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Optimism for trade progress sends European stocks higher today

Feb 11, 2019

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

European Markets

  • Optimism there will be progress this week in US-China trade negotiations sends European shares higher today
  • The Euro Stoxx 600 closed up +0.85%, the FTSE 100 advanced +0.82%, the DAX rose +0.99%, and the CAC 40 finished up +1.06%
  • This week Chinese Vice Premier Liu He and US Treasury Secretary Steve Mnuchin are set to resume trade talks. 
  • US and Chinese officials are working against a March 1st deadline set by the US to reach a deal or hike tariffs on over USD$200 billion in imports 
  • EU officials are considering a joint statement in response to Chinese sponsored hacking attacks after the UK presented evidence to the EU
  • Opposition leader Jeremy Corbyn has set February 26th as a deadline for a new plan from PM Theresa May
  • PM Theresa May will address Parliament on Tuesday, February 12th and her government said it is "not considering" a customs union with the EU 
  • Emerging Markets ETFs saw inflows for the 17th straight week last week with a total inflow of USD$30.3 billion over those 17 weeks
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 5.45x
  • Media (+1.39%), Industrial Goods & Services (+1.28%), and Financial Services (+1.28%) stocks were the top performers in the Euro Stoxx 600 today
  • Basic Resources (+0.19%), Health Care (+0.34%), and Utilities (+0.6%) stocks were the worst performers in the Euro Stoxx 600 today
  • 19 stocks in the Euro Stoxx 600 hit 4-week highs while 81 stocks closed at 4-week lows
  • 27 stocks in the Euro Stoxx 600 finished the trading session overbought while 14 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed down -1.09 points today to 15.22 after closing at 16.31 last week

