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European stocks rise, UK stocks fall; no-confidence vote looms for PM Theresa May as EU discusses Brexit deadline extension

Jan 16, 2019

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

European Markets

  • European stocks rose modestly today with investor confidence rising late session after strong US earnings releases and a positive open to US stocks
  • EU is discussing an extension of the Brexit deadline past July, potenitally for many months, according to a report from Bloomberg today
  • The Euro Stoxx 600 closed up +0.54%, the FTSE 100 declined -0.47%, the DAX rose +0.36%, and the CAC 40 finished up +0.51%
  • UK stocks dropped today after UK Prime Minister Theresa May’s BREXIT plan was voted down in the UK Parliament 
  • European Central Bank regulators are said to prefer to see Deutsche Bank (DB: DBK) merge with a European bank outside of Germany as opposed to Commerzbank (DB:CMK)the Germany government would prefer a domestic merger
  • The Tories will be holding a no-confidence vote in UK Prime Minister Theresa May’s government later today 
  • According to Bank of America, institutional investors are the most underweight Eurozone stocks since 2012 -- according to the analysis, allocations to Eurozone strocks has been dropping since C4Q2017
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 2.28x
  • Banks (+2.51%), Insurance (+1.38%), and Financial Services (+1.07%) stocks were the top performers in the Euro Stoxx 600 today
  • Food & Beverage (-0.93%), Personal & Household Goods (-0.54%), and Oil & Gas (-0.15%) stocks were the worst performers in the Euro Stoxx 600 today
  • 156 stocks in the Euro Stoxx 600 hit 4-week highs while 26 stocks closed at 4-week lows
  • 8 stocks in the Euro Stoxx 600 finished the trading session overbought while 3 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down 1.21 points today to 15.72 after closing at 16.93 yesterday
     

