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European stocks close mixed as the global stock rally takes a pause

Feb 26, 2019

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

European Markets

  • European stocks close mixed today as the global stock rally pauses and investors look for additonal catalysts for the rally to continue
  • UK PM Theresa May addressed Parliament today and showed a path to a Brexit delay if her revised proposal fails to pass
  • The Euro Stoxx 600 closed up +0.39%, the FTSE 100 declined -0.45%, the DAX rose +0.31%, and the CAC 40 finished up +0.13%
  • Weak 4Q earnings and disappointing CY2019 guidance may cap the ability of European stocks to re-rate.  Weak forward growth rates for European stocks may cap their ability to continue to see a rally in their valuations. 
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.28x
  • Retail (+1.98%), Chemicals (+0.96%), and Basic Resources (+0.81%) stocks were the top performers in the Euro Stoxx 600 today
  • Telecommunications (-0.72%), Automobiles & Parts (-0.4%), and Technology (-0.25%) stocks were the worst performers in the Euro Stoxx 600 today
  • 168 stocks in the Euro Stoxx 600 hit 4-week highs while 24 stocks closed at 4-week lows
  • 75 stocks in the Euro Stoxx 600 finished the trading session overbought while 3 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed +0.11 points today to 13.96 after closing at 13.85 yesterday

Stocks Trending in the News

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  • Aixtron SE (DB: AIXA) shares fell after the company reported a revenue forecast for FY2019 that was 1.1% below the average analyst estimate. Aixtron expects revenue between 260mm euros and 290mm euros in FY2019 while analyst consensus was for 278.1mm euros. For CY4Q2018, Aixtron generated revenue of 87.9mm euros, surpassing consensus of 81.9mm euros. Aixtron is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas.
  • Apple (AAPL) will reportedly include a sleep monitor feature on its next Apple Watch.  Apple is presently testing the feature at its headquarters in California.  If testing goes as planned the feature will be added to the Apple Watch in 2020.  The feature will give Apple the ability to better compete with other wearable health devices.  Apple is rated “Neutral” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Information Technology Global Top Stock Ideas.
  • Bank of America (BAC) announced it will drop the Merrill Lynch name from its investment bank.  Bank of America acquired Merrill Lynch at the height of the financial crisis and has told employees it will remove  “Merrill Lynch” from the investment bank completely and rebrand its wealth management unit businesses with the “Merrill” name.  An era has ended.  Bank of America is rated “Attractive” in our SMID-Cap Global Top Stock Ideas.
  • BASF (DB:BAS) reported fourth quarter ebitda of 630 million euros well above consensus of 552 million euros.  BASF reported fourth quarter adjusted revenue of 15.6 billion euros beating consensus of 14.6 billion euros.  BASF gave 2019 revenue and ebitda growth guidance of “slightly higher”.  BASF is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Bayer (DB:BAYN) has proposed a dividend of 2.80 euros per share, below 2.84 euros consensus.  Additionally, during the opening day of the second Roundup trial in the US, the plaintiff’s attorney was threatened with sanctions for straying from the subject of the trial.  The judge threatened this during the attorney’s opening statement to the court.  Bayer is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • BP (LSE:BP) announced it has started production at its new Angelin Project in Trinidad and Tobago.  The natural gas project sits 60km off the coast and came in under budget and ahead of schedule.  The platform has a capacity of 600mm scfd.  BP is rated “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Etsy (ETSY) reported fourth quarter EPS of USD$0.32 well above consensus of USD$0.25.  Etsy reported fourth quarter adjusted revenue of USD$200 million beating consensus of USD$194.9 million.  Etsy reported fourth quarter adjusted ebitda of USD$51.4 million.  Etsy sees 2019 revenue growth of 29-32% while consensus is 30%. Etsy is rated “Top Short” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Information Technology Global Top Stock Ideas.
  • Fresnillo PLC (LSE: FRES) shares fell by double-digits after the company reported CY2H2018 revenue that missed consensus due to lower revenue and higher costs. Fresnillo’s costs increased 14% y/y in CY2H2018 while its Ebitda came 9% below consensus. Citi noted that Fresnillo’s EPS was offset by a lower tax rate. Fresnillo is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Hertz (HTZ) reported fourth quarter loss of 53 cents per share beating consensus of an 82 cents per share loss.  Hertz reported fourth quarter adjusted revenue of USD$2.3 billion beating consensus of USD$2.1 billion.  Hertz posted 10% revenue growth in the fourth quarter.  Hertz is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Unattractive” in our Industrials Global Top Stock Ideas.
  • Home Depot (HD) reported fourth quarter adjusted EPS of USD$2.22 beating consensus of USD$2.16.  Home Depot reported fourth quarter adjusted revenue of USD$26.49 billion in line with consensus of USD$26.58 billion.  Home Depot reported fourth quarter same store sales growth of 3.2% while consensus was for a 4.5% rise.  Home Depot gave same store sales growth guidance in 2019 of 5% with revenue growth of 3.3%.  Home Depot is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Consumer Discretionary Global Top Stock Ideas.  Home Depot is rated “Attractive” in our Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
  • Shake Shack (SHAK) reported fourth quarter adjusted EPS of USD$0.06 beating consensus of USD$0.03.  Shake Shack reported fourth quarter adjusted revenue of USD$124.3 million beating consensus of USD$119.2 million.  Shake Shack reported fourth quarter same store sales growth of 2.3% while consensus was for a drop of 1.2%.  Shake Shack is rated “Unattractive” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Consumer Discretionary Global Top Stock Ideas.
  • Standard Chartered Plc (LSE: STAN) CFO Andy Halford confirmed in an interview that the bank will push forward with plans to create two new hubs for its Asian operations in Singapore and Hong Kong. Halford discussed that the move will save Standard Chartered in the “low” hundreds of millions of dollars in costs. Standard Chartered is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Sykes Enterprises (SYKE) reported fourth quarter adjusted EPS of USD$0.58 missing consensus of USD$0.66.  Sykes Enterprises reported fourth quarter adjusted revenue of USD$415.2 million missing consensus of USD$417.5 million.  Sykes Enterprises gave first quarter 2019 revenue guidance of USD$403-408 million, below present consensus of USD$.  Sykes Enterprises is rated “Attractive” in our SMID-Cap Global Top Stock Ideas and “Neutral” in our Information Technology Global Top Stock Ideas.
  • Tesla (TSLA) CEO Elon Musk should be held in contempt of court, according to the Securities and Exchange Commission (SEC).  The SEC has asked a judge to hold Mr. Musk in contempt for tweets he recently sent that the SEC claims breached the agreement he has signed.  The tweet in questions said Tesla would reach production of 500,000 cars in 2019, a tweet that was quickly corrected to say daily production at the annual rate of 500,000 cars.  The tweet was not approved beforehand, violating the agreement with the SEC.  Tesla is rated “Top Short” in our Large-Cap Global Top Stock Ideas and “Neutral” in our Consumer Discretionary Global Top Stock Ideas. 
  • Travis Perkins (LSE: TPK) shares rose the most intraday since 2009 after the company announced FY2018 pretax profit of 348mm pounds, notably beating the consensus estimate of 327mm pounds. Travis Perkins generated y/y revenue of 6.9% for CY4Q2018 and 4.9% revenue growth for the full year. Travis Perkins is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Vitamin Shoppe (VSI) reported fourth quarter adjusted loss of 19 cents per share beating consensus of 25 cents loss per share.  Vitamin Shoppe reported fourth quarter adjusted revenue of USD$248.5 million missing consensus of USD$254.5 million with same store sales dropping 5.4% in the quarter.  Vitamin Shoppe expects to close 60-80 stores in 2019.  Vitamin Shoppe is rated “Unattractive” in our SMID-Cap Global Top Stock Ideas and “Top Short” in our US Consumer Discretionary Global Top Stock Ideas

