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European stocks close higher with US-China trade progress lifting global stock markets

Feb 25, 2019

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

European Markets

  • European stocks rise with the global rise in stocks in the wake of trade progress between the US and China
  • President Trump said “The US had made substantial progress in our trade talks with China” in a tweet late this weekend, while Chinese officials echoed President Trump’s optimistic tone
  • The Euro Stoxx 600 closed up +0.26%, the FTSE 100 advanced +0.07%, the DAX rose +0.42%, and the CAC 40 finished up +0.31%
  • Opposition Labor leader Jeremy Corbyn has shifted his position and now supports another public vote on Brexit without giving specifics
  • UK PM Theresa May will update Parliament on Brexit progress this week after securing little in her summit with the EU
  • PM May has pushed back the deadline for a final vote on its deal to leave the EU to March 12th
  • Press reports are that the EU is considering a 21-month extension of Brexit negotiations, believing 3 months is not sufficient time
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.37x
  • Automobiles & Parts (+2.02%), Banks (+1.15%), and Insurance (+0.82%) stocks were the top performers in the Euro Stoxx 600 today
  • Telecommunications (-0.71%), Oil & Gas (-0.51%), and Real Estate (-0.4%) stocks were the worst performers in the Euro Stoxx 600 today
  • 146 stocks in the Euro Stoxx 600 hit 4-week highs while 19 stocks closed at 4-week lows
  • 73 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 -0.02 points today to 13.96 after closing at 13.98 last week

