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European stocks close flat today, capping a week of volatile trading

Dec 21, 2018

 

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

European Markets

  • European stocks traded flat through the session today, the Euro Stoxx 50 has fallen over 19% since its high in 2017 and is very close to entering bear market territory
  • EU consumer confidence fell to itst lowert level since early 2017, coming at -6 while consensus was for -4.3
  • The Euro Stoxx 600 closed up +0.03%, the FTSE 100 advanced +0.14%, the DAX rose +0.21%, and the CAC 40 finished up +0.04%
  • The European Central Bank said the economy is solid, commenting "the recent slowdown in growth has not, in fact, called into question the fundamentals of the current economic expansion"
  • Volume on European markets is well above average today, with volume, overall, ~55% above average
  • Chinese monetary authorities confirmed today that more fiscal and monetary stimulus will be coming in 2019; China will use the same limited, targeted stimulus as was done in 2018 
  • President Trump is not budging in the budget showdown, saying he will not sign any funding bill that does not include funding for a border wall; a spending bill must be signed by midnight today to avoid a US government shutdown
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.9x
  • Basic Resources (+1.19%), Chemicals (+0.66%), and Construction & Materials (+0.5%) stocks were the top performers in the Euro Stoxx 600 today
  • Telecommunications (-0.77%), Technology (-0.64%), and Media (-0.4%) stocks were the worst performers in the Euro Stoxx 600 today
  • 9 stocks in the Euro Stoxx 600 hit 4-week highs while 248 stocks closed at 4-week lows
  • 5 stocks in the Euro Stoxx 600 finished the trading session overbought while 94 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down 0.34 points today to 20.39 after closing at 20.73 yesterday
     

