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European stocks close higher focused on improving trade sentiment, ignoring weak German data

Jan 25, 2019

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

European Markets

  • European stocks closed higher on the last trading day of the week, with improving trade sentiment ahead of meetings next week between the US and China; little attention was paid the the (again) weak German data
  • January German business sentiment came at 99.1, well below the 100.7 market forecast, further evidence of a softening economy in Germany
  • The Euro Stoxx 600 closed up +0.61%, the FTSE 100 declined -0.14%, the DAX rose +1.36%, and the CAC 40 finished up +1.11%
  • European stocks closed at a 2-month high
  • The Northern Irish political party that is part of PM Theresa May’s government has privately agreed to support her Brexit plan 
  • The US will receive a delegation from China on Monday for further trade talks that will include deputy ministers and be led by Vice Premier Liu He 
  • JP Morgan published a report saying the global average cash cost to mine 1 Bitcoin is now above its value with low-cost miners in China still able to mine profitably  
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.67x
  • Utilities (-0.28%), Banks (+1.66%), and Basic Resources (+3.29%) stocks were the top performers in the Euro Stoxx 600 today
  • Retail (+1.02%), Health Care (-0.31%), and Construction & Materials (+1.49%) stocks were the worst performers in the Euro Stoxx 600 today
  • 148 stocks in the Euro Stoxx 600 hit 4-week highs while 17 stocks closed at 4-week lows
  • 36 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 down 0.78 points today to 14.78 after closing at 15.56 yesterday
     

Stocks Trending in the News

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  • AbbVie (ABBV) announced CY4Q2018 adjusted EPS that missed analyst estimates while providing full-year guidance that also missed analyst estimates. AbbVie reported an adjusted EPS of USD$1.90/share in CY4Q2018 while analysts’ consensus called for USD$1.94/share. AbbVie sees CY2019 adjusted EPS between USD$8.65/share and USD$8.75/share, the midpoint of which misses analysts’ consensus of USD$8.73/share. AbbVie is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
  • Colgate-Palmolive (C) reported fiscal second quarter EPS of 74 cents while consensus was for 73 cents.  Colgate-Palmolive fiscal second quarter revenue came at USD$3.81 billion, missing consensus of USD$3.77 billion.  Colgate-Palmolive gave guidance for 2019 revenue 2-4% growth in sales.  Colgate-Palmolive is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas
  • Discover Financial Services (DFS) reported fourth quarter EPS of USD$2.03 while consensus was for USD$2.05.  Discover Financial Services fourth quarter revenue came in line at USD$2.8 billion while consensus was for USD$2.8 billion.  Discover Financial Services is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Erste Group (WBAG: EBS) announced CY4Q2018 financials while reporting that its net profit for the full-year beat analyst estimates. Erste generated net profit of EUR1.58bn in CY2018 while analysts expected EUR1.30bn. Erste benefited from an effective tax rate below 15% as a result of deferred tax assets in the year. Erste is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.  
  • E-Trade Financial Services (ETFC) reported fourth quarter EPS of USD$1.07 while consensus was for USD$1.03.  E-Trade Financial Services fourth quarter revenue came at USD$735 million while consensus was for USD$744 million.  E-Trade Financial Services is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Hill-Rom Holdings, Inc. (HRC) reported adjusted FY1Q2019 EPS of USD$1.02/share, beating the highest analyst estimates that ranged between USD$0.98/share and USD$1.00/share. Hill-Rom's net revenue in FY1Q2019 of USD$683.5mm also beat analysts’ consensus of USD$676.4mm. Hill-Rom is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.  
  • Givaudan SA (SWX: GIVN) will begin to shift its focus to smaller deals after the company’s financial results disappointed investors. CFO Tom Hallam said in an interview, “Today in the market there are no significant targets,” adding, “We are investing in companies where we have access to local and regional customers and in natural resources and sources.” Givaudan is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. 
  • Intel (INTC) reported fiscal second quarter EPS of USD$1.28 while consensus was for USD$1.22.  Intel fiscal second quarter revenue came at USD$18.66 billion, missing consensus of USD$19.01 billion.  Intel gave guidance for 1Q19 revenue of ~USD$16 billion, well below consensus of USD$17.34 billion and EPS guidance of 87 cents, well below USD$1.22 consensus.  Intel is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Lear (LEA) announced CY4Q2018 financials that met analyst estimates whil affirming 2019 guidance given 10 days earlier. Lear observed net sales of USD$4.94bn in CY4Q2018 while analysts expected USD$4.98bn. Lear’s adjusted EPS of USD$4.05/share in CY4Q2018 surpassed analyst expectations of USD$3.92/share. Lear is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas. 
  • Mastercard (MA) will acquire Earthport (AIM: EPO), the UK payments company, for 33 pence per share, besting an offer by Visa (V) by 10%.  Mastercard is valuing Earthport at 233 million pounds.  Mastercard is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Visa is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  Earthport is not rated in our Global Top Stock ideas.
  • Mediaset (BIT: MS) and ProSiebenSat.1 (XTRA: PSM) shares surged after Italy’s MF Milano Finanza newspaper reported that the two companies could reach a potential deal as early as next month. The report cites people familiar with the matter while saying that Mediaset could review an offer at their next meeting, planned for early February. Mediaset is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. ProSiebenSat.1 is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Nokia OYJ (HLSE: NOKIA) will receive CAD$40mm in funding from the government of Canada for research. The research will likely pertain to 5G research as Canada weighs a ban on Nokia rival Huawei. Nokia is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Norwegian Air Shuttle ASA (OB: NAS) was upgraded to hold from sell by Danske Bank. Danske Bank also raised its price target for Norwegian Air to 155 kroner/share, implying an 11% upside from Thursday’s closing price. Norwegian Air’s average price target across 17 estimates is 216.50 kroner/share. Norwegian Air is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas.  
  • Starbucks (SBUX) reported fourth quarter EPS of 69 cents while consensus was for 65 cents.  Starbucks fourth quarter revenue came at USD$6.63 billion while consensus was for USD$6.48 billion.  Starbucks is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Telia Company AB (OM: TELIA) announced CY4Q2018 financials the largely missed analyst expectations. Telia reported adjusted EBITDA of 6.74bn Swedish krona in CY4Q2018, missing the lowest analyst estimates that ranged between 6.94bn Swedish krona and 7.36bn Swedish krona. Telia’s CY4Q2018 net sales of 22.21bn Swedish krona also missed analyst expectations of 22.42bn Swedish krona. Telia is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.
  • Vodafone Group Plc (LSE: VOD) officially suspended its equipment purchases from Huawei Technologies Co Ltd. Vodafone CEO Nick Read said on a call with reporters Friday, “We have decided to pause further Huawei in or core whilst we engage with the various agencies and governments and Huawei.” Vodafone is rated “Neutral” in our United Kingdom All-Cap Global Top Stock ideas.
  • Xilinx Inc. (XLNX) reported FY3Q2019 financials that largely surprised analyst expectations. Xilinx generated an EPS of USD$0.92 in FY3Q2019 while analysts expected just USD$0.86/share. The earnings surprise, fueled by growth in the company's 5G business, prompted Raymond James analyst Chris Caso to comment in a note to clients, “Boy do we feel dumb for missing this stock.” Xilinx is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas

