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European stocks post modest gains, despite Draghi warning on EU economy, weak PMI data

Jan 24, 2019

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

European Markets

  • European stocks post modest gains today, shrugging off both ECB President Draghi's comments and PMI data worse than expected
  • European Central Bank President Mario Draghi warned today that the risks to the European economy are now "to the downside", a worsening outlook compared with his "broadly balanced" comment on economic risks 6 weeks ago
  • The Euro Stoxx 600 closed up +0.22%, the FTSE 100 declined -0.35%, the DAX rose +0.53%, and the CAC 40 finished up +0.65%
  • Euro Composite PMI for January fell to 50.7, 51.4 was consensus expectation
  • Trade concerns remain in investors' minds with Commerce Secretary Wilbur Ross saying the US and China are "miles apart" on trade
  • White House Economic adviser Larry Kudlow later said he sees "a fair chance" of the US and China coming to a deal
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.67x
  • Research by Bank of America suggests institutional investors are showing a preference for individual stock picking at the expense of buying ETFs.  Will CY2019 be the year that Active Investing finally bounces back?
  • Bloomberg publishes a fascinating analysis of “passive” funds to find that many are really “passive-aggressive” with a focus on the creation of unique indices to help these supposed funds help beat the market.  At the moment, there are over 3.7 million unique indices.  This isn’t what Jack Bogle envisioned when he launched his first index fund!
  • Technology (+2.16%), Automobiles & Parts (+2%), and Insurance (+0.94%) stocks were the top performers in the Euro Stoxx 600 today
  • Telecommunications (-0.9%), Personal & Household Goods (-0.79%), and Health Care (-0.63%) stocks were the worst performers in the Euro Stoxx 600 today
  • 124 stocks in the Euro Stoxx 600 hit 4-week highs while 11 stocks closed at 4-week lows
  • 28 stocks in the Euro Stoxx 600 finished the trading session overbought while 6 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down 0.92 points today to 15.56 after closing at 16.48 yesterday

