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European stocks close flat after a see-saw day of trading

Jan 11, 2019

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

European Markets

  • European stocks closed flat after a see-saw day that saw stocks higher in the morning, lower in the afternoon, closing flat
  • Germany and France are trying to kick-start negotiations for a 0.2% transaction tax in the EU on all stock trades; talks have been on and off for 7 years
  • The Euro Stoxx 600 closed up +0.09%, the FTSE 100 declined -0.36%, the DAX fell -0.31%, and the CAC 40 finished down -0.51%
  • UK Prime Minister Theresa May denied media reports that there will be a delay in Brexit, with her representative saying "It's government policy that this is not something we are going to do"
  • President Trump has cut off negotiations with Democrats on funding for a border wall, saying he would “likely” invoke a national emergency to break the impasse and get the funding he wants
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.86x
  • Real Estate (+1.44%), Personal & Household Goods (+1.08%), and Food & Beverage (+0.92%) stocks were the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-0.99%), Oil & Gas (-0.73%), and Industrial Goods & Services (-0.36%) stocks were the worst performers in the Euro Stoxx 600 today
  • 128 stocks in the Euro Stoxx 600 hit 4-week highs while 14 stocks closed at 4-week lows
  • 10 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 1.26 points today to 17.41 after closing at 18.69 yesterday

Stocks Trending in the News

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  • Activision Blizzard (ATVI) is cutting ties to Bungie Inc, the developer of one of its most successful titles “Destiny”.  The Wall Street Journal is reporting that Activision Blizzard was not happy with the most recent version of the game and had decided to end a collaboration that began in 2008.  Neither company would comment on the story.  Activision Blizzard is rated  “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Alibaba (BABA) backed Megvii is considering an IPO that would value the company at up to USD$1 billion.  Megvii is the owner of Face++, the AI-powered facial recognition software.  Megvii hopes to raise USD$500 million, according to press reports.  Alibaba is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
  • Amazon’s (AMZN) IMDb will launch a free video streaming service that is ad supported.  This will be Amazon’s first ad supported video service and it will be called IMDb Freedive.  Amazon is looking to grab more of the USD$210 billion digital ad market with this service, a market where it had already risen to #3.  Amazon is hiring new ad sellers as it seeks to grow its advertising business.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Anheuser-Busch Inbev (ENXTBR: ABI) is considering an IPO of its Asian unit, according to a report from Bloomberg.  Anheuser-Busch Inbev is talking to advisers about the potential deal that could raise up to USD$5 billion.  Anheuser-Busch Inbev has been looking for ways to unlock value for shareholders and this could be an obvious choice.  Anheuser-Busch Inbev would look to value to business at USD$70 billion, according to the report.  Anheuser-Busch Inbev is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Archer Daniels Midland (ADM) is acquiring Florida Chemical Company for USD$175 million from Flotek Industries (FTK).  Florida Chemical Company is a leading provider of citrus oils and fragrances and ADM is adding this acquisition to its stable of natural flavor solutions.  ADM commented that citrus is one of the fastest growing flavor categories.  ADM is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas.  Flotek is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
  • Geely Automotive (SEHK:175) denied a report that it had sold part of its stake in Daimler (XTRA:DAI).  Bloomberg had earlier reported that Geely Automotive was selling half of its 9.7% stake in Daimler.  Geely vehemently denied this, and in a statement on its website it said that it is a long-term investor in Daimler, that its stake has not changed and that it has no plans to change it.  Daimler is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Geely Automotive is rated “Neutral” in our China All-Cap Global Top Stock Ideas
  • General Motors (GM) surprised investors and provided guidance that was generally upbeat and ahead of expectations.  General Motors expects diluted-adjusted EPS of USD$6.50-7.00., with adjusted automotive free cash flow of between USD$4.5-6.0 billion.  The expectation was for a downbeat guidance report, but General Motors sees demand holding up.  General Motors is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • JP Morgan (JPM) is increasing its bonus pool for corporate and investments bankers.  JP Morgan will increase bonuses for equity traders the most as that unit has had the best year.  In the first 9 months of the year JP Morgan’s stock traders generated USD$5.57 billion of revenue, a 22% hike y/y.  JP Morgan is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • PVH Corp (PVH) gave guidance that is above consensus estimates.  PVH expects 4Q EPS to be at least USD$1.75 while present consensus is USD$1.61.  PVH expects 4Q revenue of USD$2.4 billion, matching consensus estimates.  PVH is working on efforts to streamline its Calvin Klein operations.  PVH is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Richemont (SWX:CFR) reported fiscal 3Q organic sales growth of 5%, a slowdown from 8%.  The main driver of growth was high-margin Jewelry Maisons business.  Growth was maintained in the Americas and Japan, while slowing in Asia Pacific and declined in Europe.  Vontobel sees growth strengthening in the coming quarter and reiterates its buy.  Richemont is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Sharp Corp (TSE: 6753) had its price target cut to 1200 yen from 1400 yen by Morgan Stanley, sending the stock on a 10%+ rally.  Morgan Stanley raised the rating of Sharp Corp to equal weight from underweight.  Morgan Stanley believes its challenges will continue and that Sharp will struggle to hit its own targets.  Sharp is not rated is rated in our Global Top Stock Ideas. 
  • Starbucks (SBUX) was downgraded by Goldman Sachs to neutral from buy.  In its Starbucks downgrade, Goldman Sachs cited weaker China growth as a key reason for the downgrade.  Starbucks’ price target was cut to USD$68 from USD$75.  Starbucks recently lowered its long-term earnings growth to ~10% from 12%.  Starbucks is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Volkswagen (XTRA:VOW3) warned investors that 2019 will be a challenging year given uncertain economic condition.  Volkswagen’s CEO said, “The headwinds for our business won’t ease given the geopolitical volatile developments”, joining other carmakers in highlighting what a tough year 2019 may be.  Volkswagen is rated “Neutral” in our Europe Large-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently down -0.174% against the USD$ to 1.148
  • GBP£ is currently up +0.894% against the USD$ to 1.2861
  • CHF is currently up +0.177% against the USD$ to 1.0176

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -1.4 basis points to 0.183%
  • German 10-Year Bunds are higher with yields down -1.6 basis points to 0.239%
  • French 10-Year Government Bonds are higher with yields down -1 basis points to 0.664%
  • UK 10-Year GILTs are lower with yields up 1.6 basis points to 1.29%
  • Italian 10-Year Government Bonds are higher with yields down -3.4 basis points to 2.854%
  • Spanish 10-Year Government Bonds are higher with yields down -0.6 basis points to 1.445%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Anheuser-Busch InBev SA/NV Energy 63.5 3.71%               4,526,127
Orange SA Materials 13.8 1.47%               8,246,462
Unilever NV Information Technology 46.9 1.10%               3,711,617
Banco Bilbao Vizcaya Argentaria SA Information Technology 5.04 1.04%            24,160,526
adidas AG Financials 197 0.77%                  509,076
 
Underperformers Sector Price 1D % Chg Volume
Fresenius SE & Co KGaA Telecommunication Services 43 -2.71%               2,038,892
Volkswagen AG Consumer Staples 142 -1.89%               1,507,978
TOTAL SA Consumer Discretionary 46.8 -1.71%               6,319,470
Schneider Electric SE Industrials 58.9 -1.70%               1,454,725
Airbus SE Industrials 88.4 -1.37%               1,184,652

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