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European stocks rally to end the week on light volume, 40% below average

Dec 28, 2018

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

European Markets

  • European stocks rallied strongly with broad based buying fueling the biggest rally since April
  • European stocks are on track for their worst annual performance since 2008
  • The Euro Stoxx 600 closed up +2.02%, the FTSE 100 advanced +2.27%, the DAX rose +1.71%, and the CAC 40 finished up +1.74%
  • January 1st will mark the Euro's 20th anniversary, the currency was launched January 1, 1999 by 10 countries; today 19 of 28 EU countries use the Euro
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 17.18x
  • Construction & Materials (+2.62%), Insurance (+2.48%), and Technology (+2.4%) stocks were the top performers in the Euro Stoxx 600 today
  • Real Estate (+0.74%), Food & Beverage (+1.25%), and Automobiles & Parts (+1.27%) stocks were the worst performers in the Euro Stoxx 600 today
  • 8 stocks in the Euro Stoxx 600 hit 4-week highs while 314 stocks closed at 4-week lows
  • 3 stocks in the Euro Stoxx 600 finished the trading session overbought while 119 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down 1.82 points today to 23.86 after closing at 25.68 yesterday

Stocks Trending in the News

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  • Airbus (ENXTPA: AIR) is reportedly doing everything possible to hit its 800-plane delivery target by year’s end. To hit its target, Airbus will need to deliver at least 127 aircrafts to customers In December. Airbus Marketing chief Christian Scherer and his team are reportedly still on the road, meeting with customers and chasing new orders. Airbus is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Amazon (AMZN) is in talks with the New York Yankees about buying the regional sports network YES from Disney (DIS), according to the Wall Street Journal.  The Yankees already own 20% of YES and have first rights on buying the rest.  Disney is said to be seeking USD$5-6 billion for the network.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  Disney is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Canadian marijuana producer Aphria Inc. (TSX: APHA) said that a proposed CAD$2.8bn (USD$2.1bn) hostile offer by Green Growth Brands Ltd. is significantly undervalued. The proposed bid is roughly 23% below Aphria’s 20-day average share price. “The board has determined that the GGB proposal, as it currently stands, significantly undervalues the company,” said Aphria Chairman Irwin Simon. Aphria is not rated in our Global Top Stock Ideas.
  • Boeing (BA) has won an order for 11 737-Max jets from BOC Aviation Ltd. (SEHK: 2588), according to press reports out of Asia.  BOC Aviation Ltd. has signed a lease with unidentified airlines for the jets.  BOC Aviation Ltd. will have the option for an undisclosed number of additional jets from Boeing, according to the report.  BOC Aviation Ltd. is rated “Attractive” in our China 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.
  • Distribuidora Internacional de Alimentacion SA (BME: DIA) shares are trading higher after reporting that it closed an agreement to refinance its bank dept, which will allow the grocer to continue its turnaround plan. The deal includes a new liquidity line of 200mm euros (USD$228mm) and the sale of two units. DIA is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 
  • HMV Group (LSE: HMV) has filed for insolvency for the second time in 6 years after observing disappointing sales over the holiday period. The 97-year old music and entertainment retailer’s potential liquidation threatens 2,025 jobs. In January 2013, HMV entered insolvency procedures after the trend towards online streaming services dragged down sales. HMV is not rated in our Global Top Stock Ideas.
  • JPMorgan Chase & Co. (JPM) has been fined HK$12.5mm (USD$1.6mm) by the Hong Kong Monetary Authority for failing to meet anti-money laundering and counter-terrorist financing law requirements. JPMorgan Hong Kong reportedly violated 6 different provisions of the laws between April 2012 and February 2014 relating to lack of customer due diligence and improper handling of wire transfers. JPMorgan is rated "Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Nissan (TSE: 7201) said it will cut car production by 20% on less China demand.  Nissan will cut production by 30,000 units in the next quarter, according to press reports.  Nissan produced 400,000 cars in China in the last quarter.  Nissan in rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • Royal Dutch Shell (ENXTAM: RDSA) has officially completed the sale of its operations in New Zealand. The sale includes Royal Dutch Shell's Maui, Pohokura, and Tank Farm assets in addition to its interest in the Great South Basin venture. Royal Dutch Shell is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas and “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Sony (SNE, TSE: 6758) said it will boost production of chips for next-generation 3D cameras for mobile phones after interest from phone manufactures.  Sony said it will ramp up mass production of the chips this summer when they will already be powering a number of mobile phones.  Sony did not give production estimates but said the unit is already profitable.  Sony is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas.
  • On Friday Tesla (TSLA) will institute the changes it agreed to with the US Securities and Exchange Commission.  The SEC wants 2 new independent board members and they will start on Friday.  Additionally, it wants CEO Elon Musk’s tweets monitored much more closely for inappropriate content.  Telsa is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • The European Union (EU) has published draft guidelines for ethical artificial intelligence (AI) development that will impact tech giants like Alphabet Inc. (GOOGL) and Microsoft Inc. (MSFT). The EU plans to invest 1.5bn euro in AI by 2020 while working to ensure privacy and ethics in the process. Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. Microsoft is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Transocean (RIG) has signed a five-year drilling contract and rig design and construction management contract with Chevron USA (CVX). The deal will see the completion of two ultra-deepwater drillships that are already under construction. The drilling contract alone is worth an estimated USD$830mm. Transocean is not rated in our Global Top Stock Ideas. Chevron is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Verizon (VZ) customers suffered nationwide telecom service disruption after CenturyLink, a contractor that handles data network traffic management for Verizon, suffered a failure in its network.  Verizon did not say how many people were affected but data and mobile service was affected in various parts of the United States.  Verizon is rated “Attractive” in our US Large-Cap Global Top Stock Ideas

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.1445
  • GBP£ is currently up +0.482% against the USD$ to 1.2705
  • CHF is currently up +0.454% against the USD$ to 1.0169

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1.1 basis points to 0.242%
  • German 10-Year Bunds are lower with yields up 1.1 basis points to 0.242%
  • French 10-Year Government Bonds are lower with yields up 1.5 basis points to 0.71%
  • UK 10-Year GILTs are higher with yields down -4 basis points to 1.269%
  • Italian 10-Year Government Bonds are higher with yields down -0.6 basis points to 2.742%
  • Spanish 10-Year Government Bonds are lower with yields up 3 basis points to 1.416%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Nokia OYJ Financials 5.03 4.05%            20,917,886
CRH PLC Telecommunication Services 23 3.60%                  711,880
Linde PLC Real Estate 139 3.40%                  593,728
Kering SA Consumer Staples 398 3.11%                  188,940
ASML Holding NV Health Care 137 3.02%               1,125,834
 
Underperformers Sector Price 1D % Chg Volume
Enel SpA Industrials 5.04 -0.08%            31,782,705
Vivendi SA Consumer Discretionary 21 0.24%               2,919,190
Anheuser-Busch InBev SA/NV Energy 57.5 0.26%               2,110,034
Koninklijke Ahold Delhaize NV Consumer Discretionary 22.1 0.62%               2,700,285
Danone SA Financials 60.7 0.65%               1,736,288

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