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European stocks traded higher early in the session but turned negative on White House official's comment on "zero growth"

Jan 23, 2019

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

European Markets

  • European stocks traded in positive territiory for most of the session, but turned negative and closed there after White House Council of Economic Advisers Chairman Kevin Hassett said there is a possibility of zero economic growth for the US in the first quarter if the partial government shutdown drags on into March
  • He added, however, that the US would see "humungous growth" in the following quarter if that were to happen
  • The Euro Stoxx 600 closed down -0.06%, the FTSE 100 declined -0.85%, the DAX fell -0.17%, and the CAC 40 finished down -0.15%
  • Press reports are that Parliament is moving towards a vote on a delay of Brexit to avoid a no-deal exit
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.87x
  • Retail (+1.59%), Real Estate (+0.96%), and Utilities (+0.68%) stocks were the top performers in the Euro Stoxx 600 today
  • Chemicals (-0.95%), Construction & Materials (-0.93%), and Oil & Gas (-0.82%) stocks were the worst performers in the Euro Stoxx 600 today
  • 167 stocks in the Euro Stoxx 600 hit 4-week highs while 9 stocks closed at 4-week lows
  • 26 stocks in the Euro Stoxx 600 finished the trading session overbought while 4 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed +0.48 points today to 16.48 after closing at 16 yesterday
     

