Chinese stocks surge, but looming uncertainties could drag markets down again

Chinese stocks surged more than 4 percent on Monday, but experts warned the markets could fall again due to future uncertainty. The strong gains on Monday came after a series of reassuring statements from Chinese authorities over the weekend, which helped Chinese stocks extend Friday’s gains. In the medium term, Chinese stocks could be of “good value,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, told CNBC. AMP’s Oliver said that Chinese shares are “cheap and (of


Chinese stocks surged more than 4 percent on Monday, but experts warned the markets could fall again due to future uncertainty. The strong gains on Monday came after a series of reassuring statements from Chinese authorities over the weekend, which helped Chinese stocks extend Friday’s gains. In the medium term, Chinese stocks could be of “good value,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, told CNBC. AMP’s Oliver said that Chinese shares are “cheap and (of
Chinese stocks surge, but looming uncertainties could drag markets down again Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-22  Authors: weizhen tan, greg baker, afp, getty images
Keywords: news, cnbc, companies, chinese, report, drag, market, investment, markets, growth, surge, tensions, looming, uncertainties, stocks, bank, tax


Chinese stocks surge, but looming uncertainties could drag markets down again

Chinese stocks surged more than 4 percent on Monday, but experts warned the markets could fall again due to future uncertainty.

The strong gains on Monday came after a series of reassuring statements from Chinese authorities over the weekend, which helped Chinese stocks extend Friday’s gains.

The Shanghai composite jumped by 4.09 percent while the Shenzhen composite surged 4.9 percent. The Nasdaq-style Chinext leaped by more than 5 percent, while Hong Kong’s Hang Seng index closed 2.4 percent higher.

In the medium term, Chinese stocks could be of “good value,” Shane Oliver, head of investment strategy and chief economist at AMP Capital, told CNBC. However, he cautioned that there’s too much uncertainty around trade tensions and the growth slowdown to “say they have bottomed with any confidence.”

“We have seen a few false bottoms this year,” he added.

Vasu Menon, senior investment strategist at OCBC Bank told CNBC that trade tensions may continue to cast a shadow over China and it “doesn’t look like it’s going to end anytime soon.”

“So you see a rebound today, but does it mean that the markets have turned a corner and you know, will hit higher? I’m not sure, I don’t think so,” Menon said.

Some market observers, however, found the valuations to be attractive.

AMP’s Oliver said that Chinese shares are “cheap and (of) good value” for investors in the next five years.

“After the recent market pullback, Chinese equities’ valuations may be getting attractive, given Chinese corporates’ resilient sales and earnings growth,” Deutsche Bank Wealth Management said in a report on Monday. The bank added that other factors — such as the easing of tensions after the U.S. midterm elections in November — could come into play to support the market in the medium term.

There are also signs of a recovery in Chinese infrastructure investment in November, according to the report, with the country’s fiscal policy stance turning more supportive of growth since July this year.

Finally, tax cuts could also play a role.

“There have been growing discussions in China whether the government should cut tax more aggressively to support growth … but tax cut would be one possible catalyst for Chinese stock markets, if they happen,” said the Deutsche Bank report.


Company: cnbc, Activity: cnbc, Date: 2018-10-22  Authors: weizhen tan, greg baker, afp, getty images
Keywords: news, cnbc, companies, chinese, report, drag, market, investment, markets, growth, surge, tensions, looming, uncertainties, stocks, bank, tax


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Two ‘unstable’ OPEC nations may decide whether oil hits $100

“What I always worry about is the stories we should be watching, the unstable suppliers,” Croft recently told CNBC’s “Worldwide Exchange.” RBC has warned clients that 500,000 barrels per day could be periodically lost from the two nations, and elections may bring additional unrest. Iran’s exports are shrinking as oil buyers cut off purchases under threat of sanctions from the Trump administration. “If you’re going to have Venezuela continuing to decline, a million barrels of Iran off the market,


“What I always worry about is the stories we should be watching, the unstable suppliers,” Croft recently told CNBC’s “Worldwide Exchange.” RBC has warned clients that 500,000 barrels per day could be periodically lost from the two nations, and elections may bring additional unrest. Iran’s exports are shrinking as oil buyers cut off purchases under threat of sanctions from the Trump administration. “If you’re going to have Venezuela continuing to decline, a million barrels of Iran off the market,
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Keywords: news, cnbc, companies, militants, oil, barrels, barclays, recent, opec, million, unstable, nations, saudi, nigerias, 100, decide, hits, market, recently


Two 'unstable' OPEC nations may decide whether oil hits $100

“What I always worry about is the stories we should be watching, the unstable suppliers,” Croft recently told CNBC’s “Worldwide Exchange.”