What is Going on with European Currencies?

  • EUR€ is currently little changed against the USD$ at 1.1374
  • GBP£ is currently up +1.138% against the USD$ to 1.3246
  • CHF is currently little changed against the USD$ at 0.9997

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1 basis points to 0.118%
  • German 10-Year Bunds are lower with yields up 1 basis points to 0.118%
  • French 10-Year Government Bonds are lower with yields up 0.2 basis points to 0.526%
  • UK 10-Year GILTs are lower with yields up 3 basis points to 1.206%
  • Italian 10-Year Government Bonds are higher with yields down -6.9 basis points to 2.704%
  • Spanish 10-Year Government Bonds are higher with yields down -2.5 basis points to 1.138%

 

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Euro Stoxx 50 Movers

In local currency.
On Mobile/Tablet scroll to the right.

Outperformers Sector Price 1D % Chg Volume
BASF SE Utilities 67.3 4.28%               2,548,104
Industria de Diseno Textil SA Materials 25.9 2.90%                  889,345
Deutsche Post AG Health Care 27.1 1.81%               3,182,816
adidas AG Financials 213 1.71%                  286,662
Siemens AG Utilities 98.1 1.62%               3,031,868
 
Underperformers Sector Price 1D % Chg Volume
Telefonica SA Financials 7.55 -1.36%               3,613,560
Fresenius SE & Co KGaA Telecommunication Services 48.6 -1.18%               1,207,266
Societe Generale SA Energy 25.6 -1.09%               1,356,624
Orange SA Materials 13.4 -0.92%               6,031,759
ASML Holding NV Health Care 164 -0.80%                  927,975

 

 

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