Stocks Trending in the News

Click name for Q-Factor score and financial data

  • Barrick Gold (TSX:ABX) has made a hostile bid for Newmont Mining (NEM) in a USD$19.4 billion deal.  The deal offers Newmont at its market price as Barrick attempts its second acquisition in the last 6 months.  Barrick and Newmont have had on and off talks about linking up for the last few years.  The gold sector has sees a number of recent deals as its consolidation ramps up.  Barrick Gold is rated “Neutral” in our Canada All-Cap Global Top Stock Ideas.  Newmont Mining is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Covestro (DB:1COV) gave guidance well below market consensus.  Covestro said it sees ebitda of 1.5-2 billion euros, well below the 2.07 billion euros consensus.  Covestro said the glut of advanced polymers and plastics in the market will weigh on its results this year.  Covestro cited Chinese companies undercutting its pricing.  Covestro is rated “Unattractive” in our European Large-Cap Global Top Stick Ideas. 
  • Hammerson Plc (LSE: HMSO) shares edged higher following reports that the company is in discussions to sell 900mm pounds (USD$1.2bn) worth of properties. The discussions come following increased pressure from activist shareholder Elliott Advisors after the value of the company’s portfolio dropped 5.9% in 2018. Hammerson is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Ipsen SA (ENXTPA:IPN) has agreed to acquire Clementia Pharmaceuticals (CMTA) in a USD$1.3 billion deal.  Ipsen will pay USD$25 per share up front and an additional right value of USD$6 per share.  This is a 77% premium to the last close for the Canadian company.  The acquisition of Clementia will expand the rare disease portfolio of Ipsen, an area of biotech that has seen a lot of deal focus recently.  Ipsen is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas.  Clementia is not rated in our Global Top Stock Ideas.
  • Warren Buffet said this morning he was “wrong in a couple of ways” about Kraft Heinz Corp. (KHC), which he insists is still a “wonderful” business.  Buffet said “we overpaid for Kraft”, a statement not normally heard from him.  Kraft Heinz Corp took at USD$15.4 billion write-down as part of its most recent results last week, surprising the market.  Kraft Heinz Corp is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Microsoft (MSFT) is dropping the price of its augmented reality goggles HoloLens 2.  The goggles will be cut to USD$3,500 from USD$5,000.  The HoloLens 2 goggles are targeting commercial applications and not consumers at this point, things such as teaching industrial processes or other educational applications.  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. 
  • Persimmon (LSE: PSN) shares slipped notably lower after a weekend report from the Financial Times indicates that the homebuilder could be banned from the United Kingdom’s Help to Buy program. The report cites that Housing Secretary James Brokenshire is concerned that the company requires buyers to pay annual rent for their new home. Persimmon is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Ping An Insurance Co. (SEHK:2318) is planning an IPO of its fintech unit that could value it at up to USD$8 billion.  Ping An Insurance plans an IPO of its OneConnect unit in Hong Kong that could see it reap up to USD$1 billion in the offering.  The IPO could happen as soon as the second half of 2019.  Ping An Insurance is rated “Neutral” in our China All-Cap Global Top Stock Ideas. 
  • Puma (DB:PUM) was cut to underperform from neutral at Credit Suisse while its price target was cut to 417 euros from 445 euros.  Credit Suisse made the cut due to its valuation, calling it a bit expensive at these levels while highlighting that Credit Suisse’s EPS expectations are below consensus for the coming years.  Puma is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • Roche (SWX:ROG) is acquiring Spark Therapeutics (ONCE) in a USD$4.8 billion deal.  Roche is paying a 122% premium for Sparks which will transform it from a laggard to a leader in gene therapy, paying USD$114.50 or share for Spark.  Spark will give Roche a stable of experimental drugs that it is presently lacking.  Roche is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.  Spark Therapeutics is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Royal Dutch Shell (ENXTAM:RDSA) said today it expects Europe to be the fastest growing LNG (liquified natural gas) next year.  Royal Dutch Shell controls 22% of the LNG market in Europe.   Russia is expected to increase its exports significantly to Europe next year and Shell expects the market to easily absorb it all.  Royal Dutch Shell is rated “Attractive” in our European Large-Cap Global Top Stock Ideas and “Attractive” in our United Kingdon All-Cap Global Top Stock Ideas.
  • Senvion SA (DB: SEN) shares fell to record lows after the company postponed the publication of its FY2018 financial results. Senvion told investors on Sunday that it is seeking a, “restructuring opinion,” the first step required in Germany to begin negations with banks. Stephan Lienert, a credit analyst with Jefferies, wrote, “We believe delaying results and commissioning solvency reports simply means the cash issues is more acute than even we estimate.” Senvion is not rated in our Global Top Stock Ideas.
  • Telefonica (BME:TEF) said it has “all possibilities open, organically or inorganically, in Mexico”, according to its CEO.  The business in Mexico has underperformed though it is improving, he said.  Telefonica is looking and questioning every unit where the capital employed is not meeting target returns.  Telefonica is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.1343
  • GBP£ is currently little changed against the USD$ at 1.3054
  • CHF is currently little changed against the USD$ at 0.9992

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1.2 basis points to 0.108%
  • German 10-Year Bunds are lower with yields up 1.2 basis points to 0.108%
  • French 10-Year Government Bonds are lower with yields up 0.8 basis points to 0.524%
  • UK 10-Year GILTs are lower with yields up 1.8 basis points to 1.176%
  • Italian 10-Year Government Bonds are higher with yields down -7.4 basis points to 2.773%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Volkswagen AG Consumer Staples 151 3.04%                  690,359
adidas AG Financials 210 3.04%                  898,700
Societe Generale SA Energy 26.1 2.82%               4,610,562
Daimler AG Consumer Staples 53.4 2.38%               4,363,162
BNP Paribas SA Financials 42.9 2.23%               4,052,117
 
Underperformers Sector Price 1D % Chg Volume
Iberdrola SA Consumer Staples 7.36 -1.11%               2,401,199
Orange SA Materials 13.5 -0.99%               5,198,554
TOTAL SA Consumer Discretionary 49.5 -0.89%               4,565,311
Telefonica SA Financials 7.71 -0.81%            14,375,870
BASF SE Utilities 64.8 -0.70%               2,788,685
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