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European stocks post meager gains today, French industrial production much weaker than expected

Jan 10, 2019

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

European Markets

  • European stocks posted meager gains depsite weak French data sparking concerns over an EU slowdown
  • French industrial prodction fell 2.1% y/y in December, coming much worse than 0.2% drop that was expected
  • The Euro Stoxx 600 closed up +0.34%, the FTSE 100 advanced +0.52%, the DAX rose +0.26%, and the CAC 40 finished down -0.16%
  • Janguar Land Rover (BSE:500570) said it will cut 4,500 jobs due to a Brexit-induced slowdown
  • UK Prime Minister Theresa May is considering a Plan B for Brexit as it appears Parilment will not pass her plan as presently designed, according to press reports 
  • Opposition Labor Party leader Jeremy Corbyn is calling for a general election to end the present impasse, he also said he will not rule out extending Article 5
  • WTI crude trades lower, though remains firmly agove $52 in midday trading
  • US Initial Jobless Claims for January 5th came slightly better at 216,000 versus 226,000 expected
  • The FOMC minutes released yesterday higlighted the Fed's desire to go slow with rate hikes in 2019, saying the Fed "could afford to be patient about further policy tightening" 
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.36x
  • Utilities (+1.23%), Insurance (+0.98%), and Banks (+0.87%) stocks were the top performers in the Euro Stoxx 600 today
  • Technology (-0.45%), Automobiles & Parts (-0.34%), and Retail (-0.32%) stocks were the worst performers in the Euro Stoxx 600 today
  • 260 stocks in the Euro Stoxx 600 hit 4-week highs while 10 stocks closed at 4-week lows
  • 9 stocks in the Euro Stoxx 600 finished the trading session overbought while 1 stock closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down -19 points today to 0 after closing at 19 yesterday

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Danske Bank (CPSE:DANSKE) employees were “openly lying” to French authorities when responding to questions about money laundering, this according to the co-founder of Hermitage Capital.  Co-founder Bill Browder says he had proof to back up his allegations, he had been one of the driving forces behind the investigation into money laundering at Danske.  He made a presentation to the Danish parliament today.  Danske Bank is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Ericsson (OM:ERIC B) announced it will take a USD$687 million charge for its digital services unit.  This digital services unit has resisted efforts at turnaround, threatening Ericsson’s overall strategy to boost profitability.  The rest of Ericsson has seen improvements in the wake of its turnaround plan be implemented.  Ericsson is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.
  • Fast Retailing (TSE:9983) reported fiscal 1Q operating income that missed consensus.  Fast Retailing fiscal 1Q operating income was 104.67 billion yen while 117.52 was consensus estimate.  Fiscal 1Q net sales of 644.47 trillion yen came below 656.76 billion yen expected.   Full year sales guidance of 2.3 trillion yen was maintained.  Fast Retailing is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.
  • Ford (F) announced a major restructuring of its European operations as it looks to raise its stock price.  Ford is in talk with its unions about jobs cuts that are likely to run into the thousands.  Ford is likely close multiple production plants in Europe as part of the plan, specifics have yet to be announced.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Kering (ENXTPA:KER) had its rating cut by USB to neutral from buy.  UBS lowered Kering’s price target to 450 euros from 575 euros.  UBS says the Gucci momentum that Kering has seen is topping out and led UBS to cut some of its 2019 assumptions, causing the rating cut.  UBS sees 11% organic growth in 2019.  Kering is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Macy’s (M) reports holiday season (November and December) SSSs of +0.7% and cuts its full-year guidance for sales and EPS.  Macy’s now sees FY EPS in a range of USD$3.95 to USD$4.30 from previous guidance of USD$4.10 to USD$4.30.  Macy’s is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Nike (NKE) is the focus of a EU tax investigation of companies that use Dutch law to lower their tax payments.  The EU alleges Nike and others have used the Netherlands to set up structure that “unduly reduce their tax burden”, and that is unfair.  The EU probe will focus on the structure of royalty payments and how they are taxed.  Nike is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Samsung (KOSE:A005930) is set to unveil its new flagship S10 cell phone lineup on February 20th, the Wall Street Journal is reporting.  Samsung will introduce a version of the phone that is foldable and fully functional.  There will be 4 versions of the S10 unveiled on the 10th anniversary of the phone.  Samsung is not rated in our Global Top Stock Ideas.  
  • Tesco (LSE:TSCO) reported strong Christmas sales, beating consensus estimates.  Tesco Christmas UK same store sales grew 2.2%, double the 1.1% consensus.  Christmas group sales grew 1.5%.  Tesco said it “remains ang on track to deliver plans for year”.  Tesco is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
     

What is Going on with European Currencies?

  • EUR€ is currently down -0.295% against the USD$ to 1.1509
  • GBP£ is currently down -0.219% against the USD$ to 1.2761
  • CHF is currently down -0.78% against the USD$ to 1.0182
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -2.2 basis points to 0.197%
  • German 10-Year Bunds are higher with yields down -2.4 basis points to 0.255%
  • French 10-Year Government Bonds are higher with yields down -4 basis points to 0.674%
  • UK 10-Year GILTs are lower with yields up 1.3 basis points to 1.274%
  • Italian 10-Year Government Bonds are lower with yields up 0.9 basis points to 2.888%
  • Spanish 10-Year Government Bonds are higher with yields down -4.1 basis points to 

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Fresenius SE & Co KGaA Telecommunication Services 44.22 2.01%                            1,758,998 
Banco Santander SA Health Care 4.28 1.81%            36,072,030
Telefonica SA Financials 7.66 1.78%            11,810,127
Engie SA Industrials 13.5 1.74%               7,369,770
Enel SpA Industrials 5.25 1.67%                              31.331.543
 
Underperformers Sector Price 1D % Chg Volume
Kering SA Consumer Staples 405 -3.50%                  331,161
Safran SA Industrials 106 -2.18%                  959,499
Amadeus IT Group SA Materials 61.5 -1.57%                  902,394
Industria de Diseno Textil SA Materials 23.5 -1.38%               2,476,402
Deutsche Post AG Health Care 25.1 -1.22%               2,722,769

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