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European stocks close flat, unable to sustain earlier gains ahead of Fed Chair comments

Nov 28, 2018

 

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

European Markets

  • European stocks close flat as markets are unable to sustain gains from earlier in the session ahead of Fed Chair Powell's comments
  • After the close, the Bank of England warned that leaving the EU without a Brexit deal would cause a dire recession
  • Italy's Finance Minister offered a conciliatory tone on the budget, saying Italy would take into consideration the concerns of EU partners and financial markets uncertainty in its attempt to get its budget approved
  • The Euro Stoxx 600 closed up 0%, the FTSE 100 declined -0.18%, the DAX fell -0.09%, and the CAC 40 finished up 0%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.87x
  • Technology (+0.62%), Retail (+0.6%), and Basic Resources (+0.52%) stocks were the top performers in the Euro Stoxx 600 today
  • Travel & Leisure (-0.75%), Utilities (-0.64%), and Food & Beverage (-0.55%) stocks were the worst performers in the Euro Stoxx 600 today
  • 60 stocks in the Euro Stoxx 600 hit 4-week highs while 55 stocks closed at 4-week lows
  • 13 stocks in the Euro Stoxx 600 finished the trading session overbought while 35 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed up 0.12 points today to 18.59 after closing at 18.47 yesterday

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Alphabet’s (GOOGL) Google has a plan to eradicate mosquitoes around the world that carry disease.  Google is releasing mosquitoes with a bacteria implanted that renders the hatched offspring unviable.  The vermin could be released around the world potentially eradicating vermin-borne diseases.  Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • AXA SA (ENXTPA: CS) shares are trading slightly higher after the company’s CEO Thomas Buberl promised a more generous dividend policy in the future. Buberl’s comments come after AXA announced the USD$15.3bn acquisition of XL Group in March. AXA also raised its guidance for 2019 and 2020, citing additional synergies that will stem from the purchase of XL Group. AXA is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Continental AG (DB: CON) shares are trading lower on comments made by the company’s CFO regarding the first half of 2019. Continental CFO Wolfgang Schaefer said that tough business conditions, which have persisted in the second half of 2018, will continue through at least the first half of 2019, citing a weak Chinese market and Europe’s switch to a new system for emissions testing. Schaefer detailed further that Continental’s margins will suffer as a result of these issues. Continental is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Danone SA (ENXTPA: BN) shares are trading slightly lower after Goldman Sachs cut its recommendation for the French food and beverage giant from “Neutral” to “Sell”.  Goldman Sachs also lowered its price target for Danone to 61 euros/share from 67 euros/share, implying an 8.1% downside from yesterday’s closing price. In a note, Goldman Sachs analyst John Ennis cited that current company organic sales growth guidance and consensus expectations are “optimistic” given the deteriorating demographic trends in China. Danone is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • Deutsche Bank (DBK GR) may remove the senior executives that deal with regulators.  A Bloomberg article reports that regulators are frustrated with the bank’s inability to stop financial crimes.  Deutsche Bank has been trying to convince regulators it has improved compliance systems and processes, but they are not buying it.  Deutsche Bank officially has no comment on the matter, yet.  Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Faurecia (ENXTPA: EO) shares are falling alongside the European automobiles sector as worries over the unfavorable automobile manufacturing environment are at the top of investor’s concerns. Bernstein, which rates Faurecia as “Underperform”, forecasts that the company is heading for “much tougher” pricing and operating conditions, citing increased pressure from original equipment manufacturers. Faurecia is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. 
  • Janus Henderson (JHG) forecasts choppy trading for global technology stocks in the first half of 2019, citing prospects of increased US tariffs on Chinese exports and slowing Chinese growth. Janus Henderson warned investors to be wary of “demand destruction” caused by the US-Sino trade war, which is currently in “uncharted” territory. Janus Henderson highlighted that, among FAANG stocks, Alphabet (GOOGL) and Facebook (FB) offer strong risk-reward potential. Janus Henderson is not rated in our Global Top Stock Ideas.
  • LafargeHolcim Ltd (LHN SW) said it plans to sell assets and streamline operations as it looks to boost profit.  LafargeHolcim Ltd is leaving its headquarters in Zurich and Paris and settling at a new location in Zug, Switzerland.  LafargeHolcim Ltd now expects ebitda to grow at least 5% annually with these moves, up from previous 3-5% growth guidance.  LafargeHolcim Ltd is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Restaurant Group’s (LSE: RTN) shares are seeing deep losses after shareholders voted to approve a GBP550mm deal with Wagamama. Notable shareholders such as Columbia Threadneedle and GrizzlyRock Capital voted against the deal.  Restaurant Group is not rated in our Global Top Stock Ideas.
  • Royal Bank of Canada (TSX: RY) reports FY4Q2018 financials that widely beat analysts’ consensus expectations. Notably, Royal Bank of Canada generated adjusted cash EPS of CAD$2.24 in FY4Q2018, beating the highest analyst estimates, which ranged between CAD$2.08 and CAD$2.15. Additionally, Royal Bank of Canada reported its highest domestic net interest margin in five years. Royal Bank of Canada is not rated in our Global Top Stock Ideas.
  • Salesforce.com (CRM) reported results that topped analysts’ estimates.   Salesforce.com fiscal 3Q billings came at USD$2.89 billion while consensus was for USD$2.68 billion, a 27% jump.  Revenue guidance for fiscal 2020 is USD$16 billion while the company’s outlook of USD$23 billion in 2022 appears to be on track.  Salesforce.com is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Tenaris (BIT: TEN) shares are falling, trading at their lowest level since April 2016 after the company’s Chairman and largest shareholder Paolo Rocca was indicted in a corruption investigation case. Although uncertainty surrounds Rocca’s indictment, analysts are urging shareholders that they should not panic, stressing that the case is neither about the company or its employees. Tenaris is rated “Attractive” in our European Large-Cap Global Top Stock Ideas. 
  • Unilever (UNA NA) is in exclusive talks with GlaxoSmithKline (GSK LN) to acquire its nutrition business, according to the Financial Times.  The report does not mention a price as it has not been made public yet.   GlaxoSmithKline received offers from multiple players with Unilever’s coming in on top.  

