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European stocks drift lower on EU growth concerns, fears over US-China trade talks progress

Feb 14, 2019

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

European Markets

  • European stocks drift lower on news that US-China trade talks have yielded little progress as well as growth concerns in the EU
  • News from Beijing is that talks among senior trade officials have yielded little progress as the 2 countries remain at odds over key points of trade negotiations
  • The Euro Stoxx 600 closed down -0.32%, the FTSE 100 advanced +0.09%, the DAX fell -0.69%, and the CAC 40 finished down -0.23%
  • German GDP stagnated in 4Q with reported growth of 0.0%, lagging an average growth rate of +0.2% for the Euro area.  This follows last week’s downward revisions for economic growth for the Euro area by the European Commission (EU). 
  • EU GDP grew at 1.2% y/y in the fourth quarter of 2018, matching consensus and the growth seen in the third quarter
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.79x
  • Technology (+0.65%), Industrial Goods & Services (+0.61%), and Health Care (+0.37%) stocks were the top performers in the Euro Stoxx 600 today
  • Financial Services (-1.34%), Automobiles & Parts (-1.29%), and Banks (-1.26%) stocks were the worst performers in the Euro Stoxx 600 today
  • 147 stocks in the Euro Stoxx 600 hit 4-week highs while 19 stocks closed at 4-week lows
  • 39 stocks in the Euro Stoxx 600 finished the trading session overbought while 5 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed +0.16 points today to 14.13 after closing at 13.97 yesterday