Stocks Trending in the News

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  • Agenus (AGEN) and Gilead (GILD) announced they will form a partnership to work on immune-oncology therapies.  Agenus and Gilead said they will work together on up to 5 novel therapies, focused on the development and commercialization of them.  Agenus will receive USD$150mn when the deal closes and there is the potential for up to USD$1.7 billion in future fees.  Agenus is rated “Top Short” in our US SMID-Cap Global Top Stock Ideas.  Gilead is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Boeing (BA) won an order from Saudi Arabian Airlines’ low-cost carrier Flyadeal.  Flyadeal will acquire 50 narrow-body jets with a value of up to USD$5.9 billion.  Flyadeal will acquire 30 737 MAX with options to acquire 20 more.  Boeing is rated “Attractive” in our US Large-cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Bombardier Transportation (TSX: BBD.B) has entered into a contract for rolling stock with an undisclosed customer in Europe. The global mobility solutions provider announced today that the total order is valued at 437mm euros (USD$500mm). Bombardier is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.  
  • Danske Bank (CPSE: DANSKE) cut its 2018 earnings forecast, blaming the cut on the recent market slump.  Danske sees 2018 profit coming at 15 billion kroner (USD$2.3 billion), down from 16-17 billion kroner.  Danske said its revised guidance “remains subject to uncertainty).  Danske Bank is rated “Top Short” in our Global Top Stock Ideas.
  • Freeport-McMoRan (FCX) completed a deal with Indonesia giving the Indonesian government’s aluminum company majority ownership of the giant Grasberg copper and gold mine.  Indonesia will own 51.2% of the mine will Freeport’s local unit will hold the balance.  Freeport-McMoRan is rated “Attractive” in our US Large-cap Global Top Stock Ideas.
  • General Electric (GE) is being upgraded Vertical Research analyst Jeffrey Sprague, who has been ranked as the top analyst in the Institutional Investor poll on several occasions. Sprague upgraded General Electric to a buy rating while raising his price target from USD$10/share to USD$11/share. This is the first time Sprague has issued a buy rating for General Electric since April 2008. General Electric is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • The US Federal Trading Commission is seeking public comment on applications submitted by Linde AG (DB: LNA) and Praxair Inc. to divest certain facilities to enable their prospective USD$80bn merger. The public comment period will extend through January 21st. If approved, the merger would create the world’s largest industrial gas supplier. Linde AG is rated “Attractive” European SMID-Cap Global Top Stock Ideas.  
  • Nike (NKE) reported fiscal 2Q earnings that handily beat expectations.  Nike 2Q EPS came at 52 cents while average consensus was for 46 cents.  Nike 2Q revenue came at USD$9.37 billion while consensus was USD$9.17 billion.  Revenue is China came at USD$1.54 billion, while consensus was for USD$1.43 billion.    Nike is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Qualcomm (QCOM) has won an injunction against Apple’s (AAPL) sales of older iPhones in Germany, very similar to that it was awarded in China.  Qualcomm’s press release says the German court granted the injunction because Apple is infringing on its intellectual property for power savings in smartphones.  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.
  • SPIE SA (ENXTPA: SPIE) shares are trading higher after announcing the sale of its underwater cable operations to Royal Boskalis Westminster N.V. (ENXTAM: BOKA). Although the financial terms of the sale were not disclosed, the sale’s completion is expected to occur in 1Q2019. The sale of the remainder of the firm’s Gas & Offshore division is reportedly also underway. SPIE SA is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. Royal Boskalis Westminster is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.
  • Takeaway.com NV (ENXTAM: TKWY) shares are soaring after agreeing to acquire Delivery Hero SE’s (DB: DHER) German businesses for 930mm euro (USD$1bn). The acquisition ends an expensive rivalry that saw both companies compete for market share at the cost of profitability. Takeaway.com is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. Delivery Hero SE is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas. 
  • Technicolor (ENXTPA: TCH) shares are falling by double-digits after the company snuffed out any M&A hopes, saying that they have, “not engaged in any strategic discussions, including any related to the Connected Home business.” Technicolor announced this in an update concerning its 2018 adjusted EBITDA. Technicolor is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Tencent Holdings (TCEHY, SEHK: 700) shares rose on the news that China has restarted the new video game approval process.  Sina reports that China is working to issue licenses for those games that have already been approved, without saying which games those are.  Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • Zynga Inc. (ZNGA) will pay USD$560mm for an 80% stake in mobile games maker Sall Giant Games. Zynga will fund the purchase through USD$300mm of cash and USD$230mm of new common stock. Small Giant Games launched mobile game Empires & Puzzles 18-months ago and it has been the third-highest grossing game in the Google Play Store since. Zynga is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Information Technology Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently down -0.655% against the USD$ to 1.1371
  • GBP£ is currently down -0.213% against the USD$ to 1.2629
  • CHF is currently down -0.534% against the USD$ to 1.0067

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 2.2 basis points to 0.25%
  • German 10-Year Bunds are lower with yields up 2.2 basis points to 0.25%
  • French 10-Year Government Bonds are lower with yields up 2 basis points to 0.697%
  • UK 10-Year GILTs are lower with yields up 5.5 basis points to 1.321%
  • Italian 10-Year Government Bonds are lower with yields up 9.3 basis points to 2.831%
  • Spanish 10-Year Government Bonds are lower with yields up 2.7 basis points to 1.401%
     

 

Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
CRH PLC Telecommunication Services 22.4 2.47%               2,981,083
Deutsche Post AG Health Care 24.1 1.69%               9,461,907
BASF SE Utilities 60.7 1.62%               8,841,494
ING Groep NV Consumer Discretionary 9.49 1.42%            46,950,825
Amadeus IT Group SA Materials 59.8 1.36%               2,356,972
 
Underperformers Sector Price 1D % Chg Volume
Schneider Electric SE Industrials 58.1 -1.76%               4,451,047
Intesa Sanpaolo SpA Industrials 1.91 -1.69%          228,601,040
SAP SE Industrials 86.4 -1.54%               6,980,413
Safran SA Industrials 103 -1.39%               1,926,257
ASML Holding NV Health Care 133 -1.34%               3,465,516