, with WTI futures down by more than one percentage point. Oil services group Saipem fell 6.72%.

The climate of uncertainty weighed on bonds as well. Yields of ten-year BTps rose to 2.33%, widening the spread with the German Bund by more than 190 basis points - the highest in three years.

Among bank stocks, shares of Italian lender UniCredit ended down 5.45% as the countdown begins for its €13 billion capital increase, and the bank warned of the risk that measures it has foreseen for addressing its bad loans in its strategic plan could potentially fall short of the ECB’s demands.

The ECB has asked UniCredit to present a strategy and operating plan for handling its high level of bad loans by February 28, the bank said in the document presenting its capital increase released this morning.

UniCredit added that while its strategic plan is also focused on dealing with the issue of nonperforming loans, there is the risk that the measures it has foreseen will not adequately address the credit quality concerns of the ECB.

After market close, UniCredit announced that it expects to report a record loss of approximately €11.8 billion for fiscal year 2016.

But selling hit the entire banking sector after head of the ECB oversight authority, Daniele Nouy, said Italian institutions have a long way to go to deal with the problem of deteriorated credit. UBI Banca fell by 6.8%; BPER by 4.81%; and Banco BPM by 3.95%.

Intesa Sanpaolo (-3.09%) and Generali (-3.18%) fell in line with the broader market ahead of new details on some kind of combination of the bank and insurance company.
Stmicroelectronics (-0.4%) limited its losses on a day when just about everything was down.

Rare gainers included Pierrel, which surged 12.56% thanks to U.S. sales of is dental anastethic Orabloc. Sintesi was up sharply (+18.18%) as was Rosss (+17.01%).
The biggest losers included Tas (-21.8%) Innovatec (-21.77%) and Fullsix (-14.94%).