Stocks Trending in the News

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  • Anheuser-Busch InBev SA (ENXTBR: ABI) shares were downgraded to underperform from hold at Jefferies. Anheuser-Busch maintains 26 buy recommendations, 7 hold recommendations, and 2 sell recommendations across industry forecasts. Additionally, analysts have lowered the consensus price target for Anheuser-Busch by 15% over the last 3 months. Anheuser-Busch is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.  
  • Bank of America (BAC) reported CY4Q2018 earnings that broadly beat analysts’ consensus estimates led by the bank’s retail business. Bank of America generated EPS of USD$0.70/share in CY4Q2018 while analysts expected USD$0.63/share. Bank of America also increased its efficiency ratio from 58% a year ago to 65% in CY4Q2018. Bank of America is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • BlackRock (BLK) reported 4Q18 EPS of USD$6.08 versus USD$6.28 consensus.  4Q18 revenue of USD$3.43 billion came in-line with consensus.  BlackRock increased quarterly dividend 5% to USD$3.30.  BlackRock is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Bovis Homes (LSE: BVS) shares are trading higher after the company reported that it sees FY2018 profit ahead of analyst expectations. Additionally, Canaccord Genuity analyst Aynsley Lammin, who maintains a buy recommendation for Bovis Homes, said that the company’s valuation looks attractive against its peers. Bovis Homes is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Deutsche Bank AG (DB: DBK) Chief Executive Officer Christian Sewing detailed on Tuesday that the bank launched a further internal investigation into its role as a correspondent bank for Danske Bank’s (CPSE: DANSKE) Estonian unit. At an event in Berlin on Tuesday, Sewing said that Deutsche Bank probed its role in Danske Bank’s tax evasion scheme, “long before the cases became public.” Deutsche Bank is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Danske Bank is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • DSV A/S (CPSE:DSV), the Danish freight concern, is bidding USD$4 billion for Panalpina Welttransport Holding (SWX:PWTN), its Swiss rival.  DSV is looking to create a shipping concern that would be #4 in global logistics.  This is DSV’s second bid for a sector player in the last 6 months.  DSV is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.  Panalpina Welttransport Holdings is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
  • Fiserv (FISV) reports preliminary financials for CY4Q2018 while announcing the all-stock acquisition of First Data Corporation (FDC). The acquisition by Fiserv values First Data at an about USD$22bn. Additionally, Fiserv reported that it expects CY4Q2018 EPS between USD$0.84/share and USD$0.85/share while analysts’ consensus calls for USD$0.87/share. Fiserv is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas. First Data is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Ford (F) reported a preliminary 2018 profit of USD$1.30, a touch below USD$1.32 consensus.  CFO Bob Shanks said he expects 2019 to see an improvement in ebitda, though that cannot be guaranteed.  Ford is entering 2019 with plans to abandon the sedan market, focusing mostly on SUVs.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Goldman Sachs (GS) reports CY4Q2018 financials that largely please investors and analysts. Goldman Sachs generated an EPS of USD$6.04/share in CY4Q2018 while analysts’ consensus called for USD$5.30/share. Goldman Sachs’ revenue fell 0.5% y/y to USD$8.08bn although it still beat analysts’ consensus by USD$580mm. Goldman Sachs is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • McDonald’s (MCD) lost a case in the EU that cost it its right to the trademark for the term “Big Mac”.   The EU Intellectual Property Office ruled McDonald’s does not have the right to the name, instead granting that right to Ireland’s Supermac chain.  McDonald’s is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Norsk Hydro (OB: NHY) shares are reacting positively after regulators said it can reopen its Alunorte mine.  Brazilian environmental regulators said Norsk Hydro can resume production at the mine, removing the embargo that was in place.  Norsk Hydro is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Reckitt Benckiser Group’s (LSE: RB) Chief Executive Officer, Rakesh Kapoor, is planning to step down after 8 years in the position. Kapoor’s stint as CEO was plagued by setbacks, including a cyberattack, manufacturing glitches, and investor criticisms over his substantial compensation package. Reckitt is rated “Top Buy” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Snap Inc. (SNAP) shares are falling after an SEC filing revealed the resignation of Chief Financial Officer Tim Stone. The Snap SEC filing details that the CFO’s resignation is not related to, “any disagreement with us on any matter relating to our accounting, strategy, management, operations, policies, regulatory matters, or practices (financial or otherwise).” Snap is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • United Continental (UAL) reported 4Q18 EPS of USD$2.41, well above consensus of USD$2.04.  4Q18 revenue grew 11% to USD$10.49 billion, also ahead of USD$10.377 billion.  4Q18 PRASM grew by 5%.  United Continental expects 1Q19 capacity to grow 5-6%.  United Continental is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.1405
  • GBP£ is currently little changed against the USD$ at 1.2854
  • CHF is currently down -0.237% against the USD$ to 1.0099
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1.8 basis points to 0.224%
  • German 10-Year Bunds are lower with yields up 1.8 basis points to 0.224%
  • French 10-Year Government Bonds are lower with yields up 1.2 basis points to 0.636%
  • UK 10-Year GILTs are lower with yields up 5.3 basis points to 1.311%
  • Italian 10-Year Government Bonds are higher with yields down -11.9 basis points to 2.755%
  • Spanish 10-Year Government Bonds are higher with yields down -1.5 basis points to 1.375%
     

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Societe Generale SA Energy 30.2 4.15%               5,975,443
Intesa Sanpaolo SpA Industrials 2.03 3.73%          131,053,327
ING Groep NV Consumer Discretionary 10.3 3.64%            17,473,111
BNP Paribas SA Financials 43.1 3.32%               5,752,135
Deutsche Post AG Health Care 25 2.50%               4,643,046
 
Underperformers Sector Price 1D % Chg Volume
Anheuser-Busch InBev SA/NV Energy 61.8 -2.69%               2,875,154
Nokia OYJ Financials 5.17 -1.49%            18,479,206
Unilever NV Information Technology 46 -1.32%               3,659,480
Danone SA Financials 61.5 -1.27%               1,328,117
Industria de Diseno Textil SA Materials 23.1 -1.11%               3,095,990

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