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European stocks close higher on Chinese stimulus news, ECB President post-market says EU economy weak

Jan 15, 2019

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

European Markets

  • European stocks close higher with the news of potential Chinese stimulus fueling risk-on sentiment
  • Chinese officials said that the Chinese government is considering tax cuts on a “large scale” to stimulate economic growth
  • European Central Bank President Mario Draghi said that Europe's economy is weaker than expected, saying to members of the European Parliament,  "Recent economic developments have been weaker than expected and uncertainties, notably related to global factors, remain prominent"
  • The Euro Stoxx 600 closed up +0.35%, the FTSE 100 advanced +0.58%, the DAX rose +0.33%, and the CAC 40 finished up +0.49%
  • Members of Parliament was expected to vote down UK Prime Minister Theresa May’s BREXIT plan later today (in the evening London time)
  • German GDP Growth expanded 1.5% in CY2018, the slowest pace in 5 years and compares to 2.2% growth in CY2017
  • NYMEX gasoline crack spreads, a measure of profitability for US refiners, is trading at lowest levels in 3 years with rising domestic stockpiles weigh downstream products prices
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.64x
  • Utilities (+0.74%), Banks (-0.19%), and Basic Resources (+0.32%) stocks were the top performers in the Euro Stoxx 600 today
  • Retail (-0.16%), Health Care (+1.04%), and Construction & Materials (+0.32%) stocks were the worst performers in the Euro Stoxx 600 today
  • 50 stocks in the Euro Stoxx 600 hit 4-week highs while 26 stocks closed at 4-week lows
  • 7 stocks in the Euro Stoxx 600 finished the trading session overbought while 2 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed down 0.97 points today to 16.93 after closing at 17.9 yesterday
     

Stocks Trending in the News

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  • Bayer (DB: BAYN) shares suffered after a French court ruled that its weed killer RoundUp causes cancer.  The ruling caused Bernstein to reiterate its buy on Bayer, saying the ruling will have minimal financial impact on results and any weakness should be used as an opportunity to buy.  Bayer is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Boohoo Group (LSE: BOO) increased full-year guidance after a strong holiday season.  Boohoo as previously said revenue would rise 38-43%, now it has upped that to 43-45% growth.  Boohoo’s social media strategy has paid off handsomely.  Boohoo is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Delta Airlines (DAL) reported 4Q EPS of USD$1.30, a touch above USD$1.28 expected.  For the coming quarter, Delta Airlines sees revenue growing 4-6% while expecting costs to grow below inflation.  Delta expects 1Q revenue of USD$10.4 billion, up 5% y/y.  For full-year 2019, Delta Airlines expects EPS of USD$6-7.  Delta Airlines is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Facebook (FB) said it is going to invest USD$300 million in local news over the next 3 years.  Facebook will offer grants to local newsrooms and invest in local news non-profits.  Facebook is making the efforts as local news programs continue to suffer.  Facebook is rated is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and is rated “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Glencore (LSE: GLEN) is being described as “Far, far too cheap” by Bernstein in a note.  Bernstein says the stock is trading at 4.8x EV/ebitda versus its historical average of 8.0x.  Bernstein reiterates it outperform rating at 500 pence price target.  Glencore is rated is rated “Neutral” in our European Large-Cap Global Top Stock Ideas and is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • JP Morgan (JPM) reported 4Q results that missed estimates, with fixed income trading revenue missing estimates significantly.  4Q EPS of USD$1.98 was well below USD$2.21 and came below the lowest estimate.  Fixed income trading revenue of USD$1.86 billion was well below USD$2.29 billion expected.  Equity sales and trading revenue of USD$1.32 billion was in-line.  JP Morgan reported USD$2 trillion in assets under management.  JP Morgan is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Marks & Spencer (LSE: MKS) has announced the next 17 store closures and the elimination of 1,045 jobs.  Marks & Spencer previously announced 100 stores will be closing, it has thus far announced 48 before today’s 17 closures.  The closures are part of a radical restructuring of Marks & Spencer’s retails operations.  Marks & Spencer is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Sage Group (LSE: SGE) said it will post a profit of 23 million pounds on the sale of iSolved HCM, its payroll outsourcing operations.  Upon the sale closing Sage will receive 73 million pounds in cash with 5 million pounds additional as a contingency payment.  Sage is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Bytedance is launching a new chat service in China to take on Tencent’s (TCEHY, SEHK: 700) WeChat.  The new service was launched today in a live-streamed event in Beijing and is called “Duoshan”.  Bytedance wants to grab some of the 1 billion users that WeChat presently has.  Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas.
  • United Healthcare (UNH) reported fourth quarter results that beat estimates.  Adjusted earnings came at USD$3.28, beating the USD$3.21 average consensus.  United Healthcare saw it medical care ratio decline 50 basis points to 81.6%.  United Healthcare maintained 2019 revenue guidance of USD$243-245 billion.  United Healthcare is rated is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently down -0.706% against the USD$ to 1.1388
  • GBP£ is currently down -1.018% against the USD$ to 1.2733
  • CHF is currently down -0.824% against the USD$ to 1.011
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 2.8 basis points to 0.206%
  • German 10-Year Bunds are higher with yields down -2.5 basis points to 0.206%
  • French 10-Year Government Bonds are higher with yields down -1.6 basis points to 0.624%
  • UK 10-Year GILTs are higher with yields down -3.9 basis points to 1.258%
  • Italian 10-Year Government Bonds are lower with yields up 3.1 basis points to 2.874%
  • Spanish 10-Year Government Bonds are higher with yields down -2.9 basis points to 1.39%
     

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Amadeus IT Group SA Materials 61.8 3.50%               1,097,264
Airbus SE Industrials 92.3 2.67%               1,870,631
Safran SA Industrials 108 2.08%                  803,410
Koninklijke Philips NV Financials 30.8 1.89%               1,817,266
Engie SA Industrials 13.6 1.83%               6,608,207
 
Underperformers Sector Price 1D % Chg Volume
Deutsche Post AG Health Care 24.4 -1.97%               8,984,688
Fresenius SE & Co KGaA Telecommunication Services 42.8 -1.38%               1,420,746
Intesa Sanpaolo SpA Industrials 1.96 -1.25%          137,344,144
Unibail-Rodamco-Westfield Telecommunication Services 142 -1.03%                  461,103
Orange SA Materials 13.5 -0.70%               8,191,989

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