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European stocks close higher today with trade optimism driving risk-on sentiment

Jan 08, 2019

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

European Markets

  • German industrial activity’s fall yesterday was the third month in a row activity has fallen, with analysts starting to raise the specter of recession
  • The EU and UK have discussed the possibility of extending the exit day deadline, according to a report in the Telegraph today
  • Brexit will be voted on in the UK Parliment on January 15th as PM Theresa continues to seek concessions from the EU
  • The Euro Stoxx 600 closed up +0.87%, the FTSE 100 advanced +0.74%, the DAX rose +0.52%, and the CAC 40 finished up +1.15%
  • US-China trade talks are extending into Wednesday with both sides signaling progress and President Trump tweeting "going great"
  • US Commerce Secretary Wilbur Ross said yesterday, “there’s a very good chance we’ll get a reasonable settlement”
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 3.72x
  • Retail (+2.06%), Industrial Goods & Services (+1.88%), and Real Estate (+1.65%) stocks were the top performers in the Euro Stoxx 600 today
  • Telecommunications (-1.21%), Oil & Gas (+0.11%), and Utilities (+0.45%) stocks were the worst performers in the Euro Stoxx 600 today
  • 152 stocks in the Euro Stoxx 600 hit 4-week highs while 5 stocks closed at 4-week lows
  • 4 stocks in the Euro Stoxx 600 finished the trading session overbought while 0 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down 0.67 points today to 19.28 after closing at 20.15 yesterday

Stocks Trending in the News

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  • Danaher Corp. (DHR) Chief Executive Officer Thomas Joyce, Jr. is set to comment on the company’s performance at the J.P. Morgan Healthcare Conference in San Francisco today. Ahead of the conference, Danaher sees its FY4Q core revenue growth above its prior forecasts with its adjusted EPS expected to be, “at or near the high-end,” of previously announced guidance. Danaher is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Duerr AG (DB: DUE) shares are trading lower after being downgraded to underperform from neutral at Bank of America Merrill Lynch. Bank of America Merrill Lynch cited slowing momentum in the company’s HOMAG unit as demand slows in China as a reason for the downgrade. Additionally, the company lacks an M&A catalyst and auto exposure. Duerr is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas. 
  • Geely Automotive (SEHK: 175) provided guidance that implies its challenges will continue.  Geely sees sales growth in 2019 of just 1% while many analysts are expecting double-digit sales growth.  Merrill Lynch cut its price target to HK$10 from HK$19.  Credit Suisse cut its target to HK$11 from HK$29.  Geely Automotive is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • General Dynamics (GD) had its shares downgraded at Jefferies to hold from buy.  Jefferies cut the price target of General Dynamics to USD$164 from USD$197.  General Dynamics won a USD$898 million cyber engineering contract for the US Navy, it also announced.  General Dynamics is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Maxar Technologies (MAXR) reported the failure of its Worldview-4 global imaging satellite.  It appears its gyroscopes have failed at making it remain stable on an axis.  Maxar was downgraded by Credit Suisse to underperform from neutral on the news.  Maxar Technologies is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
  • Nissan (TSE: 7201) CEO Hiroto Saikawa said on Monday that he wants to, “discuss whether there need to be some sorts of initiatives or changes,” as the company continues its partnership with Renault (ENXTPA: RNO). Saikawa also stressed that the alliance itself is, “not in danger.” Nissan is rated “Top Buy” in our Japan Large-Cap Global Top Stock Ideas. Renault is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Orange S.A. (ENXTPA: ORA) is being fined 14mm euros (USD$16mm) by Romania’s Competition Council for abuse of its dominant position. The Competition Council said that Orange restricted access to its network from 2011 through 2015 in order to deny local companies access to sending commercial text messages to Orange clients. Orange is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Samsung (KOSE: 005093) reported revenue and operating income for fiscal 4Q that missed estimates.  Samsung revenue came at 59 trillion won, below 63.6 trillion expected, a drop of 11%.  Operating income of 10.8 trillion won came below the 13.8 trillion consensus expectation.  Samsung is feeling the pinch of softer demand in its 2 key export markets of the US and China.  Samsung is not rated in our Global Top Stock Ideas.
  • Sika AG (SWX: SIKA) will acquire private equity-owned Parex Group for 2.5bn Swiss francs (USD$2.6bn). The acquisition will enable Sika to expand its building materials operations into construction markets from France to China. Sika AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Ubisoft Entertainment SA (ENXTPA: UBI) shares are trading notably higher after being upgraded to buy from hold at Kepler Cheuvreux. Additionally, Kepler Cheuvreux raised its price target for Ubisoft from 80 euros/share to 90 euros/share, implying a 27% upside from Monday’s closing price. Ubisoft is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Billions of Xiaomi Corp. (SEHK: 1810) shares will be free of their six-month lock lockup period on Wednesday, causing investors to question if it will exacerbate the stock’s drop from a listing price of HK$17/share to HK$11.10/share as of its last close. More than 3bn shares accounting for about 19% of shares outstanding will be unlocked Wednesday. JPMorgan Chase & Co. also cut its buy recommendation for Xiamoi today. Xiaomi is rated “Neutral” in our China All-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently down -0.279% against the USD$ to 1.1442
  • GBP£ is currently down -0.501% against the USD$ to 1.2713
  • CHF is currently down -0.157% against the USD$ to 1.0192
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 0.5 basis points to 0.226%
  • German 10-Year Bunds are lower with yields up 0.5 basis points to 0.226%
  • French 10-Year Government Bonds are lower with yields up 0.7 basis points to 0.732%
  • UK 10-Year GILTs are lower with yields up 2 basis points to 1.253%
  • Italian 10-Year Government Bonds are lower with yields up 5.5 basis points to 2.954%
  • Spanish 10-Year Government Bonds are lower with yields up 1.3 basis points to 1.513%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Airbus SE Industrials 86.7 3.70%               2,533,915
Kering SA Consumer Staples 411 3.56%                  337,604
Unibail-Rodamco-Westfield Telecommunication Services   141.66 3.16%                              836,444
LVMH Moet Hennessy Louis Vuitton SE Consumer Discretionary 259 3.13%                  742,574
Safran SA Industrials 106 2.90%                  817,869
 
Underperformers Sector Price 1D % Chg Volume
Orange SA Materials 13.8 -2.96%            13,284,369
Fresenius SE & Co KGaA Telecommunication Services 42.9 -2.44%               2,058,908
Deutsche Telekom AG Financials 14.9 -1.33%            16,750,939
Intesa Sanpaolo SpA Industrials 2.01 -1.16%          110,671,111
Munich Re Financials 186 -1.11%                  940,806

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