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European stocks fall, closing at lows, ahead of Federal Reserve tomorrow

Dec 18, 2018

 

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

European Markets

  • European stocks traded down most of the session with the risk-off moves being fueled by fear of higher interest rates from the Federal Reserve tomorrow
  • The EU told England there will be no talks on a "managed no-deal" as the EU increases its pressure on England
  • Business sentiment in Germany, as measured by the Ifo Institute Business Climate index, declines to its lowest level in 2 years
  • President Trump warned the Federal Reserve to avoid "yet another mistake" in raising interest rates as the Fed considers what move to make-if any-tomorrow when it releases its decision on the Fed Funds rate
  • Chine President Xi Jinping gave a speech marking 40 years of economic reform in China and mentioned no new reforms or stimulus, disappointing investors
  • Oil has been trading lower all morning and WTI is quoted 5% down at USD$47.41  
  • The Euro Stoxx 600 closed down -0.82%, the FTSE 100 declined -1.06%, the DAX fell -0.29%, and the CAC 40 finished down -0.95%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.59x
  • Industrial Goods & Services (+0.25%), Retail (+0.14%), and Automobiles & Parts (-0.11%) stocks were the top performers in the Euro Stoxx 600 today
  • Oil & Gas (-2.47%), Utilities (-2.25%), and Telecommunications (-1.87%) stocks were the worst performers in the Euro Stoxx 600 today
  • 25 stocks in the Euro Stoxx 600 hit 4-week highs while 142 stocks closed at 4-week lows
  • 10 stocks in the Euro Stoxx 600 finished the trading session overbought while 62 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed +0.09 points today to 19.91 after closing at 19.82 yesterday
     

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Apple (AAPL) will introduce a technical fix to its Apple Pay app to satisfy Swiss regulators.  The technical fix will stop Apple Pay from interrupting payments with the Twint app.  With this action from Apple, Swiss authorities will suspend its investigation into Apple.  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.
  • A Brazilian Superior Labor court has revoked the regional labor court ruling allowing the Embraer (ERJ)/Boeing (BA) commercial aviation JV.  The judge said these negotiations are not within the purview of labor courts- the allegations were that the deal could cost Brazil jobs.  Embraer is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • CNOOC-China National Offshore Oil Corp (SEHK 883) CEO said China’s offshore exploration business will be more open to international players.  He went on to add that authorities may propose new, more favorable policies for international players.  He said new blocks will be added to the international cooperation area.  CNOOC is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • Flowserve (FLS) is being downgraded at Morgan Stanley from equal-weight to underweight. Morgan Stanley also lowered its price target for Flowserve from USD$51/share to USD$38/share. Flowserve is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Japan has agreed to spend an additional USD$10bn on Lockheed Martin (LMT) F-35 jet fighters, increasing its pre-existing order for 42 units to 147 units. The move will make Japan Lockheed Martin’s largest customer outside of the US. Lockheed Martin is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Funding Circle Holdings Plc (LSE: FCH) shares are falling after a lending fund that is liked to Funding Circle said increased personal insolvencies drove it to a loss last month. With this news, Funding Circle is the latest UK firm impacted by stress on British consumers from the run-up to Brexit. In November, Funding Circle’s SME Income Fund lost 1.4%, its worst monthly return since its inception in 2015. Funding Circle is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Getlink S.E. (ENXTPA: GET) shares are trading higher after disclosing that Eiffage (ENXTPA: FGR) purchased a 5% stake in the European tunnel operator. Goldman Sachs, who maintains a buy recommendation for Getlink, believes the new stake in Getlink could lead to a potential M&A opportunity. Getlink is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. Eiffage is rated “Attractive” in our European Large-Cap Global Top Stock Ideas. 
  • National Grid (LSE: NG) shares are falling after regulator Ofgem proposed gas and power rates than expected.  Ofgem chose pricing that will save consumers USD$8.2 billion.  Ofgem set the cost of equity return at 3% from 2021 on, a record low and half of previous levels.  Ofgem said in a statement “This will result in lower returns for investors and more savings for consumers” and National Grid shares fell in the wake of the statement.  National Grid is rated “Neutral” in our United Kingdom Global Top Stock Ideas.
  • Oracle (ORCL) reported 2Q adjusted revenue of USD$9.57 billion, beating consensus of USD$9.52 billion.  Oracle 2Q adjusted EPS of 80 cents came above 78 cents consensus.  2Q cloud revenue was USD$6.64 billion while service revenue was 817mn.  Oracle 2Q operating margin was 43%.  Oracle sees revenue growing 2-4% in the coming quarter and higher in the second half of 2019.  Oracle is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Phillip Morris Intl (PM) is being downgraded at Credit Suisse, who cut its recommendation for the tobacco manufacturing company from neutral to underperform. Additionally, Credit Suisse slashed its price target for Phillip Morris from USD$92/share to USD$74/share, implying a 9.1% decrease from Monday’s close. Phillip Morris is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Sprint (S) and T-Mobile (TMUS) received national security approval for their merger.  The Committee on Foreign Investment in the US has approved the USD$26 billion merger.  The companies still need approval from the US FCC and Department of Justice anti-trust division.  Sprint is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.  T-Mobile US is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Twitter (TWTR) said it is investigating unusual traffic that may be from state-sponsored hackers.  Twitter also said a security firm told it hackers may also have tried to use the platform to steal data.  Twitter said it has seen unusual activity from IP addresses in China and Saudi Arabia that could be hackers.  Twitter said it has informed law enforcement.  Twitter is rated “Attractive” in our US Large-cap Global Top stock Ideas and “Top Buy” in our US Information technology Global Top Stock Ideas.
  • XXL ASA (OB: XXL) shares are trading lower after releasing a trading note warning of slower-than-expected growth in FY4Q2018. In the trading note, XXL warned that Block Friday sales growth in FY2018 was slower than a year prior. Additionally, XXL reported that CEO Ulf Bjerknes decided to resign after just 11 months with the company. XXL ASA is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.  
     

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.136
  • GBP£ is currently up +0.174% against the USD$ to 1.2646
  • CHF is currently little changed against the USD$ at 1.0069

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -1.2 basis points to 0.244%
  • German 10-Year Bunds are higher with yields down -1.2 basis points to 0.244%
  • French 10-Year Government Bonds are higher with yields down -2.8 basis points to 0.71%
  • UK 10-Year GILTs are lower with yields up 1.4 basis points to 1.28%
  • Italian 10-Year Government Bonds are higher with yields down -2.2 basis points to 2.938%
  • Spanish 10-Year Government Bonds are higher with yields down -2.1 basis points to 1.378%

 

Euro Stoxx 50 Movers

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

Outperformers Sector Price 1D % Chg Volume
Deutsche Post AG Health Care 25.3 1.73%               4,980,457
Industria de Diseno Textil SA Materials 23.9 1.31%               5,119,748
Airbus SE Industrials 88.7 1.14%               1,654,569
LVMH Moet Hennessy Louis Vuitton SE Consumer Discretionary 252 0.76%                  954,683
Siemens AG Utilities 100 0.74%               2,343,225
 
Underperformers Sector Price 1D % Chg Volume
TOTAL SA Consumer Discretionary 46.8 -2.54%            10,947,403
Fresenius SE & Co KGaA Telecommunication Services 41 -2.38%               2,375,307
Unibail-Rodamco-Westfield Telecommunication Services 139 -2.22%                  792,810
Telefonica SA Financials 7.47 -2.03%          145,203,983
Nokia OYJ Financials 5.12 -1.92%            20,767,572