RBC has warned clients that 500,000 barrels per day could be periodically lost from the two nations, and elections may bring additional unrest.

Half a million bpd represents just half a percent of daily global demand, but a disruption of that scale would have an outsize impact given the anticipated loss of roughly 1 million barrels a day of Iranian crude in the coming months. Iran’s exports are shrinking as oil buyers cut off purchases under threat of sanctions from the Trump administration.

“If you’re going to have Venezuela continuing to decline, a million barrels of Iran off the market, you can’t afford to lose another big, major producer,” Croft said.

Washington is largely depending on Saudi Arabia, Russia and a handful of other producers to keep the market supplied and prevent an oil price spike as Iran’s shipments dwindle. Traders recently sent Brent crude to nearly four-year highs above $86 a barrel, as fears that the Saudi alliance will fall short stoked concern about $100 oil.

Investment bank Barclays does not think oil prices will hit triple digits, but the outcome of Nigeria’s elections in February presents the biggest risk to that outlook, Michael Cohen, the bank’s head of energy markets research, said in a recent note to clients.

If Nigeria’s political opposition unseats President Muhammadu Buhari, Barclays analysts believe the new leadership will probably have to renegotiate a deal with militants brokered by Buhari’s government. During a political transition, militants might resume attacks on oil infrastructure, which caused Nigeria’s output to plunge by about 400,000 bpd in early 2016.

Analysts at Barclays say there’s a growing chance that the opposition can present a credible alternative to Buhari, whose popularity is waning and who spent much of his presidency seeking medical treatment overseas.

“Oil market participants ought to be more concerned about the possibility of disruptions in the Niger delta,” Cohen wrote, referring to Nigeria’s southern oil-producing region, a maze of waterways where militants staged daring attacks between 2006 and 2009 and again in recent years.

Oil theft also remains endemic in the Niger Delta. This month, a pipeline blast believed to be caused by petroleum thieves killed dozens, sparking protests among locals who blamed the Nigerian National Petroleum Corporation for the explosion.


Company: cnbc, Activity: cnbc, Date: 2018-10-22  Authors: tom dichristopher, abdullah doma, afp, getty images
Keywords: news, cnbc, companies, militants, oil, barrels, barclays, recent, opec, million, unstable, nations, saudi, nigerias, 100, decide, hits, market, recently


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Oil market trusts Saudi Arabia for now to temper impact of Iran sanctions


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Company: cnbc, Activity: cnbc, Date: 2018-10-22
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Scandal causes foreigners to dump more than $1 billion in Saudi stocks, report says

Foreign investors dumped $1.1 billion of Saudi stocks last week, among the biggest weekly outflows since data became available in 2015. The heavy sales coincided with the country’s growing crisis after the killing of journalist Jamal Khashoggi, according to Bloomberg. The stock sales came from qualified foreign institutional investors, who were net sellers of 4 billion riyals of stocks. Local retail investors were also net sellers last week while Saudi institutions were net buyers, the report sa


Foreign investors dumped $1.1 billion of Saudi stocks last week, among the biggest weekly outflows since data became available in 2015. The heavy sales coincided with the country’s growing crisis after the killing of journalist Jamal Khashoggi, according to Bloomberg. The stock sales came from qualified foreign institutional investors, who were net sellers of 4 billion riyals of stocks. Local retail investors were also net sellers last week while Saudi institutions were net buyers, the report sa
Scandal causes foreigners to dump more than $1 billion in Saudi stocks, report says Cached Page below :
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Scandal causes foreigners to dump more than $1 billion in Saudi stocks, report says

Foreign investors dumped $1.1 billion of Saudi stocks last week, among the biggest weekly outflows since data became available in 2015. The heavy sales coincided with the country’s growing crisis after the killing of journalist Jamal Khashoggi, according to Bloomberg.

The stock sales came from qualified foreign institutional investors, who were net sellers of 4 billion riyals of stocks. Local retail investors were also net sellers last week while Saudi institutions were net buyers, the report said.

There was only one other worse week, in September 2017, relating to a single transaction, Bloomberg said.

