FCA flies by 9% and PSA collapses by 10% after confirmation of negotiations for integration


the market day

The economic calendar of Thursday, October 31st foresees the Chinese SME manufacturing index (expected below 50 points, the threshold that delimits the economic expansion from the contraction) and then the new weekly requests for unemployment benefits in the US

by Chiara Di Cristofaro

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3 'of reading

European stock markets pinned on the levels of the eve, while Tokyo closed slightly, after the decisions of the US Federal Reserve to boost the US economy. In closing, the Nikkei index gained 0.37% to 22,927.04 points, while the broader Topix index gained 0.07% to 1.6667,01 points.

At Piazza Affari, focus on the development of the merger between Fiat Chrysler Automobiles and the French group Psa. On October 30, the respective stocks on the stock exchange gained momentum with the Italian title in great shape (even considering that the discount rate compared to the French and the marriage should be at par). Meanwhile, the Tokyo Stock Exchange has closed with the plus sign, following the last record set by the S&P 500 index in the US, and after the Federal Reserve's decision to reduce interest rates, for the third time since the start of the year. The Nikkei scored a rise of 0.37%, to 22,927.04, adding 83 points. On the currency markets the yen returns to stabilize against the dollar, at a level of 108.60, and at a value of 121.20 on the single currency.

Fca-Psa: Equita Sim, positive agreement, expected benefit on a Fiat rating
The transaction being studied to aggregate Fiat Chrysler and PSA represents a «positive deal that, in addition to improving the risk profile, allows us to benefit from the significant industrial synergies that would otherwise not be possible
get an award in the evaluation ». This is what the Equita Sim analysts observed in light of the details of the operation announced by the joint statement of the two groups released this morning. "The transaction, observes Equita, could have a positive impact also on the ratings of FCA – currently Ba2 (Moodys) / BB + (S&P) and BBB- (Fitch) – for which an upgrade of a notch by S&P would trigger the "inclusion of FCA bonds in Investment Grade credit indices". According to Credit Suisse, the terms announced are neutral for PSA with a limited upside resulting from the reduction of the holding discount for the French group.

The next Fed
The Federal Reserve, as expected, therefore cut interest rates by 25 basis points, bringing the cost of money to 1.75%. This is the third cut since July. At the same time, data on GDP in the third quarter – published Wednesday, October 30 – show an increase (+ 1.9% annualized) higher than expected (+ 1.6%). Employment in the private sector was also positive in October when 125,000 new jobs were created, above the expectations of 110,000.

Signs that indicate that the US economy is still healthy and postpone the hypotheses of a recession, currently discounted by the markets for the next 12 months at 30% of the probability.

Economic calendar
The economic calendar for Thursday, October 31st includes an index Chinese manufacturing SMEs (expected below 50 points, the threshold that delimits the economic expansion from the contraction) and then the new weekly requests for unemployment benefits in the US.

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