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European stocks close little changed with Brexit and trade tensions weighing on investor sentiment

Jan 17, 2019

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

European Markets

  • European stocks close little changed on a day that saw little to animate European investors, Brexit and trade tensions top the list of concerns
  • The Euro Stoxx 600 closed up +0.04%, the FTSE 100 declined -0.4%, the DAX fell -0.12%, and the CAC 40 finished down -0.34%
  • EU Consumer Price Index for December was 1.6% y/y, 0% m/m; both matched market consensus
  • The US government formally alleges that Huawei Technologies has stolen “trade secrets” and has begun a formal federal investigation -- the news of the investigation has rekindled investor fears about a breakdown in US-China trade talks
  • Following the “no vote” on the most recent BREXIT deal, US Prime Minister Theresa May is reaching out to political rivals to see if it is possible to reach a compromise BREXIT deal
  • A European Commission spokesperson said significant preparations have been made for the possibility of there being no deal in place if the EU and UK split in March with no deal in place
  • UK opposition Labor party leader Jeremy Corbyn is refusing to meet with PM Theresa May, saying he could support a second referendum but prefers a new general election
  • Investor sentiment for European stocks finished trading neutral with the advance/decline ratio for the Euro Stoxx 600 currently at 1.03x
  • Food & Beverage (+1.01%), Construction & Materials (+0.64%), and Basic Resources (+0.62%) stocks were the top performers in the Euro Stoxx 600 today
  • Banks (-1.2%), Automobiles & Parts (-0.87%), and Oil & Gas (-0.25%) stocks were the worst performers in the Euro Stoxx 600 today
  • 195 stocks in the Euro Stoxx 600 hit 4-week highs while 12 stocks closed at 4-week lows
  • 20 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 -15.72 points today to 0 after closing at 15.72 yesterday
     

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Alcoa (AA) reported 4Q18 EPS of 66 cents while 58 cents was consensus.  Alcoa adjusted ebitda of USD$749 million topped USD$717 million consensus.  Alcoa sees a deficit in aluminum continuing in 2019, with a 1.7-2.1 million ton deficit estimated while a surplus of alumina is expected driven by China.  Alcoa is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Associated British Foods’ (LSE: ABF) Primark budget fashion chain rebounded in the holiday season after a challenging November. Primark benefited from increased retail space and the early stages of an expansion into the US. After the successful holiday season, Associated British Foods is eyeing a continued expansion of its Primark brand into the US, France, and Spain. Associated British Foods is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Casino, Guichard-Perrachon Societe Anonyme (ENXTPA: CO) reported FY4Q2018 financials that mostly came in-line with analyst estimates. Casino brought in 9.93bn euros of revenue in FY4Q2018 while analysts’ consensus called for 9.86bn euros. Casino noted a slowdown in its French business in FY4Q2018, citing the yellow vest protests as reasoning. Casino is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • CSX (CSX) reported 4Q18 EPS of USD$1.01 while 99 cents was consensus.  CSX 4Q18 revenue of USD$3.14 billion came in line with USD$3.12 billion consensus.  CSX operating margin this quarter was 60.3% and CSX expects that to improve in 2020.  CSX completed its USD$5 billion share buyback and authorized another USD$5 billion buyback.  CSX is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Electronic Arts Inc. (EA) have reportedly canceled development of their open-world Star Wars game. The cancellation is raising questions if EA can retain their contract with Disney for the Star Wars intellectual property when the contract is up for renewal in 2024. Additionally, Jefferies downgraded its recommendation for EA from buy to hold. EA is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Fiserv (FISV) has lined up bridge loan financing for its planned acquisition of First Data (FDC).  First Data has a USD$18 billion debt load which includes USD$13 billion of loans and USD$5 billion of bonds.  Fiserv said it intends to keep its BBB rating.  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.
  • Morgan Stanley (MS) reported 4Q18 EPS of  73 cents while 89 cents was consensus.  Morgan Stanley 4Q18 revenue of USD$8.5 billion came well below USD$9.35 billion consensus.  FICC sales and trading revenue came at USD$564 million while USD$822 million was consensus.  Morgan Stanley is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Pandora A/S (CPSE: PNDORA) Christmas season sales declined at Signet Jewelers Limited (SIG), the retail company said in a statement. Signet detailed in its statement that the firm’s product category, labeled as Other, “declined driven by a strategic reduction of owned brand beads, as well as declined in Pandora.” Pandora is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Signet is not rated in our Global Top Stock Ideas.
  • PPG Industries (PPG) reported FY4Q2018 financials that slightly beat analysts’ expectations. PPG generated an adjusted EPS from continuing operations in FY4Q2018 of USD$1.15/share while analysts’ consensus called for USD$1.10/share. PPG’s revenue of USD$3.65bn in FY4Q2018 met analyst expectations of USD$3.65bn. PPG is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Sage (LSE: SGE) reported a 10.5% jump in fiscal 2Q19 revenue to 387 million pounds.  Sage saw subscription growth of 27.7% while total organic revenue growth was 7.6%.  Sage reiterated 2019 guidance with Shore Capital reiterating its buy rating in the wake of these results.  Sage Data is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • Societe Generale SA (ENXTPA: GLE) is reportedly considering deep cuts to its bonus pool for traders for a second consecutive year amid a slump in revenue. Reports indicate that bonuses could fall as much as 25%, which would roughly equal the level of bonus cuts last year. The financial institution will reportedly cut trader bonuses by at least 10%. Societe Generale is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  
  • Taiwan Semiconductor (TSEC:2330) provided revenue guidance well below consensus.  Taiwan Semiconductor forecasts 2019 revenue of USD$7.3-7.4 billion while present consensus is for USD$8.1 billion.  The maker of chips for Apple (AAPL) continues to feel the slowdown in handset sales.  Taiwan Semiconductor is not rated in our Global Top Stock Ideas.  Apple is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.1384
  • GBP£ is currently up +0.404% against the USD$ to 1.2937
  • CHF is currently down -0.426% against the USD$ to 1.0055
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1.9 basis points to 0.243%
  • German 10-Year Bunds are lower with yields up 1.9 basis points to 0.243%
  • French 10-Year Government Bonds are lower with yields up 0.8 basis points to 0.644%
  • UK 10-Year GILTs are lower with yields up 2.6 basis points to 1.337%
  • Italian 10-Year Government Bonds are lower with yields up 1.1 basis points to 2.766%
  • Spanish 10-Year Government Bonds are higher with yields down -1 basis points to 1.365%
     

 

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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 62.6 1.29%               2,131,389
Industria de Diseno Textil SA Materials 23.4 1.21%               2,383,069
Unilever NV Information Technology 46.6 1.13%               3,115,923
SAP SE Industrials 90.5 1.13%               2,060,735
adidas AG Financials 200 0.96%                  583,021
 
Underperformers Sector Price 1D % Chg Volume
Societe Generale SA Energy 28.5 -5.66%            14,006,031
BNP Paribas SA Financials 41.4 -3.85%               6,948,081
Daimler AG Consumer Staples 48.9 -1.84%               3,409,173
ING Groep NV Consumer Discretionary 10.1 -1.77%            14,752,806
Banco Bilbao Vizcaya Argentaria SA Information Technology 5.04 -1.43%            19,652,507

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