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European stocks close lower on Brexit and global growth outlook concerns

Nov 16, 2018

 

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

European Markets

  • European markets see earlier gains evaporate and closer moderately lower as Brexit noise and comments by Federal Reserve Chairman Richard Clarida dampened sentiment 
  • Federal Reserve Vice Chairman Richard Clarida said today that interest rate policy is getting close to neutral and there is some evidence that the global economy is cooling
  • The Euro Stoxx 600 closed down -0.2%, the FTSE 100 declined -0.34%, the DAX fell -0.11%, and the CAC 40 finished down -0.17%
  • Investor sentiment for European stocks finished trading neutral with the advance/decline ratio for the Euro Stoxx 600 currently at 1.03x
  • Basic Resources (+0.84%), Financial Services (+0.63%), and Media (+0.39%) stocks were the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-0.97%), Banks (-0.78%), and Technology (-0.74%) stocks were the worst performers in the Euro Stoxx 600 today
  • 56 stocks in the Euro Stoxx 600 hit 4-week highs while 68 stocks closed at 4-week lows
  • 8 stocks in the Euro Stoxx 600 finished the trading session overbought while 38 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down -20.15 points today to 0 after closing at 20.15 yesterday

Stocks Trending in the News

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  • Huawei Technologies Co. (SZSE: 002502) aims to dethrone Apple (AAPL) as the number one global smartphone maker, as per CEO Richard Yu’s comments in a CNBC interview, where he said, “Next year, we will be very close to number one, maybe we will be on par with Samsung.” Yu went on to mention that the US-Sino trade war has created a barrier to the US for Huawei, allowing the technology company to focus on other global markets. Huawei is not rated in our Global Top Stock Ideas. Apple is rated “Attractive” in both our US Large-Cap Global Top Stock Ideas and US Information Technology Global Top Stock Ideas.
  • Nintendo (7974 JP) had its price target cut to 54,200 yen from 55,200 at Daiwa Securities as the woes mount for the company.  Nintendo saw a weak debut of its most recent Pokemon game but has seen brisk sales of its Switch console.  Nintendo closed over 9% lower on the news.  Nintendo is not rated in our Global Top Stock Ideas.
  • Nyrstar NV (ENXTBR: NYR) shares are soaring more than 50% after Trafigura Group Ltd.  and a syndicate of banks are in advanced talks to provide new financing for the zinc giant. Nyrstar’s stock has plummeted this week amid speculation that it will be unable to repay its 340mm euro bond due next September. The advanced talks also reportedly involve stabilizing a 600m euro trade finance facility. Nyrstar is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 
  • Taiwan Semiconductor Manufacturing (TSMC) shares are falling in pre-market trading after the world’s largest contract chipmaker announced that it suffered a NT$2.596bn (USD$84.28) loss from a virus that infected its computer system in August. Booked as an operating expense, the loss was offset by gains from foreign currency conversion. Following the announcement, Morgan Stanley downgraded TSMC’s recommendation from overweight to equal-weight while cutting the price target from NT$253/share to NT$239/share. TSMC is not rated in our Global Top Stock Ideas.
  • Vallourec (ENXTPA: VK) shares are falling the most in its public trading history after reporting FY3Q2018 y/y sales growth of –0.3% to 0.961bn euros while analyst consensus called for 1.100bn euros. Vallourec’s negative free cash flow of –153mm euros largely missed expectations of nearly breakeven cash flow. Vallourec is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. 
  • Vivendi (VIV IM) said it is making progress with its sale of Universal Music Group, sending the stock over 10% higher.  Vivendi is speaking to 15 banks regarding the sale and will whittle the list down to between 5 and 7.  The sale of Universal Music Group could reap upwards of 20 billion euros according to analysts.  Vivendi expects to complete the sale over the next 12-18 months.  Vivendi is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • Volkswagen AG (XTRA: VOW3) shares are trading slightly lower after the automaker significantly raised its investment plans for the next five years in an effort to keep pace with the trending shift to electric and self-driving cars. Volkswagen intends to spend 44bn euros through 2023 to push for the development of 40 fully-electric car models by 2025. Last year, the company estimated they would spend 10bn euros less on the same plan. Volkswagen is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
     

What is Going on with European Currencies?

  • EUR€ is currently up +0.715% against the USD$ to 1.1409
  • GBP£ is currently up +0.548% against the USD$ to 1.2844
  • CHF is currently up +0.544% against the USD$ to 0.9989

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 0.7 basis points to 0.367%
  • German 10-Year Bunds are lower with yields up 0.7 basis points to 0.367%
  • French 10-Year Government Bonds are lower with yields up 1.3 basis points to 0.764%
  • UK 10-Year GILTs are lower with yields up 3.9 basis points to 1.412%
  • Italian 10-Year Government Bonds are higher with yields down -0.2 basis points to 3.491%
  • Spanish 10-Year Government Bonds are lower with yields up 0.5 basis points to 1.636%

 

Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Vivendi SA Consumer Discretionary 21.7 3.09%               7,619,637
E.ON SE Utilities 9.13 1.52%            15,901,722
Deutsche Telekom AG Telecommunication Services 15.1 1.34%            21,502,476
Sanofi Health Care 79.2 1.28%               3,059,629
Enel SpA Utilities 4.50 1.08%            33,004,398
 
Underperformers Sector Price 1D % Chg Volume
ASML Holding NV Information Technology 148 -2.99%               3,021,457
Volkswagen AG Consumer Discretionary 144 -2.52%               1,932,846
CRH PLC Materials 24.2 -2.35%               1,638,662
Intesa Sanpaolo SpA Financials 1.92 -1.76%          139,676,238
Bayer AG Health Care 62.6 -1.45%               5,436,888