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Apple (AAPL) saw a 20% plummet in iPhone shipments in the fourth quarter of 2018, according to a report from research firm IDC.  IDC estimates the market as a whole or phones contracted 9.7% in China in the fourth quarter.  IDC highlights that Apple has not been able to adjust its offerings in China fast enough for the pace of change of customers.  Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Banca Mediolanum S.p.A. (BIT: BMED) announced FY2018 net income that missed the average analyst estimate. Banca Mediolanum generated 256mm euros of net income in FY2018 while analyst consensus was for 291.1mm euros. Banca Mediolanum’s FY2018 net revenue of 1.23bn euros also missed analyst consensus of 1.64bn euros. Banca Mediolanum is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.  
  • Deutsche Post (DB: DPW) may get a hike in postage rated more than expected, according to a report in Frankfurter Allgemeine Zeitung today.  Deutsche Post may get a hike to 0.90 euro, up from 0.70 presently.  The hike will take effect in early summer and not in April as originally thought.  Deutsche Post is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.
  • Electronic Arts (EA) was upgraded by Bank of America Merrill Lynch to buy from neutral.  Electronic Arts had its price target hiked to USD$110 from USD$95 while the average price target is USD$93.66.  The hike comes in the wake of weak earnings in February 5th.  Electronic Arts is rated "Unattractive" in our US Large-Cap Global Top Stock Ideas and "Neutral" in our US Information Technology Global Top Stock Ideas. 
  • Geely Automotive (SEHK: 175) announced a total sales increase of 2% y/y in January to a record 158,393 units. The January sales number represents a 70% increase in unit sales from December and includes sales of its Lynk & Co. premium brand, sold by a 50% joint venture. Geely Automotive is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
  • KKR (KKR) is acquiring 60% of Indian waste-collection company Ramky Enviro Engineers Ltd in its impact fund.    The deal is valued at USD$510 million.  This is KKR’s biggest deal in the impact fund.  KKR is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Euronext (ENXTPA:ENX) has hiked its offer for the Oslo Stock Exchange to 158 kronor per share, topping by 4% Nasdaq’s (NDAQ) offer for the Oslo exchange.  Nasdaq’s offer was already accepted by the Oslo Exchange and today Nasdaq said it is moving ahead with the deal, giving no hint if it plans to up its offer.  Euronext is rated “Top Buy” in our European SMID-Cap Global Top Stock Ideas.  Nasdaq is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Just Eat Plc (LSE: JE) is being urged to merge with a rival by Cat Rock Capital Management LP. Cat Rock Capital Management, who owns about 2% of Just Eat Plc, cited lack of an ability to find a suitable CEO in an open letter to the Just Eat Plc board as reasoning for urging a merger. Alex Captain, founder of Cat Rock Capital Management, wrote in the letter, “You basically have a situation where you can get a world-class CEO and delivery capabilities, while also potentially securing premium valuation for shareholders.” Just Eat is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Morgan Stanley (MS) announced the acquisition of Solium Capital (TSX: SUM) for about USD$900mm. Morgan Stanley will pay about CAD$19.15/share for Solium Capital, a provider of stock-plan administration services, which represents a 43% premium on the company’s closing price. Morgan Stanley is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. Solium Capital is not rated in our Global Top Stock Ideas.
  • Playtech (LSE: PTEC) was downgraded by Bank of America Merrill Lynch to underperform from neutral.  Bank of America Merrill Lynch sees a lack of visibility in Asia in the near term and was cited as a primary reason for the downgrade.  Playtech is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas 
  • Recordati Industria Chimica e Farmaceutica S.p.A. (BIT: REC) announced FY2018 financials that were largely in line with the average analyst estimate. Recordati generated net income of 312.4mm euros in FY2018 while consensus was for 212.9mm euros. Recordati’s revenue of 1.35bn euros in FY2018 matched consensus of 1.35bn euros. Recordati is rated “Top Buy” in our European SMID-Cap Global Top Stock Ideas. 
  • Smith & Nephew Plc (LSE: SN) shares fell on news of deal talks with NuVasive Inc. (NUVA). A deal would reportedly be worth more than USD$3bn, according to the Financial Times. Last week, Smith & Nephew CEO Namal Nawana said that the company is ready to pursue a large deal to expand the company’s operations to more medical devices. Smith & Nephew is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas. NuVasive is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Sprint (S) is suing AT&T (T) for the use of a “5G E” symbol on the screens of phones on its networks that are near an enhanced 4G cell tower.  AT&T calls this “5G Evolution”  hence the 5G E symbol on screens while Sprint is suing call this deceptive.  Sprint is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.  AT&T is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Tesla (TSLA) has successfully ramped up the production of Model 3s but is still have challenges servicing them.  The Wall Street Journal highlight today that owners are having to wait weeks or months to get their vehicles serviced due to the limited number of locations. Tesla is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Vale (VALE) has lost its license to operate the tailings dam that collapsed.  The Brazilian Mines and Energy Minister has opened an administrative proceeding to collect information related to the rupture of Vale's tailings dam.  Vale announced the evacuation of 500 residents downstream of a different dam at another of Vale’s mines due to fears of a potential collapse.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.
  • Vestas Wind Systems (CPSE: VWS) shares traded higher after Iberdrola selected the wind turbine supplier for the preferred supplier for its Baltic Eagle offshore wind farm. The contract between Vestas Wind Systems and Iberdrola includes up to 52 units of the company’s V174-9.5 MW offshore turbine. Vestas Wind Systems is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.  

What is Going on with European Currencies?

  • EUR€ is currently down -0.415% against the USD$ to 1.1276
  • GBP£ is currently down -0.641% against the USD$ to 1.2861
  • CHF is currently down -0.35% against the USD$ to 0.9958

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 3.3 basis points to 0.12%
  • German 10-Year Bunds are lower with yields up 3.3 basis points to 0.12%
  • French 10-Year Government Bonds are lower with yields up 2.4 basis points to 0.565%
  • UK 10-Year GILTs are lower with yields up 2.9 basis points to 1.18%
  • Italian 10-Year Government Bonds are higher with yields down -5.8 basis points to 2.9%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Deutsche Post AG Health Care 25.9 2.45%               4,077,393
Kering SA Consumer Staples 451 2.29%                  289,914
Airbus SE Industrials 102 2.06%               1,314,998
CRH PLC Telecommunication Services 26.8 1.86%               1,104,148
EssilorLuxottica SA Consumer Staples 108 1.83%                  686,779
 
Underperformers Sector Price 1D % Chg Volume
Koninklijke Ahold Delhaize NV Consumer Discretionary 23.2 -0.28%               2,559,051
Bayerische Motoren Werke AG Utilities 69.4 -0.17%               1,964,372
Sanofi Consumer Discretionary 75.3 0.11%               1,792,200
Deutsche Telekom AG Financials 14.2 0.14%               9,068,889
Orange SA Materials 13.3 0.26%               5,977,464
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS