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Global growth worries drag European stocks lower, close at low of session

Jan 03, 2019

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

European Markets

  • European stocks closed lower, weighed down by fears of slower global growth and the still unresolved Brexit
  • The EU made clear again today that Brexit will not be renegotiated and there will be no further EU-UK meetings to discuss Brexit
  • The Euro Stoxx 600 closed down -0.98%, the FTSE 100 declined -0.62%, the DAX fell -1.55%, and the CAC 40 finished down -1.66%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.42x
  • Telecommunications (+0.8%), Food & Beverage (+0.19%), and Utilities (+0.12%) stocks were the top performers in the Euro Stoxx 600 today
  • Technology (-4.19%), Basic Resources (-2.58%), and Industrial Goods & Services (-2.39%) stocks were the worst performers in the Euro Stoxx 600 today
  • 18 stocks in the Euro Stoxx 600 hit 4-week highs while 102 stocks closed at 4-week lows
  • 2 stocks in the Euro Stoxx 600 finished the trading session overbought while 26 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down -23.39 points today to 0 after closing at 23.39 yesterday
     

Stocks Trending in the News

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  • AMS AG (SWX: AMS) shares are tanking after Apple (AAPL) cut its revenue guidance for the first time in two decades. Neil Campling, an analyst at Mirabaud, warned, “expect a ton of Apple supplier warnings in coming days.” AMS AG is rated “Top Short” in our European Large-Cap Global Top Stock Ideas. 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. 
  • Apple (AAPL) cut its revenue forecast for fiscal 1Q19, its first guidance cut in close to 20 years.  Apple said unexpected weakness in China demand caused it to cut guidance, with USD$84 billion now expected, down from USD$89-93 billion originally expected.   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.
  • Bristol-Myers Squibb (BMY) will acquire Celgene (CELG) in a deal the values the biopharmaceutical company at USD$74bn. Celgene shareholders will receive USD$50 and one Bristol-Myers share for each Celgene share owned. Bristol-Myers is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Celgene is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • DNO ASA (OB: DNO) has extended a hostile bid to Faroe Petroleum Plc (AIM: FPM) after unsuccessfully convincing shareholders to sell their stock. Of late, DNO has criticized Faroe management in an attempt to convince shareholders they are better off selling. Faroe shareholders recently voted down a USD$713mm acquisition offer by DNO -- the offer only received 43% of votes despite DNO owning 30% of Faroe. DNO is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas. Faroe is not rated in our Global Top Stock Ideas.
  • Elbit Systems of America (TASE: ESLT) has been awarded a contract by Raytheon (RTN) to develop the Two Color Laser System (TCLS) for the Multi-Spectral Targeting System. The contract concerns development in 2019. Additionally, Elbit said that its IMI Systems unit will no longer continue its cluster munitions activities. Elbit is not rated in our Global Top Stock Ideas. Raytheon is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Equity Bancshares (EQBK) saw its shares downgraded to market perform from outperform at Keefe, Brunette & Woods.  Equity Bancshares had its price target lowered to USD$45 from USD$47.  Equity Bancshares shares are fully valued at this level, which was cited as the main reason for the rating cut.  Equity Bancshares Apple is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Geely Automotive (SEHK: 175) was downgraded to underweight from equal weight at Morgan Stanley.  Geely Automotive had its price target slashed to USD$8 from USD$15.  Geely’s price target implies 38% downside from its last close.  Geely Automotive is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Johnson & Johnson (JNJ) saw its sales in India fall 3% in 2018.  Total sales in India were USD$829mm, according to a regulatory filing from Johnson & Johnson.  Johnson & Johnson’s sales fell after the Indian government decided to cap price for medical devices.  Johnson & Johnson is rated “Attractive” in our US Large-Cap Global Top Stock Ideas
  • Lumber Liquidators (LL) had its price target cut by Loop Capital, it was slashed to USD$10 from USD$24.  Lumber Liquidators rating was cut to hold from buy.  Loop Capital expects lower sales and margins for Lumber Liquidators in 2019, the main reason for the downgrade.  Lumber Liquidators is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas.
  • Next Plc (LSE: NXT) reported sales growth during the holiday season.  Next reported a 1% rise in sales in the properties it manages, surprising most investors.  Analysts called the holiday sales data “excellent”.  Next is rated “Top Buy” in our United Kingdom Global Top Stock Ideas.
  • UBS Group AG (SWX: UBSG) Chairman Axel Weber said that European banks need to get bigger in order to compete with US banks. “What Europe needs in order to catch up with American firms is European champions, banks that are larger in size.” Weber went on to call for consolidation among European banks. UBS Group is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Zalando SE (XTRA: ZAL) shares are trading notably higher after Marcel Muench, founder of German-Chinese trading start-up DONGXii, said in an interview that the company could be an acquisition target of Alibaba Group Holding Limited (BABA). Muench said, “I assume that Alibaba will soon invest in companies in Europe. Zalando is a takeover candidate.” Zalando is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. Alibaba is rated “Unattractive” in our China All-Cap Global Top Stock Ideas. 
     

What is Going on with European Currencies?

  • EUR€ is currently up +0.502% against the USD$ to 1.1401
  • GBP£ is currently up +0.206% against the USD$ to 1.2633
  • CHF is currently little changed against the USD$ at 1.0112
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -1.2 basis points to 0.153%
  • German 10-Year Bunds are higher with yields down -1.2 basis points to 0.153%
  • French 10-Year Government Bonds are lower with yields up 0.3 basis points to 0.654%
  • UK 10-Year GILTs are higher with yields down -1.5 basis points to 1.194%
  • Italian 10-Year Government Bonds are lower with yields up 16.8 basis points to 2.86%
  • Spanish 10-Year Government Bonds are lower with yields up 2.8 basis points to 1.429%
     

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Telefonica SA Financials 7.53 1.66%            18,962,093
Anheuser-Busch InBev SA/NV Energy 58.2 1.22%               1,929,456
Banco Santander SA Health Care 4.01 0.80%            31,742,740
Deutsche Telekom AG Financials 14.9 0.74%            10,370,848
Orange SA Materials 14.2 0.60%               5,917,789
 
Underperformers Sector Price 1D % Chg Volume
Amadeus IT Group SA Materials 58.1 -5.50%               5,283,130
Kering SA Consumer Staples 381 -5.49%                  395,191
Koninklijke Philips NV Financials 29.1 -4.82%               3,816,249
Fresenius SE & Co KGaA Telecommunication Services 41.2 -4.59%               1,670,347
ASML Holding NV Health Care 132 -4.16%               1,767,143

Global Top Stock Ideas
TOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETS
MONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS