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European stocks close lower, Euro Stoxx 50 enters bear market territory

Dec 27, 2018

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

European Markets

  • European stocks opened positive but soon turned negative and are trading lower in lighter volume, unable to sustain the momentum from US strength yesterday
  • The Euro Stoxx 50 has fallen 20.7% since its peak in November 2017; the market is at a level last seen in late 2016
  • European stocks are on pace for their worst year since 2008 with outflows of approximately USD$70 billion from European mutual funds
  • The Euro Stoxx 600 closed down -1.69%, the FTSE 100 declined -1.52%, the DAX fell -2.37%, and the CAC 40 finished down -0.6%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.18x
  • Technology (-0.58%), Retail (-0.75%), and Industrial Goods & Services (-1.03%) stocks were the top performers in the Euro Stoxx 600 today
  • Utilities (-3.18%), Automobiles & Parts (-3.04%), and Real Estate (-2.67%) stocks were the worst performers in the Euro Stoxx 600 today
  • 1 stock in the Euro Stoxx 600 hit 4-week highs while 90 stocks closed at 4-week lows
  • 3 stocks in the Euro Stoxx 600 finished the trading session overbought while 50 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is little rising this morning and is currently at 25.68 after closing at 20.39 Monday

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Apple Inc. (AAPL) will be the best performing FAANG stock in 2019, according to notable analyst Gene Munster. Munster believes that Apple will focus on revenue and earnings growth rather than iPhone sales in 2019 to deliver value to shareholders. With just a few days left in 2018, Apple is the second-worst performing company in the FAANG group. 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.
  • Banca Carige SpA (BIT: CRM) shares are plunging after its largest shareholder blocked a planned share sale to boost bank equity.  Malacalza Investimenti owns 27.5% of the bank and blocked the 400-million-euro sale of share at a December 22nd shareholders meeting.  It is not clear how Banca Carige will proceed.  Banca Carige is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • DBV Technologies S.A. (ENXTPA: DBV) shares are trading higher by double-digits after plunging 70% on December 20th following its withdrawal of a US regulatory application for its peanut allergy patch for children.  Today, Gilbert Dupont analyst Jamila El Bougrini said that, “This price decline represents an opportunity and entry point for investors.” Gilbert Dupont maintains a buy recommendation for DBV. DBV is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 
  • Deutsche Bank AG (DB: DBK) will issue a loan of 349mm euro for the country of Ukraine to inject into its budget. The loan is being issued to Ukraine in two tranches; tranche A is worth 52.2mm euro with a 4-year maturity while tranche B is worth 296.1mm euro with a 10-year maturity and a 4.5-year grace period. Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Earthstone Energy (ESTE) saw its price target cut yesterday at Imperial Capital.  Earthstone Energy’s price target was cut to USD$8 from USD$12.  The cut came in the wake of Earthstone’s decision to cancel its purchase of Sabalo Holdings.  Earthstone Energy is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas
  • NEC (TSE: 6701) has agreed to pay 8 billion Danish kroner (USD$1.2 billion) for KMD Holdings (NZSE: KMD).  NEC is making the acquisition to expand its services offerings in Europe.  KMD gives NEC entry into lucrative government services contracts.  NEC is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.  KMD Holdings is not rated in our Global Top Stock Ideas.
  • Sinopec (SEHK: 386) trading unit has suspended 2 executives after the unit incurred losses.  The Sinopec unit Unipec handles the trading of crude for the giant refining company and is very active in world markets.  The executives were said to be suspended for “work reasons” without any further information.  Many trading firms were poorly positioned during the recent crude weakness.  Sinopec is rated “Attractive” in our China All-Cap Global Top Stock Ideas. 
  • Sound Energy (AIM: SOU) shares are surging after reporting that wireline logs at eastern Morocco's TE-10 permit indicate that there is a presence of gas-bearing sands. Sound Energy is trading higher intraday by the most in 2 weeks on the news. Sound Energy is not rated in our Global Top Stock Ideas.
  • Tesla Inc. (TSLA) is, “poised to generate improved profitability and cash flow,” which, “puts the risk of a capital raise in the background for now,” wrote Wedbush analyst Daniel Ives in a note to clients. Wedbush forecasts a price target of USD$440/share for the electric car maker while maintaining an outperform rating. Ives added in his note to clients that Tesla, “has turned the corner on Model 3 production,” and, “demand looks very strong into 2019 and beyond based on underlying drivers for the electric vehicle market.” Tesla is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Vinci SA (ENXTPA: DG) has announced it will acquire London’s Gatwick Airport.  Vinci will pay USD$3.7 billion for 50.1%  of the airport as it was anxious to add to its portfolio.  Sovereign wealth funds from Abu Dhabi and Australia are selling.  Vinci is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas
  • Visa (V) has agreed to pay 61 pence per share for all of Earthport (LSE: EPO).  The deal values Earthport at 198 million pounds on a fully diluted basis.  Visa is paying a 250% premium for Earthport.  Visa is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  Earthport is not rated on our Global Top Stock Ideas.

What is Going on with European Currencies?

 

  • EUR€ is currently up +0.837% against the USD$ to 1.1448
  • GBP£ is currently up +0.15% against the USD$ to 1.2652
  • CHF is currently up +0.787% against the USD$ to 1.0122

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -1.9 basis points to 0.231%
  • German 10-Year Bunds are higher with yields down -1.9 basis points to 0.231%
  • French 10-Year Government Bonds are higher with yields down -0.2 basis points to 0.695%
  • UK 10-Year GILTs are lower with yields up 4.6 basis points to 1.309%
  • Italian 10-Year Government Bonds are higher with yields down -8.3 basis points to 2.748%
  • Spanish 10-Year Government Bonds are higher with yields down -1.5 basis points to 1.386%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
ASML Holding NV Health Care 133 1.33%               1,223,946
Amadeus IT Group SA Materials 60.2 0.94%                  907,609
LVMH Moet Hennessy Louis Vuitton SE Consumer Discretionary 247 0.82%                  639,884
Airbus SE Industrials 82.1 0.58%               1,611,466
Schneider Electric SE Industrials 58.2 0.41%               1,570,091
 
Underperformers Sector Price 1D % Chg Volume
Volkswagen AG Consumer Staples 137 -4.09%               1,608,052
Bayer AG Information Technology 59.2 -3.63%               3,809,877
Nokia OYJ Financials 4.83 -3.32%            19,205,277
Daimler AG Consumer Staples 45.3 -3.30%               5,133,587
Iberdrola SA Consumer Staples 6.82 -3.07%            78,341,105

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