 

What is Going on with European Currencies?

  • EUR€ is currently up +0.611% against the USD$ to 1.1358
  • GBP£ is currently up +0.526% against the USD$ to 1.2814
  • CHF is currently up +0.439% against the USD$ to 1.0056

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -0.1 basis points to 0.349%
  • German 10-Year Bunds are higher with yields down -0.1 basis points to 0.349%
  • French 10-Year Government Bonds are higher with yields down -0.2 basis points to 0.729%
  • UK 10-Year GILTs are higher with yields down -1.5 basis points to 1.377%
  • Italian 10-Year Government Bonds are higher with yields down -3.3 basis points to 3.256%
  • Spanish 10-Year Government Bonds are higher with yields down -1.1 basis points to 1.543%
     

 

Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Fresenius SE & Co KGaA Health Care 50.9 2.50%               2,097,368
Industria de Diseno Textil SA Consumer Discretionary 27.4 1.71%               8,487,839
Banco Bilbao Vizcaya Argentaria SA Financials 4.98 1.21%            40,259,840
Telefonica SA Telecommunication Services 7.78 1.04%            46,899,827
Sanofi Health Care 79.28 0.94%               2,012,088
 
Underperformers Sector Price 1D % Chg Volume
Koninklijke Philips NV Health Care 32.4 -2.20%               4,536,810
Safran SA Industrials 106 -1.94%               1,093,920
Danone SA Consumer Staples 65.4 -1.49%               2,227,525
Munich Re Financials 193 -1.35%                  868,840
E.ON SE Utilities 9.11 -1.24%               8,156,814