The Saudi All-Share index is down 4.4 percent this month, on pace for its worst month since October 2017, though it regained much of its losses Monday. It closed down 0.15 percent after being down as much as 3.35 percent.

Saudi Arabia has been trying to attract foreign investment as it diversifies its economy away from oil. Its market regulator, Tadawul, is going forward with reforms to bring the market into alignment with international standards. Index providers S&P Dow Jones, FTSE Russell and MSCI all said they were going to upgrade the kingdom to an “emerging market” starting next year, a move that was expected to draw billions of dollars of investment, especially from passive funds.

Foreigners are sill net buyers of Saudi stocks for the year, Bloomberg said.

Read the full Bloomberg story here.


Company: cnbc, Activity: cnbc, Date: 2018-10-22  Authors: liz moyer, fayex nureldine, afp, getty images
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‘Tech earnings have been driving the US stock market’

‘Tech earnings have been driving the US stock market’11 Hours AgoBig tech companies involved in cloud and cyber security businesses will be particularly in demand going forward, according to Richard Martin of IMA Asia.


‘Tech earnings have been driving the US stock market’11 Hours AgoBig tech companies involved in cloud and cyber security businesses will be particularly in demand going forward, according to Richard Martin of IMA Asia.
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'Tech earnings have been driving the US stock market'

‘Tech earnings have been driving the US stock market’

11 Hours Ago

Big tech companies involved in cloud and cyber security businesses will be particularly in demand going forward, according to Richard Martin of IMA Asia.


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A 15 percent correction is the gut check the market needs: Jim Paulsen

But the worst may be yet to come for the stock market, according to Jim Paulsen, chief investment strategist at Leuthold Group. “I think a good gut check to sentiment, like a 15 percent correction, might be just the ticket to extend this bull market,” he added. “I don’t think we can handle that environment at 20-some-times trailing earnings, probably more like 15 to 16 times trailing earnings and we’re a ways from that,” the investor added. The S&P 500 currently trades at 19 times trailing earni


But the worst may be yet to come for the stock market, according to Jim Paulsen, chief investment strategist at Leuthold Group. “I think a good gut check to sentiment, like a 15 percent correction, might be just the ticket to extend this bull market,” he added. “I don’t think we can handle that environment at 20-some-times trailing earnings, probably more like 15 to 16 times trailing earnings and we’re a ways from that,” the investor added. The S&P 500 currently trades at 19 times trailing earni
A 15 percent correction is the gut check the market needs: Jim Paulsen Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2018-10-20  Authors: keris lahiff, adam jeffery, getty images, brendan mcdermid, kcna, thomas barwick getty images, source, lawrence mcdonald
Keywords: news, cnbc, companies, needs, correction, economic, stocks, jim, earnings, 15, check, times, think, market, gut, etf, trailing, paulsen


A 15 percent correction is the gut check the market needs: Jim Paulsen

Markets could be setting up for an even deeper correction: Jim Paulsen 4:29 PM ET Fri, 19 Oct 2018 | 01:54

The S&P 500 is having its worst month in nearly three years.

But the worst may be yet to come for the stock market, according to Jim Paulsen, chief investment strategist at Leuthold Group.

“My guess is that we’re going to have a bigger correction than we’ve had yet,” said Paulsen on CNBC’s “Trading Nation” on Friday.

“I think a good gut check to sentiment, like a 15 percent correction, might be just the ticket to extend this bull market,” he added.

The S&P 500 is currently 6 percent from its 52-week high set in late September, shy of the 10 percent pullback that represents a correction. To get into correction territory, the benchmark index would need to fall to 2,645, a level not seen since May. A 15 percent drop would take it negative for the year.

Paulsen told CNBC a correction is necessary to reflect a changing market environment where rates are on the rise, earnings are peaking, and economic growth might slow.

“What we need is a lower valuation, I think, to sustain a different environment if this recovery is going to continue,” he said.

“I don’t think we can handle that environment at 20-some-times trailing earnings, probably more like 15 to 16 times trailing earnings and we’re a ways from that,” the investor added.

The S&P 500 currently trades at 19 times trailing earnings, one of its highest multiples in the past decade. High-growth sectors including technology and consumer discretionary trade, with a multiple above 20 times trailing earnings.

