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European stocks close lower, negative sentiment grows over fears of slowing European and global economic growth

Dec 14, 2018

 

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

European Markets

  • European stocks close lower, negative sentiment grows over fears of slowing European and global economic growth
  • Today, the Ifo-Institute, a premier German economic institute, projected lower growth of the German economy in 2019 with a projected GDP growth rate of 1.1%, the previous estimate was 1.9%
  • European Central Bank head Mario Draghi reinforced negative sentiment with comments on a slow down in global growth and decelerating economic data in China
  • Chinese retail sales growth of 8.1% in November is the lowest 15 years and industrial production of 5.4% in November is the lowest in 10 years
  • European auto stocks are dropping following a report showing a sharp drop in new car registrations in November
  • The Euro Stoxx 600 closed down -0.63%, the FTSE 100 declined -0.47%, the DAX fell -0.54%, and the CAC 40 finished down -0.88%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.33x
  • Travel & Leisure (+0.3%), Media (+0.23%), and Telecommunications (+0.21%) stocks were the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-1.29%), Personal & Household Goods (-1.27%), and Basic Resources (-1.16%) stocks were the worst performers in the Euro Stoxx 600 today
  • 53 stocks in the Euro Stoxx 600 hit 4-week highs while 30 stocks closed at 4-week lows
  • 12 stocks in the Euro Stoxx 600 finished the trading session overbought while 32 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed +0.73 points today to 19.91 after closing at 19.18 yesterday
     

Stocks Trending in the News

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  • Instacart will no longer make deliveries for Amazon’s (AMZN) Whole Foods starting yesterday.  Instacart will not deliver any longer as Amazon uses its own delivery service.  The separation will take months to complete.  Amazon is slowly transitioning to its own delivery service as it no longer sees Instacart as the most efficient way to make the deliveries.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Apple (AAPL) will push through a software update to its iPhones in China in an effort to satisfy a local court injunction granted to Qualcomm (QCOM).  Apple said it was taking the action to assure its compliance with the court order there.  Apple’s update will address the Qualcomm complaints over patents.  Globally, Apple and Qualcomm are in a legal battle over the fees Apple pays Qualcomm pays for use of its chips.  Apple presently is not using Qualcomm chips.  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.  Qualcomm is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Balfour Beatty (LSE: BBY) shares are trading higher after the company announced that it expects profits for the fiscal year to come in ahead of expectations. As a result of the announcement, Liberum raised its FY2018 EPS estimate for the construction firm by 18%. Balfour Beatty is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Costco (COST) reported earnings that topped the highest estimates.  Costco reported 1Q EPS of USD$1.73 while consensus was for USD$1.51-1.67.  Costco 1Q revenue of USD$35.07 billion came above USD$34.8 billion expected.  Total sales excluding fuel grew 7.5% in constant currency.
  • GAM Holding AG (SWX: GAM) shares are trading lower after surprising investors with an announcement of an expected record loss for the full-year. GAM Holding announced that it expects to post a loss of 925mm Swiss franc as a result of massive outflows, which forced the asset manager to write down its business. GAM Holding is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • LVMH (ENXTPA: MC) is acquiring luxury hotel operator Belmond Ltd. (BEL) in a USD$2.6 billion deal.  The deal will push LVMH further into luxury services, with a chain where USD$2,000 per night rooms are common.  LVMH is offering USD$25 per share, a 42% premium over last night’s close.  LMH is looking to catch a portion of consumer’s spending on luxury services.  LVMH is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.  Belmond is not rated in our Global Top Stock Ideas.
  • Merck & Co. (MRK) has agreed to acquire Antelliq Group for 2.1bn euros (USD$2.4bn) in an effort to bolster its animal-health business. As a part of the acquisition, Merck will assume the debt of the privately held manufacturer of animal-monitoring tools. Merck is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Scout24 AG (DB: G24) shares are higher in today's trading on reports that the German online classified advertisements company is considering a sale. Scout24 is reportedly working with advisers to assess interest from private equity firms. Scout24 is rising the most intraday since its trading debut in 2015. Scout24 is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • Starbucks Corporation’s (SBUX) CFO Patrick Grismer said that same-store sales growth in China could be as low as 1% over the long-term, a statement of concern for one of the coffee brewer’s most important markets. The 1% projected long-term same-store sales growth in China is much slower than the 3%-4% same-store sales growth observed by Starbucks in the US and the rest of the world. Additionally, Starbucks guided that it expects 6,000 total stores in China in 4 years.  Starbucks is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently down -0.511% against the USD$ to 1.1303
  • GBP£ is currently down -0.514% against the USD$ to 1.2578
  • CHF is currently down -0.278% against the USD$ to 1.0033

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -3.3 basis points to 0.252%
  • German 10-Year Bunds are higher with yields down -3.3 basis points to 0.252%
  • French 10-Year Government Bonds are higher with yields down -2 basis points to 0.712%
  • UK 10-Year GILTs are higher with yields down -4.9 basis points to 1.24%
  • Italian 10-Year Government Bonds are higher with yields down -1.7 basis points to 2.939%
  • Spanish 10-Year Government Bonds are higher with yields down -1.2 basis points to 1.412%

 

Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Fresenius SE & Co KGaA Telecommunication Services 206 1.55%                  667,899
Koninklijke Ahold Delhaize NV Consumer Discretionary 22.7 1.39%               4,872,144
Engie SA Industrials 12.9 1.02%               7,248,417
Allianz SE Financials 177 0.36%               1,158,463
TOTAL SA Consumer Discretionary 49.1 0.33%               8,072,261
 
Underperformers Sector Price 1D % Chg Volume
Schneider Electric SE Industrials 61 -2.93%               2,369,186
adidas AG Financials 196 -2.25%                  814,282
Societe Generale SA Energy 29.9 -2.08%               4,526,748
Amadeus IT Group SA Materials 62.3 -1.92%                  976,512
Industria de Diseno Textil SA Materials 24.6 -1.76%               4,843,195