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European stocks close lower, Brexit postponement adds to trade and growth concerns

Dec 10, 2018

 

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

European Markets

  • European stocks sold off, closing at a 2-year low, as the Brexit postponement adds to trade and growth concerns weighing on investor sentiment
  • The Euro Stoxx 600 closed down -1.87%, the FTSE 100 declined -0.83%, the DAX fell -1.54%, and the CAC 40 finished down -1.47%
  • UK Prime Minister Theresa May confirmed the Brexit vote has been postponed (it was set for Tuesday the 11th) and a new date for a vote has not been chosen, she said she is ramping up preparations for a no-vote scenario
  • Europe's top court issued a ruling that the UK could reverse its Brexit decision at any time, stating "The UK is free to revoke unilaterally the notification of its intention to withdraw from the EU."
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.1x
  • Technology (-0.94%), Health Care (-1.05%), and Real Estate (-1.08%) stocks were the top performers in the Euro Stoxx 600 today
  • Travel & Leisure (-3.01%), Basic Resources (-2.75%), and Banks (-2.66%) stocks were the worst performers in the Euro Stoxx 600 today
  • 13 stocks in the Euro Stoxx 600 hit 4-week highs while 96 stocks closed at 4-week lows
  • 3 stocks in the Euro Stoxx 600 finished the trading session overbought while 84 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed moving up +1.99 points today to 23.66 after closing at 21.67 last week

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Alibaba (BABA) is considering joining a new funding round for Megvii, the maker of facial recognition software Face++.  Megvii is seeking USD$500mn in new funding and is considering a valuation of between USD$3.5-4 billion, Alibaba has previously participated in funding for Megvii.  Megvii makes facial recognition software that scans faces for security systems.  Alibaba is not rated in our Global Top Stock Ideas. 
  • ASM Pacific Technology Limited (SEHK: 522) shares are falling amid worries that the recent Huawei case will cause the United States to increase import and export controls on Chinese tech products. A wide range ASM Pacific’s products would be affected by the controls. On Friday, ASM Pacific was downgraded to “Underperform” from “Neutral” at Macquarie, which cited expected cuts to earnings guidance. ASM Pacific is rated “Attractive” in our China All-Cap Global Top Stock Ideas. 
  • BASF (DB: BAS) has issued another profit warning, saying that deteriorating markets will hurt earnings.  BASF sees earnings before interest and taxes falling 15-20%.  Its previous warning stated the drop would be about 10%.  BASF is citing lower chemical prices a weaker automotive market as the reason for the profit warning.  BASF is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Boeing (BA) announced it is launching the BBJ 777X, a new Boeing business jet that can fly farther than any business jet ever.  The new Boeing BBJ 777X can fly halfway around the world non-stop.  The longest-range model of the new jet can fly 11,645 nautical miles without stopping to refuel.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Eramet S.A. (ENXTPA: ERA) shares are falling the most in its history after warning investors that quality-management problems related to its alloy business will likely result in material financial impacts. Although there is no indication that the French-based metals conglomerate’s product safety was impacted, Eramet still informed costumers to await further word on its corrective action plan. Eramet is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. 
  • Gilead Sciences (GILD) has named a veteran executive from Roche Holdings (SWX: ROG), Daniel O’Day, to take over as Chairman and CEO.  Gilead is tasking him with expanding the reach of Gilead beyond its core drugs of anti-viral treatments for HIV and hepatitis.  Mr. O’Day will take over in his new role on March 1, 2019.  Gilead is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas    Roche Holdings is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas. 
  • Hong Kong Stock Exchanges and Clearing Limited (SEHK: 388), which owns the Stock Exchange of Hong Kong, Asia's third-largest stock exchange, detailed today that it will announce a three-year strategy tomorrow to adopt artificial intelligence (AI) and robotics to increase efficiencies on its exchanges. Additionally, the Hong Kong Stock Exchange is considering how it could develop big data into its own tradeable asset class. Officials from Hong Kong Stock Exchanges and Clearing highlighted that prospects of tradeable big data are in their early stages. Hong Kong Stock Exchanges and Clearing is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. 
  • Impel S.A. (WSE: IPL) shares are falling after Danish cleaning giant ISS A/S (CPSE: ISS) announced that it has given up on lower margin operations in central and eastern Europe to focus on stronger core markets. Impel maintains a 19% stake in ISS. In explaining its reasoning for leaving central and eastern Europe markets, ISS said that they are dominated by, “smaller, price-centric customers,” and that it is unable to, “fully leverage volumes, concept, and talent,” to generate,” attractive returns.” Impel is not rated in our Global Top Stock Ideas. ISS is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • RIB Software (DB: RIB) shares are plummeting after announcing an agreement with Flex Ltd.  (FLEX) on a new ownership structure for their joint venture, YTWO Formative. Flex has exited the YTWO Formative partnership, leaving RIB Software to take full control of the venture. The partnership now lacks a partner that can take control of the supply chain process. RIB Software is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  Flex Ltd. 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 1.1363
  • GBP£ is currently down -1.273% against the USD$ to 1.2564
  • CHF is currently little changed against the USD$ at 1.0101

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -0.3 basis points to 0.246%
  • German 10-Year Bunds are higher with yields down -0.3 basis points to 0.246%
  • French 10-Year Government Bonds are lower with yields up 0.6 basis points to 0.694%
  • UK 10-Year GILTs are higher with yields down -6.6 basis points to 1.199%
  • Italian 10-Year Government Bonds are higher with yields down -2.6 basis points to 3.106%

 

Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Fresenius SE & Co KGaA Telecommunication Services 39.9 2.28%               5,304,446
Nokia OYJ Financials 4.95 1.04%            26,257,238
Sanofi Consumer Discretionary 76.8 0.47%               1,559,365
L'Oreal SA Health Care 207 0.24%                  553,515
Linde PLC Real Estate 136 0.07%               1,204,022
 
Underperformers Sector Price 1D % Chg Volume
Bayer AG Information Technology 60.8 -4.15%               6,333,796
BASF SE Utilities 58.4 -3.77%               8,985,310
CRH PLC Telecommunication Services 22 -3.51%               1,469,581
Societe Generale SA Energy 29.5 -3.05%               5,379,359
Safran SA Industrials 103 -2.93%                  538,550