“It’s probably time to get more defensive and not have as much octane on from here as you have earlier in this bull market,” said Paulsen, highlighting safety sectors such as utilities, staples, and real estate investment trusts (REITs) as good bets in this environment.

Defensive stocks have already taken the lead in recent months. The XLP consumer staples ETF and the XLU utilities ETF have rallied more than 3 percent over the past three months, while the XLK technology ETF and XLY consumer discretionary ETF have fallen by at least 3 percent.

Paulsen said a hard turn in the market, to favor defensive stocks over cyclicals, suggested economic trouble ahead, too.

“If defensive stocks are taking leadership, what’s that say about upcoming economic growth?” he asked. “I think it suggests that economic growth is going to slow more than Wall Street really is ready for.”

The U.S. economy is expected to grow by 2.9 percent in 2018, slowing to 2.5 percent in 2019, according to GDP estimates pooled by FactSet.


Company: cnbc, Activity: cnbc, Date: 2018-10-20  Authors: keris lahiff, adam jeffery, getty images, brendan mcdermid, kcna, thomas barwick getty images, source, lawrence mcdonald
Keywords: news, cnbc, companies, needs, correction, economic, stocks, jim, earnings, 15, check, times, think, market, gut, etf, trailing, paulsen


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China’s securities regulator seeks to support market confidence

China’s securities regulator unveiled a series of measures to aid the country’s struggling stock market, saying it would encourage funds to help ease liquidity difficulties at listed companies, and would support share buy-backs. Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC) also said the regulator would encourage private equity funds to buy shares in listed firms and speed up approval for mergers and acquisitions, according to a statement on the CSRC’s official website


China’s securities regulator unveiled a series of measures to aid the country’s struggling stock market, saying it would encourage funds to help ease liquidity difficulties at listed companies, and would support share buy-backs. Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC) also said the regulator would encourage private equity funds to buy shares in listed firms and speed up approval for mergers and acquisitions, according to a statement on the CSRC’s official website
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China's securities regulator seeks to support market confidence

China’s securities regulator unveiled a series of measures to aid the country’s struggling stock market, saying it would encourage funds to help ease liquidity difficulties at listed companies, and would support share buy-backs.

Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC) also said the regulator would encourage private equity funds to buy shares in listed firms and speed up approval for mergers and acquisitions, according to a statement on the CSRC’s official website.

Liu also announced measures to aid private-run businesses, saying the regulator would support the issuance of high-yield bonds and other debt instruments by small and medium-sized companies, and would encourage asset managers to launch funds that invest in equity or debt of private companies.

China’s benchmark Shanghai Composite Index slumped 2.9 percent on Thursday amid worries about the levels of borrowing in the stock market and broader concerns over economic growth. Shanghai stocks extended their declines in early trading on Friday, hitting the lowest level since November 2014.

An increasing number of companies face margin calls as share prices fall.

More than 637 billion shares worth 4.44 trillion yuan ($639.86 billion) were pledged for loans as of Oct. 12, according to Reuters’ calculations based on data from the China Securities Depository and Clearing.

Liu said that regulators encourage various types of investors, including funds run by local governments, private equity funds, and wealth management products managed by brokerages, to help ease liquidity difficulties at listed companies with pledged shares.


Company: cnbc, Activity: cnbc, Date: 2018-10-19  Authors: afp, getty images
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Trump-approved boycott appears to be hitting Harley-Davidson amid rising trade-ins for rival Indian brand

A boycott of Harley-Davidson encouraged by President Donald Trump seems to be having a significant impact on the iconic motorcycle manufacturer. While that didn’t cover the period from when the president’s dispute with the company began, Johnson said recent evidence suggests the boycott is adding to Harley’s woes. The issues this year continue a trend in which Polaris and Indian have been able to take market share. In addition, Indian has grown year-over-year sales in 42 of 46 months, while Harl


A boycott of Harley-Davidson encouraged by President Donald Trump seems to be having a significant impact on the iconic motorcycle manufacturer. While that didn’t cover the period from when the president’s dispute with the company began, Johnson said recent evidence suggests the boycott is adding to Harley’s woes. The issues this year continue a trend in which Polaris and Indian have been able to take market share. In addition, Indian has grown year-over-year sales in 42 of 46 months, while Harl
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Trump-approved boycott appears to be hitting Harley-Davidson amid rising trade-ins for rival Indian brand

A boycott of Harley-Davidson encouraged by President Donald Trump seems to be having a significant impact on the iconic motorcycle manufacturer.