Stocks Trending in the News

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  • Airbus (ENXTPA: AIR) will cease production of its jumbo A380 airliner.  The 555-seat plane never caught on with airlines as Airbus had hoped.  A number of airlines cut their orders for the plane making it unprofitable to keep the production line open.  Airbus is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • AstraZeneca Plc (LSE: AZN) shares surged the most in nearly 2 years after the company forecasted higher than expected earnings in FY2019. AstraZeneca told investors that it sees FY2019 EPS excluding some items between USD$3.50 and USD$3.70 while analysts had estimated USD$3.56. Jefferies analyst Peter Welford wrote in a note to clients about the financials release, “The focus is on longer-term earnings, for which we forecast an impressive trajectory and improving quality.” AstraZeneca is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Cisco Systems (CSCO) reported second quarter 2019 adjusted EPS of USD$0.73 in line with consensus of USD$0.72.  Cisco Systems reported second quarter total sales of USD$12.4 billion matching consensus of USD$12.42 billion.  Cisco Systems gave third quarter 2019 EPS guidance of 76-78 cents, 76 cents is consensus.  Its dividend was raised 6% and a USD$15 billion share buyback plan was announced.  Cisco Systems is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • CME Group Inc (CME) reported CY4Q2018 adjusted EPS of USD$1.77 while analysts expected USD$1.73. CME Group Inc generated net sales of USD$1.24bn in CY4Q2018, beating consensus of USD$1.21bn. CME Group Inc is rated "Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Coca-Cola Co. (KO) shares dropped after the company announced CY4Q2018 comparable EPS of USD$0.43 that was in line with consensus for USD$0.43. Coca Cola told analysts that it sees FY2019 EPS growth between –1% and 1% and organic revenue growth of about 4%. Coca-Cola is rated "Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
  • Credit Suisse Group AG (SWX: CSGN) announced a larger than expected loss for its Global Markets business of 193mm francs (USD$191mm). The loss in the company’s Global Markets business offset results in the firm’s wealth management and investment banking businesses that beat estimates. Credit Suisse is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  
  • Duke Energy Corp (DUK) reported CY4Q2018 adjusted EPS of USD$0.84, slightly missing consensus of USD$0.89. Duke Energy Corp operating revenue of USD$6.12bn in CY4Q2018, beating consensus of USD$5.85bn. Duke Energy Corp expects FY2019 adjusted EPS between USD$4.80 and USD$5.20, the midpoint of which is slightly above consensus of USD$4.95. Duke Energy Corp is rated "Neutral” in our US Large-Cap Global Top Stock Ideas.
  • EQT Corp (EQT) reported CY4Q2018 adjusted EPS of USD$0.79 while analysts expected USD$0.81. EQT Corp generated adjusted cash flow from operations of USD$693.0mm in CY4Q2018, largely beating consensus of USD$415.6mm. EQT Corp expects FY2019 adjusted cash flow from operations between USD$2.2bn and USD$2.3bn. EQT Corp is rated "Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Incyte Corp (INCY) announced CY4Q2018 adjusted EPS of USD$0.40 while consensus was for USD$0.49. Incyte Corp reported adjusted revenue of USD$468.4mm in CY4Q2018 while analysts expected USD$485.8mm. Incyte Corp is rated "Neutral” in our US Large-Cap Global Top Stock Ideas.
  • IQVIA Holdings Inc (IQV) announced CY4Q2018 adjusted EPS of USD$1.50 while consensus was for USD$1.47. IQVIA Holdings Inc reported net sales of USD$2.69bn in CY4Q2018 while analysts expected USD$2.62bn. IQVIA Holdings Inc sees FY2019 adjusted EPS between USD$6.20 and USD$6.40, the midpoint of which is slightly above consensus of USD$6.24. IQVIA Holdings Inc is rated "Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Iron Mountain Inc (IRM) reported CY4Q2018 adjusted funds from operations of USD$0.56 while analysts expected USD$0.52. Iron Mountain Inc generated net sales of USD$1.06bn in CY4Q2018, matching consensus of USD$1.06bn. Iron Mountain Inc expects FY2019 adjusted EPS revenue between USD$4.20bn and USD$4.40bn, the midpoint of which is below consensus of USD$4.38bn. Iron Mountain Inc is rated "Neutral” in our US Large-Cap Global Top Stock Ideas.
  • MGM Resorts (MGM) reported fourth quarter adjusted loss of USD$0.06 per share including a 17 cents per share non-recurring income tax expense.  MGM Resorts reported fourth quarter revenue of USD$3.05 billion beating consensus of USD$2.99 billion.   MGM Resorts is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • NetApp (NTAP) reported third quarter 2019 adjusted EPS of USD$1.20 beating consensus of USD$1.15.  NetApp reported fourth quarter revenue of USD$1.56 billion just below consensus of USD$1.6 billion.  NetApp gave fourth quarter 2019 EPS guidance of USD$1.22-1.28, USD$1.25 is consensus.  NetApp is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Puma SE (DB: PUM) shares fell after the company reported a FY2019 profit outlook that disappointed investors. Puma sees Ebit to grow by as much as 23% in FY2019 to between 395mm euros and 415mm euros, missing analyst consensus for 428.1mm euros. Puma is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • Six Flags (SIX) reported fourth quarter adjusted EPS of USD$0.93 which may not compare with consensus of USD$0.25.  Six Flags reported fourth quarter revenue of USD$269.5 million missing consensus of USD$284.4 million.  Six Flags is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
  • Tempur Sealy International Inc (TPX) announced CY4Q2018 adjusted EPS of USD$0.90, missing consensus of USD$0.97. Tempur Sealy International Inc reported net sales of USD$646.1mm in CY4Q2018, beating analyst expectations of USD$659.5mm. Tempur Sealy International Inc sees FY2019 adjusted Ebitda between USD$425.0mm and USD$475.0mm, the midpoint of which misses consensus of USD$478.8mm. Tempur Sealy International Inc is rated "Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • TransUnion (TRU) announced CY4Q2018 adjusted EPS of USD$0.66 while consensus was for USD$0.63. TransUnion reported net sales of USD$613.1mm in CY4Q2018 while analysts expected USD$620.0mm. TransUnion sees FY2019 adjusted EPS between USD$2.57 and USD$2.63, the midpoint of which misses consensus of USD$2.81. TransUnion is rated "Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Waste Management Inc (WM) announced CY4Q2018 adjusted EPS of USD$1.13 while consensus was for USD$1.06. Waste Management Inc reported operating revenue of USD$3.84bn in CY4Q2018 while analysts expected USD$3.78bn. Waste Management Inc sees FY2019 adjusted EPS between USD$4.28 and USD$4.38, the midpoint of which is below consensus of USD$4.44. Waste Management Inc is rated "Top Buy” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Yelp (YELP) reported fourth quarter adjusted EPS of USD$0.37 in line with consensus of USD$0.36. Yelp reported fourth quarter net revenue of USD$243.7 million matching consensus of USD$241 million.  Yelp is targeting mid-teen revenue growth over the next 5 years.  Yelp is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas
  • YETI Holdings Inc (YETI) reported CY4Q2018 adjusted EPS of USD$0.38 while analysts expected USD$0.34. YETI Holdings Inc expects FY2019 adjusted EPS between USD$0.99 and USD$1.04, surpassing consensus of USD$0.93. YETI Holdings Inc is rated "Neutral” in our US SMID-Cap Global Top Stock Ideas.
  • Zoetis Inc (ZTS) reported CY4Q2018 adjusted EPS of USD$0.79 while analysts expected USD$0.77. Zoetis Inc generated net sales of USD$1.56bn in CY4Q2018, beating consensus of USD$1.52bn. Zoetis Inc expects FY2019 adjusted EPS between USD$3.42 and USD$3.52, the midpoint of which surpasses consensus of USD$3.43. Zoetis Inc is rated "Attractive” in our US Large-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently up +0.222% against the USD$ to 1.1286
  • GBP£ is currently down -0.374% against the USD$ to 1.2798
  • CHF is currently up +0.303% against the USD$ to 0.9938

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -2 basis points to 0.103%
  • German 10-Year Bunds are higher with yields down -2 basis points to 0.103%
  • French 10-Year Government Bonds are higher with yields down -2.2 basis points to 0.529%
  • UK 10-Year GILTs are higher with yields down -3.2 basis points to 1.15%
  • Italian 10-Year Government Bonds are lower with yields up 1.9 basis points to 2.803%
  • Spanish 10-Year Government Bonds are lower with yields up 0.8 basis points to 1.242%

 

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Euro Stoxx 50 Movers

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Outperformers Sector Price 1D % Chg Volume
Schneider Electric SE Industrials 67.6 3.70%               1,330,742
Airbus SE Industrials 109 2.68%               1,491,681
Amadeus IT Group SA Materials 68.9 2.21%                  399,354
Vivendi SA Consumer Discretionary 22.7 1.43%               3,969,723
ASML Holding NV Health Care 163 0.74%               1,233,319
 
Underperformers Sector Price 1D % Chg Volume
Unibail-Rodamco-Westfield Telecommunication Services 146 -5.38%                  527,791
Bayer AG Information Technology 66.9 -4.04%                  894,495
EssilorLuxottica SA Consumer Staples 106 -3.11%                  926,102
Anheuser-Busch InBev SA/NV Energy 66.9 -3.06%               2,045,029
Kering SA Consumer Staples 468 -2.46%                  395,979
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