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European stocks close mixed ahead of US election with positive sentiment from potential Brexit progress offset by continuing concerns over trade conflict

Nov 05, 2018

 

*Data in Price Return and Updated Real-Time (with a delay), Source: StockDio

European Markets

  • European stocks closed mixed ahead of the US elections; positive sentiment generated by the potential Brexit progress was offset by trade concerns
  • The Euro Stoxx 600 closed down -0.16%, the FTSE 100 advanced +0.14%, the DAX fell -0.21%, and the CAC 40 finished down -0.01%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.48x
  • Oil & Gas (+1.51%), Utilities (+0.94%), and Telecommunications (+0.72%) stocks were the top performers in the Euro Stoxx 600 today
  • Technology (-1.55%), Financial Services (-1.51%), and Industrial Goods & Services (-1.27%) stocks were the worst performers in the Euro Stoxx 600 today
  • 117 stocks in the Euro Stoxx 600 hit 4-week highs while 6 stocks closed at 4-week lows
  • 5 stocks in the Euro Stoxx 600 finished the trading session overbought while 7 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  moving down -4.61 points today to 14.23 after closing at 18.85 last week
     

Stocks Trending in the News

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  • Capital & Counties Properties Plc (LSE: CAPC) shares are trading higher as reports are indicating that CK Asset Holdings Ltd. (SEHK: 1113) is in talks to buy Capital & Counties’ Earls Court project. Capital & Counties shareholders are interpreting this as an indicator of confidence in London’s luxury-housing market. Capital & Counties’ Earls Court project is valued at USD$920mm after a series of writedowns over the last three years. Capital & Counties is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas and CK Asset Holdings is rated “Attractive” in our China All-Cap Global Top Stock Ideas. 
  • Dufry (DUFN SW) cut its full year forecast after a disappointing 3Q in Spain and Latin America.  Dufry cut its organic growth forecast to 2-3% down from 5-7% previously.  Dufry saw a less favorable mix of tourists in Spain and currency turbulence in Brazil and Argentina.  Dufry is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Grenke AG (XTRA GLJ) shares are falling after the Sebastian Hirsch, a member of Grenke’s Board of Directors, said in an interview with Bloomberg that the company will not be able to sustain high growth rates of more than 20% observed in its core business. Hirsch pulled-back growth forecasts, projecting growth rates between 14% and 16% over the next 2-3 years while forecasting 12% growth in the long-term. Grenke is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.  
  • Icelandair Group HF (ICSE: ICEAIR) shares are soaring after an unexpected agreement was reached to buy discount-airline rival, Wow Air. Both of these companies are Icelandic airlines that have sustained significant financial hardships in recent years. Both airlines have suffered due to higher oil prices, the introduction of low-cost trans-Atlantic airlines, slumping tourism to Iceland. Icelandair is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 
  • Pandora (PNDORA DC) shares are trading lower ahead of its CY3Q2018 earnings release tomorrow as investors fear a weak earnings announcement. Ole Kjaer Jensen, head of share trading at Sydbank, said, “The market is expecting the 3Q numbers to be weak, so there may be people who are taing last-minute decisions to pull out,” adding, “there has also been takeover speculation on Pandora in recent months and maybe investors are pulling out ahead of the earnings,”. Pandora is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Siemens Healthineers (SHL GR) reported 4Q adjusted net of 430n euros while the company guidance was for 435mn euros.  Siemens Healthineers reported 4Q adjusted profit of 674mn euros while company guidance was for 668mn euros.  Siemens Healthineers expects 2019 EPS to come 20-30% above previous year.  Siemens Healthineers is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Softbank (9984 JP) reported profit that well exceeded analysts’ expectations.  Softbank reported 2Q profit of 706 billion yen, far above any expectation of analysts as the results of its tech investments begin to bear fruit.  Softbank’s CEO said next year “I believe we will not only exceed these results but may deliver results on a level Japan has never seen before”.  Softbank is rated “Attractive” in our Japan Large-Cap Global Top Stock Ideas.
  • STMicroelectronics (SMT IM) announced a share buyback program of up to USD$750mn.  STMicroelectronics will have its program in place for up to 3 years.  STMicroelectronics will place any stock bought into its treasury.  STMicroelectronics will pay at least 1.04 euros for any shares bought back.  STMicroelectronics is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Subaru (7270 JP) cut is full year forecast for operating profit by 27% in the wake of expanding its car recall.  Subaru is recalling vehicles due to flaws in its inspection process.  Subaru now expects to report a profit of 220 billion yen compared to consensus of 347.4 billion yen.  Subaru is not rated on our Global Top Stock Ideas.
  • Tata Motors (TTMT IN) has been placed on “CreditWatch” by S&P.  Tata Motors could see its credit metrics worsen near term given recent results that were weaker than expected.  Tata Motors “is likely to miss our expectations for 2019” S&P said.  Tata Motors is not rated in our Global Top Stock Ideas.

 

 

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.1391
  • GBP£ is currently up +0.355% against the USD$ to 1.3016
  • CHF is currently down -0.231% against the USD$ to 0.9944

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -0.2 basis points to 0.426%
  • German 10-Year Bunds are higher with yields down -0.2 basis points to 0.426%
  • French 10-Year Government Bonds are lower with yields up 0.6 basis points to 0.791%
  • UK 10-Year GILTs are lower with yields up 0.7 basis points to 1.501%
  • Italian 10-Year Government Bonds are lower with yields up 0.4 basis points to 3.325%

Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
TOTAL SA Energy 51.4 2.29%               5,408,192
Orange SA Telecommunication Services 14.2 1.47%               7,692,439
E.ON SE Utilities 8.75 1.23%               8,774,009
Engie SA Utilities 12.1 1.22%               4,785,738
Sanofi Health Care 78.64 1.14%               2,294,328
 
Underperformers Sector Price 1D % Chg Volume
ASML Holding NV Information Technology 150 -1.71%               1,319,378
Vivendi SA Consumer Discretionary 21.5 -1.60%               2,717,642
Intesa Sanpaolo SpA Financials 1.97 -1.51%          105,652,432
Safran SA Industrials 111 -1.51%                  678,183
Fresenius SE & Co KGaA Health Care 54.2 -1.35%               2,353,735