17/09/2012

PEERS & MARKETS

European stock markets were again positive in the week from 10 to 14 September 2012 (Milan +3.2%, London +2.1%, Frankfurt +2.7%, Paris +1.8%, Madrid +3.4%) supported by the positive macroeconomic newsflow.

The German Constitutional Court ratified the ESM (with a financial commitment of up to 190 €bln) and the Federal Reserve Governor, mr Bernanke, launched a third round of Quantitative Easing in order to improve employment in the United States (Mortgage Back Securities purchase without preset limits – first tranche of up to 40$bln). The Fed also reiterated its commitment to keep official interest rates near zero until mid 2015 (0.25% the current level).

Auto&Parts sector marked the best performance in Europe (+5.6% Stoxx Auto) driven by Audi and Volkswagen good car sales in August and positive newsflow on Chinese market.

Pirelli ended the week at € 9.37 with an increase of 4.6% and an average daily trading volume of about 3 million pieces. The stock has benefited from the upgrade of Societe Generale who brought the target price to 10.4 € (from 8.7€, Buy confirmed): following the broker, Pirelli fundamentals remain solid and 2012 objectives can be reached despite the difficult market environment. The consensus price target stands at 10.5 € with 75% of the coverage with Buy recommendation.