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European stocks rally and close higher with tariff progress fueling risk-on appetite

Dec 11, 2018

 

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

European Markets

  • European stocks rallied today, closing broadly higher, with carmakers and trade-sensitive minig stocks strong; progress on US-China tariffs fueled risk-on appetite in Europe stocks today 
  • UK Prime Minister Theresa May will tour the capitals of the EU seeking concessions to get her Brexit deal passed in Parliment, European Commission Juncker said no renegotiations are possible though he allows for "clarifications", SkyNews reports Tory opposition is growing
  • German Chancellor Angela Merkel echoed the European Commission today, saying a renegotiation of the Brexit deal is not an option
  • The Euro Stoxx 600 closed up +1.53%, the FTSE 100 advanced +1.27%, the DAX rose +1.49%, and the CAC 40 finished up +1.35%
  • While China moves ahead with its plan to cut import tariffs on autos imported from the US, Bloomberg notes that 6 of the 10 top selling vehicles in China are US-built, German-badged SUVs
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 5.25x
  • Basic Resources (+3.11%), Construction & Materials (+2.87%), and Automobiles & Parts (+2.34%) stocks were the top performers in the Euro Stoxx 600 today
  • Real Estate (-0.08%), Insurance (+0.63%), and Banks (+0.73%) stocks were the worst performers in the Euro Stoxx 600 today
  • 6 stocks in the Euro Stoxx 600 hit 4-week highs while 276 stocks closed at 4-week lows
  • 3 stocks in the Euro Stoxx 600 finished the trading session overbought while 132 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed down 2.56 points today to 21.09 after closing at 23.65 yesterday

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Anglo American Plc (LSE: AAL) shares are trading higher after reporting that it expects to produce more commodities this year and more cheaply than indicated in prior forecasts. Anglo American’s copper-equivalent production, which converts the miner’s mined commodities into a comparable ratio, is expected to be 2$ higher than previously forecasted while costs will be 5% lower. Anglo American is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Anheuser-Busch InBev NV (ENXTBR: ABI) had its credit rating cut by Moody’s Investor Services, driven by the brewer’s struggle to lessen its USD$100bn debt burden. Moody’s lowered its credit rating for Anheuser-Busch's unsecured senior debt from A3 to Baa1, the lowest tier of investment-grade debt. This news comes even after Anheuser-Busch announced a plan to slash its dividend payment by 50% to combat high debt levels. Anheuser-Busch is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Asos Plc (ASC LN) had its price target slashed by Morgan Stanley today to 3,200 pence, the lowest in the market.  Asos’ cash balance has fallen to 43 million pounds, down from 173 million pounds in September 2016.  Morgan Stanley said that while Asos has self-financed its expansion for the last 15 years, “it no longer seems able to do so”.  Asos is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Credit Suisse Group AG (SWX: CSGN) shares are trading slightly higher after CEO Tidjane Thiam announced the company’s intention to buyback 3bn francs (USD$3bn) of stock and an upcoming dividend hike. Switzerland’s second-largest lender plans to buyback stock over the next two years. Analysts expect details of the stock buyback and dividend hike to be revealed at Credit Suisse’s investor day on Wednesday. Credit Suisse is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Daimler AG (XTRA: DAI) has secured a purchase agreement for 20bn euros (USD$23bn) of battery cells through 2030 to leverage in its shift towards electric vehicles. By 2022, the Mercedes-Benz manufacturer plans to roll out some 130 hybrid and fully-electric car variants across its models. “After investing billions of euros in the development of the electric fleet and the expansion of our global battery network, we are now taking the next step,” said Daimler CEO Dieter Zetsche. Daimler is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Disney (DIS) had hoped to sell its 22 regional Fox Sports networks to one buyer.  The NY Post reports today, however, that it will sell them to multiple buyers as it conducts management meetings with multiple suitors.  Disney would not deny or confirm the news.  Disney is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Distribudora Internacional de Alimentacion (BME: DIA) and its largest shareholder told its banks it is unable to repay a USD$2.1 billion debt it owes, according to a story in El Confidencial.  The news comes as the company is set to leave the Ibex 35 index later this month.  The stock traded over 15% lower on the news.  Distribudora Internacional de Alimenacion is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas.
  • FleetCor (FLT) was downgraded to neutral from buy today at Goldman Sachs.  FleetCor saw its price target lowered to USD$215 from USD$245.  FleetCor was downgraded as Goldman Sachs takes a more defensive position in the payments & IT sector.  FleetCor is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Lundbeck (CPSE: LUN) shares are rising after Nordea upgraded the stock from “Sell” to “Hold”. Additionally, Nordea lifted its price target for Lundbeck from DKK255/share to DKK259/share. The new price target incorporated an EPS estimate increase for 2019 and on by between 1% and 2%, according to Nordea analyst Michael Novod. Lundbeck is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Qualcomm’s (QCOM) victory in Chinese courts yesterday over Apple (AAPL) concerning a two-year legal dispute over smartphone patents is a very real problem for Apple investors. While Apple is calling Qualcomm’s injunction against the sale of several iPhone models a, “desperate move,” that the company intends to fight, Granite Investment Advisors fund manager Timothy Lesko believes that Apple will be forced to settle in time, saying, “Apple will eventually have to come to the negotiating table with Qualcomm.” Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. Apple is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • WPP (LSE WPP) announced it intends to see USD$347mm in annual cost savings by the end of 2021.  If realized, that would push its profit margin from 13% to at least 15%.   WPP will spend 300mm pounds per year to restructure and sees comparable organic sales dropping by 0.5%, up from previous guidance of a fall of between 0.5-1%.  WPP is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently down -0.387% against the USD$ to 1.1312
  • GBP£ is currently down -0.303% against the USD$ to 1.2523
  • CHF is currently down -0.297% against the USD$ to 1.0067

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -1.4 basis points to 0.232%
  • German 10-Year Bunds are higher with yields down -1.4 basis points to 0.232%
  • French 10-Year Government Bonds are lower with yields up 1.9 basis points to 0.713%
  • UK 10-Year GILTs are higher with yields down -1.1 basis points to 1.188%
  • Italian 10-Year Government Bonds are lower with yields up 1.6 basis points to 3.122%
  • Spanish 10-Year Government Bonds are higher with yields down -0.6 basis points to 1.437%

 

Euro Stoxx 50 Movers

In local currency.
On Mobile/Tablet scroll to the right.

Outperformers Sector Price 1D % Chg Volume
Linde PLC Real Estate 142 4.04%               1,330,909
Volkswagen AG Consumer Staples 146 3.63%               1,653,186
Nokia OYJ Financials 5.13 3.55%            28,180,428
Bayer AG Information Technology 62.9 3.37%               5,015,054
Vinci SA Consumer Discretionary 73.7 2.85%               1,809,049
 
Underperformers Sector Price 1D % Chg Volume
Industria de Diseno Textil SA Materials 26.3 -1.05%               4,138,751
Deutsche Post AG Health Care 25.3 -0.94%               4,330,769
AXA SA Health Care 19.2 -0.87%            12,442,985
Banco Bilbao Vizcaya Argentaria SA Information Technology 4.54 -0.82%            38,137,453
Fresenius SE & Co KGaA Telecommunication Services 39.7 -0.55%               3,159,997