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • American Airlines (AAL) announced CY4Q2018 financials that mostly surpassed analyst expectations. American Airlines reported adjusted EPS of USD$1.04/share in CY4Q2018 while analysts expected USD$1.02/share. American Airlines generated operating revenue of USD$10.94bn in the quarter, slightly missing analysts’ consensus of USD$10.95bn. American Airlines is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Bristol-Myers Squibb (BMY) reported fourth quarter adjusted EPS of 94 cents while consensus was for 85 cents.  Bristol-Myers Squibb fourth quarter revenue came at USD$5.97 billion, USD$ 5.99 billion was consensus.  Bristol-Myers Squibb affirmed 2019 EPS guidance of USD$4.10-4.20.   Bristol-Myers Squibb is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Euronav NV (ENXTBR: EURN) announced CY4Q2018 earnings that largely missed analyst estimates. Euronav reported CY4Q2018 EPS of USD$0.00/share while analysts expected USD$0.06/share. Euronav’s adjusted EBITDA of USD$102.1mm in CY4Q2018 also missed analysts’ consensus of USD$118.4mm. Euronav is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 
  • Fevertree Drinks Plc (AIM: FEVR) announced full-year revenue guidance that prompted analysts to hike price targets for the premium tonic maker. Fevertree sees full-year sales increasing to GBP236mm while analysts’ consensus called for GBP227mm. The guidance prompted price target and earnings estimate increases from Jefferies, Investec, Numis, and Morgan Stanley. Fevertree is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Freeport-McMoRan Inc. (FCX) reported fourth quarter EPS of USD$0.11/share while consensus was for USD$0.18/share.  Freeport fourth quarter revenue came at USD$3.68bn while analysts expected USD$3.77bn.   Freeport is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Jet Blue (JBLU) reported fourth quarter adjusted EPS of 50 cents while consensus was for 42 cents.  Jet Blue fourth quarter operating revenue came at USD$1.97 billion versus USD$1.96 billion consensus.  Jet Blue is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Kone Oyj (HLSE: KNEBV) announced CY4Q2018 financials that underwhelmed investors. Kone reported adjusted EBIT of EUR320mm while analysts expected EUR323mm. Morgan Stanely said that, while Kone’s orders and sales were strong, the company’s margins for the quarter disappointed. Kone is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.  
  • McCormick (MKC) reported fourth quarter EPS of USD$1.67 while consensus was for USD$1.70.  McCormick fourth quarter revenue came at USD$1.5 billion versus USD$1.55 billion expeceted.  McCormick is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • Microsoft Corporation’s (MSFT) Bing search engine has officially been banned in China. While other search engines like Alphabet’s (GOOGL) Google were previously banned in China, Bing was allowed to operate because it sensors search results. Microsoft is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas. Alphabet is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Norwegian Air Shuttle (OB: NAS) shares tanked on Thursday after British Airways owner International Consolidated Airlines Group SA (LSE: IAG) said that it would not make a takeover offer for the Norwegian airline and that it would sell its small stake in the company. Norwegian Air’s stock sank to the lowest price in 6 years on the news. Norwegian Air is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. IAG is rated “Attractive” in our European Large-Cap Global Top Stock Ideas and “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Southwest Airlines (LUV) reported fourth quarter EPS of USD$1.17, above the highest estimate, while consensus was for USD$1.07.  Southwest Airline's fourth quarter operating revenue came at USD$5.7 billion.  Revenue per seat mile grew 1.8% in the quarter.  Southwest Airlines is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.
  • STMicroelectronics (ENXTPA: STM) reported strong CY4Q2018 financials while providing CY1Q2019 guidance that indicates a q/q revenue decrease of about 20.7%, or a y/y decrease of about 5.7%. STMicroelectronics generated USD$418mm of net income in CY4Q2018 while analysts expected just USD$376mm. STM Microelectronics is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Tencent Holdings Ltd. (SEHK: 700), along with private equity firms Hillhouse Capital and KKR & Co., are reportedly considering bids to acquire a major stake in gaming company Nexon Co. (TSE: 3659). Other buyout firms are also reportedly considering the acquisition. As per people familiar with the matter, NXC is currently working with Deutsche Bank and Morgan Stanley to weigh its sale options. Tencent is rated “Attractive” in our China All-Cap Global Top Stock Ideas. Nexon is not rated in our Global Top Stock Ideas.
  • Textron (TXT) reported fourth quarter EPS from continuing operations of USD$1.02 while consensus was for 98 cents.  Textron fourth quarter revenue came at below expectations at USD$3.75 billion while USD$4 billion was consensus.  Textron is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Union Pacific Corporation (UNP) reported CY4Q2018 earnings that beat analysts’ consensus. Union Pacific recorded USD$2.12 EPS in CY4Q2018 while analysts expected USD$2.06/share. Union Pacific’s operating revenue of USD$5.76bn in CY4Q2018 also beat analyst expectations of SUD$5.73bn. Union Pacific is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • W.W. Grainger (GWW) announced CY4Q2018 adjusted EPS that beat analyst estimates while reporting CY2019 EPS guidance, the midpoint of which misses analyst estimates. Grainger observed CY4Q2018 adjusted EPS of USD$3.96/share, beating analysts’ consensus of USD$3.59/share. Grainger sees CY2019 EPS of between USD$17.10/share and USD$18.70/share while the analyst consensus was for USD$18.04/share. Grainger is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas. 

What is Going on with European Currencies?

  • EUR€ is currently down -0.606% against the USD$ to 1.1312
  • GBP£ is currently down -0.321% against the USD$ to 1.3027
  • CHF is currently down -0.199% against the USD$ to 1.0034

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -4.5 basis points to 0.18%
  • German 10-Year Bunds are higher with yields down -4.5 basis points to 0.18%
  • French 10-Year Government Bonds are higher with yields down -5 basis points to 0.585%
  • UK 10-Year GILTs are higher with yields down -6.1 basis points to 1.265%
  • Italian 10-Year Government Bonds are higher with yields down -9.2 basis points to 2.66%
  • Spanish 10-Year Government Bonds are higher with yields down -7.3 basis points to 1.24%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
ASML Holding NV Health Care 149 4.33%               2,676,605
Fresenius SE & Co KGaA Telecommunication Services 44.1 3.08%               3,182,360
Volkswagen AG Consumer Staples 146 2.31%               1,333,987
Airbus SE Industrials 95.9 2.25%               1,534,265
Nokia OYJ Financials 5.43 2.18%            17,460,725
 
Underperformers Sector Price 1D % Chg Volume
adidas AG Financials 202 -2.41%               1,008,541
Deutsche Telekom AG Financials 14.2 -1.83%            20,777,270
ING Groep NV Consumer Discretionary 10.3 -1.07%            18,235,826
Linde PLC Real Estate 138 -0.79%                  778,842
Intesa Sanpaolo SpA Industrials 2.03 -0.54%          126,587,456

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