Harley sales already had slipped 8.7 percent in the first half of 2018 while its main American competitor, Polaris and its Indian brand, saw a 4 percent gain, according to industry analyst Gerrick L. Johnson at BMO Capital Markets. While that didn’t cover the period from when the president’s dispute with the company began, Johnson said recent evidence suggests the boycott is adding to Harley’s woes.

Harley riders have been trading in their “hogs” in increasing numbers as the company fights through a public relations nightmare created when it said it was shifting some production overseas, Johnson said. The Milwaukee-based manufacturer said it was doing so in response to retaliatory tariffs abroad due to Trump’s duties on steel and aluminum imports from other countries.

While both companies have tried to tamp down the president’s influence on motorcycle sales, Johnson said the impact is unlikely to be a coincidence. Back in August, Trump used his Twitter account to lambaste the company for its production shift and seemed to back a boycott he said was already underway.

“While President Trump’s assessment of HOG’s actions in his tweets were often factually inaccurate, the damage has been done,” Johnson said in a research note. “Dealers are feeling an impact, and we find that the impact has become more acute over time.”

Johnson said he was cutting Harley’s stock from outperform to market perform and knocked the price target to $45 from $52, which still implies 11.5 percent upside from Thursday’s close. Harley shares were off 1.3 percent in premarket trading Friday morning after sliding 3.1 percent in Thursday’s broad market sell-off. The stock has tumbled just over 20 percent year to date.

CNBC has reached out to Harley-Davidson for comment. The company officially reports earnings on Monday.

It’s not so much a problem with Harley’s products — Johnson said, in fact, that the company has continued to bring good bikes to market, but to little avail.

“For the first time in 10 years of covering powersports we have seen a manufacturer develop innovative new products that are significantly better than what they replace, and yet not seen an increase in demand,” he wrote.

But the company, according to the analysis, has failed to capture young riders, due in part to overpricing, and it managed the public relations poorly around the production move and Trump’s subsequent reaction.

“The overlap between Donald Trump supporters and Harley riders is significant,” Johnson said. “Thus, it’s disconcerting to have the President call on these consumers to boycott the brand. In response to new European tariffs on American motorcycles, HOG may have had the right financial intentions but the way it communicated its strategy was a public relations debacle.”

Johnson suggested the company shouldn’t have been as public as it was in announcing the move and shouldn’t have decided to “poke” the president when doing so.

The issues this year continue a trend in which Polaris and Indian have been able to take market share. The company still only holds 7 percent of the market for “heavyweight” brands, compared to 50 percent for Harley-Davidson, but says it has about a 20 percent share in the mid-size market, which is geared toward younger riders.

In addition, Indian has grown year-over-year sales in 42 of 46 months, while Harley has done so just 12 times during the period.

Since the battle with Trump, Johnson said he has found “that a majority of dealers feel they have lost at least some sales.”

“It should be disconcerting to HOG investors that most Indian dealers we speak with are seeing an uptick in Harley trade-ins for whatever the reason may be,” the analyst wrote.


Company: cnbc, Activity: cnbc, Date: 2018-10-19  Authors: jeff cox, fabian bimmer
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Dow rises more than 100 points as Procter & Gamble surges on earnings

The 30-stock index climbed 109 points, led by a 7.8 percent surge in Procter & Gamble shares. The stock surged after Procter posted better-than-expected earnings. American Express, PayPal and Skechers all posted on Thursday earnings that topped analyst expectations. Their shares rose 3.9 percent, 8.2 percent and 13 percent, respectively. “The underpinnings of the economy are still in place and earnings are still good,” said Quincy Krosby, chief market strategist at Prudential Financial.


The 30-stock index climbed 109 points, led by a 7.8 percent surge in Procter & Gamble shares. The stock surged after Procter posted better-than-expected earnings. American Express, PayPal and Skechers all posted on Thursday earnings that topped analyst expectations. Their shares rose 3.9 percent, 8.2 percent and 13 percent, respectively. “The underpinnings of the economy are still in place and earnings are still good,” said Quincy Krosby, chief market strategist at Prudential Financial.
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Dow rises more than 100 points as Procter & Gamble surges on earnings

Lebenthal says we’re in a rolling bear market right now 2 Hours Ago | 03:33

The Dow Jones Industrial Average rose on Friday on the back of strong earnings from Procter & Gamble as Wall Street tried to regain its footing after a sharp sell-off in the prior session.