Stocks Trending in the News

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  • Abbott Laboratories (ABT) reported CY1Q2019 adjusted EPS from continuing operations guidance that missed analyst expectations. Abbott sees adjusted EPS from continuing operations between USD$0.60/share and USD$0.62/share in FY1Q2019 while analysts expected USD$0.64/share. Abbott’s CY4Q2018 adjusted EPS from continuing operations came in-line with analyst expectations of USD$0.81/share. Abbott is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Amphenol (APH) reported adjusted EPS guidance for FY2019 that missed the average analyst estimate. Amphenol forecasts adjusted EPS between USD$3.88/share and USD$3.96/share while analysts’ consensus called for USD$3.97/share. Amphenol also reported adjusted EPS of USD$1.05/share in FY4Q2018 while analysts expected just USD$0.97/share. Amphenol 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.  
  • ASML Holding N.V. (ENXTAM: ASML) reported CY4Q2018 financials that surpassed analyst estimates and CY1Q2019 guidance that missed analyst estimates. ASML generated 788mm euros of net income in CY4Q2018 while analysts expected 758.7mm euros. ASML sees net sales of about 2.1bn euros in CY1Q2019, missing the lowest analyst estimates that range between 2.58bn euros and 2.92bn euros. ASML is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • Burberry Group Plc (LSE: BRBY) reported FY3Q2018 financials that missed analyst estimates. Burberry saw net sales of GBP719mm in FY3Q2018, missing analysts’ consensus of GBP719mm by more than 10%. Burberry’s same store sales growth of just 2% in FY3Q2018 missed analyst expectations of 3.25%. Burberry is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Carrefour S/A (ENXTPA: CA) reported CY4Q2018 EBIT that may signal a turnaround for the company’s financials, according to Bernstein. Bernstein analyst Bruno Monteyne said in a note to clients that, “The slight beat in French like-for-like and the confirmation of EU1.93bn EBIT will reassure markets that Carrefour is stable and could be at the start of a turn around.” Carrefour is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Comcast (CMCSA) reported fourth quarter EPS of 64 cents while consensus was for 62 cents.  Comcast fourth operating cash flow came at USD$5.8 billion.  NBCUniversal has 4Q revenue of USD$9.4 billion.  Comcast is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Deutsche Bank AG (DB: DBK) is reportedly the subject of a probe by the US Federal Reserve that will examine how the German bank handled billions of dollars in suspicious transactions from Danske Bank A/S (CPSE: DANSKE). The fed probe is in its early stages but is reportedly critical of how Deutsche Bank’s US operations monitored funds from an Estonian branch of Danske. 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.
  • Ingenico Group (ENXTPA: ING) issued a profit warning that caps a tumultuous year of weak financials, multiple guidance reductions, a CEO change, and M&A speculation. Although Ingenico said on a call that its retail division will continue to grow in 2019, it is likely to issue weak or flat 2019 revenue growth guidance for its terminals market segment. Ingenico is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • International Business Machines Corporation (IBM) reported CY4Q2018 earnings that was the, “cleanest quarter in years,” according to Morgan Stanley. IBM reported revenue of USD$21.8bn for CY4Q2018, beating analyst consensus of USD$21.7bn. IBM’s EPS of USD$4.87/share in CY4Q2018 also surpassed analyst expectations, which called for USD$4.82/share. IBM 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.
  • Kimberly-Clark (KMB) announced a full-year adjusted EPS forecast that missed analysts’ consensus while reporting CY4Q2018 adjusted EPS that also missed analyst estimates. Kimberly-Clark expects full-year adjusted EPS between USD$6.50/share and USD$6.70/share while analysts’ consensus called for USD$6.79/share. Kimberly-Clark's CY4Q2018 adjusted EPS of USD$1.60/share also missed analyst expectations of USD$1.65/share. Kimberly-Clark is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Metro Bank Plc (LSE: MTRO) shares fell the most in its trading history after the company reported that it incorrectly applied low risk weighting to parts of its loan book. Metro Bank said that the mistake was a, “misinterpretation of the rules,” and that it is an, “isolated incident.” Metro Bank is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Northern Trust (NTRS) reported disappointing CY4Q2018 financials. Northern Trust reported assets under management of USD$1.07tn, missing the lowest analyst estimates that ranged between USD$1.08tn and USD$2.80tn. Northern Trust is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Proctor & Gamble (PG) reported fiscal second quarter 2019 EPS of USD$1.25 while consensus was for USD$1.21.  Proctor & Gamble fiscal second quarter revenue came at USD$17.44 versus USD$17.16 billion expected.  Proctor & Gamble guidance for all of fiscal 2019 is EPS growth of 3-8%.  Proctor & Gamble is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Restaurant Brands International Inc. (QSR) reported accelerating same-store sales growth in its Burger King and Tim Hortons chains while announcing that it named a new Chief Executive Officer. Jose Cil, an individual with 18 years of experience at Burger King, will assume the CEO position from Daniel Schwartz, who will become the company’s executive chairman and co-chairman of the board of directors. Restaurant Brands is rated “Attractive” in our Canada All-Cap Global Top Stock Ideas.  
  • RPC Group Plc (LSE: RPC) will be acquired by Apollo Global Management for GBP3.32bn, or USD$4.3bn. The acquisition comes amid public backlash against RPC’s sector regarding plastic waste. RPC shares traded as much as 5.5% higher on the news. RPC is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • RPC Inc. (RES) became the latest US oilfield services provider to say that it is feeling the impact of a slowdown in fracking. In a statement on Wednesday, Chief Executive Officer Richard Hubbell said that several of the company’s customers are reconsidering their 2019 budgets and current operations. RPC is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas. 
  • RWE AG (DB: RWE) shares moved higher after Metzler said the proposals related to Germany’s plan to phase out coal-generated power could work in the company’s favor. Metzler said in its note to clients that it is, “becoming apparent that the phaseout period will extend well beyond 2030,” and that it expects, “adequate compensation,” for short-term removal of lignite-fired plants. RWE is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  
  • United Technologies (UTX) reported fourth quarter EPS of USD$1.95, well above consensus of USD$1.53.  United Technologies fourth quarter revenue came at USD$18.04 billion, well above USD$16.87 billion.  United Technologies is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “top buy” in our US Industrials Global Top Stock Ideas.
  • Walgreens Boot Alliance (WBA) has agreed to pay USD$269.2mm in order to settle claims that the drugstore chain defrauded federally-funded health care programs and a consumer-discount initiative. The USD$269.2mm payment spans across two settlements; one for USD$209.2mm that relates to billed Medicare, Medicaid, and other programs, and one for USD$60mm that concerns not disclosing lower drug prices offered in a discount program. Walgreens is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Waters Corporation (WAT) reported adjusted EPS guidance for its full-year that surpassed the average analyst estimate. Waters sees adjusted EPS of between USD$9.20/share and USD$9.45/share for FY2019 while analysts’ consensus called for USD$9.19/share. Further, Waters offered adjusted EPS guidance of between USD$1.65/share and USD$1.75/share for FY1Q2019 while analysts expected USD$1.74/share. Waters is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently up +0.246% against the USD$ to 1.1388
  • GBP£ is currently up +0.826% against the USD$ to 1.3061
  • CHF is currently up +0.269% against the USD$ to 1.0054
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -1.1 basis points to 0.225%
  • German 10-Year Bunds are higher with yields down -1.1 basis points to 0.225%
  • French 10-Year Government Bonds are higher with yields down -0.8 basis points to 0.635%
  • UK 10-Year GILTs are lower with yields up 0.3 basis points to 1.326%
  • Italian 10-Year Government Bonds are lower with yields up 1.1 basis points to 2.752%
  • Spanish 10-Year Government Bonds are higher with yields down -2.1 basis points to 1.313%
     

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Koninklijke Ahold Delhaize NV Consumer Discretionary 23.2 3.21%               7,670,464
Industria de Diseno Textil SA Materials 24.4 1.75%               2,632,197
Banco Bilbao Vizcaya Argentaria SA Information Technology 5.23 1.10%            20,085,898
Banco Santander SA Health Care 4.36 1.06%            79,578,747
Unilever NV Information Technology 47.2 1.03%               4,006,824
 
Underperformers Sector Price 1D % Chg Volume
BASF SE Utilities 63.2 -1.83%               3,070,689
Linde PLC Real Estate 139 -1.73%                  793,147
Schneider Electric SE Industrials 59.2 -1.63%               1,394,203
CRH PLC Telecommunication Services 24.9 -1.47%                  896,805
Eni SpA Utilities 14.3 -1.11%               8,705,666

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