What is Going on with European Currencies?

  • EUR€ is currently up +0.902% against the USD$ to 1.1406
  • GBP£ is currently up +0.834% against the USD$ to 1.3175
  • CHF is currently up +0.349% against the USD$ to 1.0071
     

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1.3 basis points to 0.193%
  • German 10-Year Bunds are lower with yields up 1.3 basis points to 0.193%
  • French 10-Year Government Bonds are lower with yields up 1.3 basis points to 0.598%
  • UK 10-Year GILTs are lower with yields up 4 basis points to 1.305%
  • Italian 10-Year Government Bonds are higher with yields down -1.1 basis points to 2.649%
  • Spanish 10-Year Government Bonds are higher with yields down -0.9 basis points to 1.231%
     

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Nokia OYJ Financials 5.74 5.75%            35,886,031
Volkswagen AG Consumer Staples 152 4.19%               2,125,332
BNP Paribas SA Financials 43 3.89%               6,014,996
ASML Holding NV Health Care 154 3.79%               2,185,527
Societe Generale SA Energy 28.6 3.25%               4,455,646
 
Underperformers Sector Price 1D % Chg Volume
Industria de Diseno Textil SA Materials 24.2 -1.23%               3,513,677
Deutsche Telekom AG Financials 14.1 -0.67%            20,165,942
Munich Re Financials 196 -0.66%                  495,798
EssilorLuxottica SA Consumer Staples 111 -0.63%                  694,516
Iberdrola SA Consumer Staples 7.07 -0.59%            18,046,695

 

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