The 30-stock index climbed 109 points, led by a 7.8 percent surge in Procter & Gamble shares. The stock surged after Procter posted better-than-expected earnings. The company said it got a boost from strong beauty-product sales.

Honeywell and Schlumberger also reported better-than-forecast profits. American Express, PayPal and Skechers all posted on Thursday earnings that topped analyst expectations. Their shares rose 3.9 percent, 8.2 percent and 13 percent, respectively.

The corporate earnings season is off to a strong start. With more than 15 percent of S&P 500 companies having reported, 83 percent have topped analyst expectations, according to FactSet.

The S&P 500, meanwhile, climbed 0.2 percent as the consumer staples sector outperformed. The Nasdaq Composite fell 0.1 percent, however, giving up a more than 1 percent gain.

“The underpinnings of the economy are still in place and earnings are still good,” said Quincy Krosby, chief market strategist at Prudential Financial. “The market is not going to have an immediate recovery; it tends to bounce.”


Company: cnbc, Activity: cnbc, Date: 2018-10-19  Authors: fred imbert, brendan mcdermid
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A ratings downgrade for Italy is now forecast to happen within days

At least two major banks have predicted that ratings agencies will lower Italy’s sovereign credit rating to just one level above “junk” status. Standard Chartered’s rate strategist, John Davies, said Friday that his bank expected to see a one notch ratings downgrade. A ratings downgrade essentially means that analysts are telling clients that it has become riskier to lend money to that particular government and it often leads to a sell-off in those bond markets. “The ratings agency induced press


At least two major banks have predicted that ratings agencies will lower Italy’s sovereign credit rating to just one level above “junk” status. Standard Chartered’s rate strategist, John Davies, said Friday that his bank expected to see a one notch ratings downgrade. A ratings downgrade essentially means that analysts are telling clients that it has become riskier to lend money to that particular government and it often leads to a sell-off in those bond markets. “The ratings agency induced press
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A ratings downgrade for Italy is now forecast to happen within days

At least two major banks have predicted that ratings agencies will lower Italy’s sovereign credit rating to just one level above “junk” status.

Italy is at loggerheads with European commissioners over a proposed budget that would increase the country’s deficit to 2.4 percent of annual economic output during 2019. The country’s populist and partly right-wing coalition want the fiscal blow out in order to make good on pre-election pledges.

Brussels has rejected the plan, citing Italy’s already huge debt pile. The clash has roiled markets, sending the yield spread between Italian and German 10-year benchmark bonds to a fresh five-and-a-half year high. Shares of the country’s banking sector were also down 5 percent at one stage during Friday’s session.

The uncertainty comes as two of the three major ratings agencies are readying reviews for Italy’s sovereign credit rating, which currently sits at “BBB.” S&P will decide on Friday October 26 while Moody’s has said it will conclude its review before the end of the month.

Standard Chartered’s rate strategist, John Davies, said Friday that his bank expected to see a one notch ratings downgrade. That would take Italy to just one level above a “junk” rating which would trigger forced selling of Italian assets. A ratings downgrade essentially means that analysts are telling clients that it has become riskier to lend money to that particular government and it often leads to a sell-off in those bond markets.

“The ratings agency induced pressure by the market will force Italy to back down,” Davies said by phone Friday.

The strategist added that should Italy eventually bend to Brussels, this would “calm current nerves” and bring Italian yields lower. Davies warned however that the market won’t bring yields all the way to levels last seen in May, before the political spat began.

“The market will still be looking at an Italy with a much less predictable government and a lower credit rating against a backdrop of fading ECB (European Central Bank) QE (quantitative easing) purchases,” he added.

UBS is another bank predicting a ratings downgrade for Italy.

In a note Friday, the Swiss bank said its base-case scenario is for both S&P and Moody’s to issue a one-notch downgrade, while tagging on a “stable outlook.”

It said should such an outcome materialize, the spread between 10-year Italian and German debt — which is used as a fear gauge for euro zone troubles — should retreat from around 330 basis points back into a 250 to 300 range.


Company: cnbc, Activity: cnbc, Date: 2018-10-19  Authors: david reid
Keywords: news, cnbc, companies, lower, davies, italian, happen, italys, forecast, downgrade, market, days, ratings, italy, bank, rating


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