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European stocks post moderate gains, off highs of the session, on news of imminent US-China trade deal

Mar 04, 2019

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

European Markets

  • European stocks post moderate gains on news US and Chinese trade officials are nearing a comprehensive agreement on the trade dispute, stocks close off the highs of the session  
  • There are rumors that US trade officials are prepared to lift tariffs on USD$200 billion on Chinese goods if Chinese trade officials commit to better address intellectual-property rights for American products. 
  • The Euro Stoxx 600 closed up +0.23%, the FTSE 100 advanced +0.39%, the DAX fell -0.08%, and the CAC 40 finished up +0.41%
  • There has been no progress on Brexit with the March 12th deadline to put a proposal to a vote in Parliament fast approaching
  • China is planning a 3 percentage point cut to its VAT on manufacturing, in an effort to spur growth, according to press reports
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.75x
  • Media (+0.97%), Construction & Materials (+0.64%), and Oil & Gas (+0.61%) stocks were the top performers in the Euro Stoxx 600 today
  • Travel & Leisure (-0.73%), Retail (-0.34%), and Chemicals (-0.27%) stocks were the worst performers in the Euro Stoxx 600 today
  • 220 stocks in the Euro Stoxx 600 hit 4-week highs while 23 stocks closed at 4-week lows
  • 88 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 -0.07 points today to 13.3 after closing at 13.37 last week

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Alibaba (BABA) announced it is pairing with Office Depot (ODP) in its first partnership with a US company.  Alibaba is creating a new destination for US businesses to come and access Alibaba’s business-to-business platform of suppliers.  Alibaba will gain access to 10 million customers and 1800 sales agents at Office Depot.  Alibaba is rated “Top Buy” in our China All-Cap Global Top Stock Ideas.   Office Depot is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • Amazon (AMZN) is reported to be planning to open dozens of grocery stores around the US, according to a report in the Wall Street Journal.  Amazon will open the first of the additional grocery stores in Los Angeles.  Amazon is in discussions about locations in most of the major US cities, the report highlights.  Amazon is looking to build on its Whole Foods acquisition with stores at a lower price point.  Amazon is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas

Global Information Technology & Communication Services Stocks Trending in the News

  • 58.com (WUBA) was downgraded to neutral from outperform at Macquarie.  Macquarie also cut the price target to USD$73 from USD$91.  The downgrade comes in the wake of results that came in line as Macquaries raises concerns about growth in the coming year.  58.com is rated “Top Buy” in our China All-Cap Global Top Stock Ideas. 
  • China Tower (SEHK:788) reported a 36% jump in annual profit, matching consensus.  China Tower delivered net income of 2.65 billion yuan (USD$396 million) in 2018, this compared to 2.66 billion yuan a year earlier in 2017.  China Tower expects continued strength anticipating strong spending on the coming 5G rollout from which it will benefit.  China Tower is rated “Unattractive” in our China All-Cap Global Top Stock Ideas.
  • Versum (VSM) was downgraded today by Jefferies to hold from buy.  Jefferies raised the price target for Versum to USD$47 from USD$44.  The downgrade comes after Versum declined Merck’s USD$48-per-share offer.  After rejecting the offer, Jefferies sees an unattractive risk/reward scenario.  Versum is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  Merck is rated “Attractive” in our US Large-Cap Global Top Stock Ideas.
  • Xilinx (XLNX) saw its rating lowered at BMO to market perform from outperform.  BMO has been bullish on Xilinx for 3 years with this being the first downgrade of Xilinx during that time.  BMO increased Xilinx’s price target to USD$125 from USD$100 while cutting its rating.  Xilinx is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. 

Global Industrials Stocks Trending in the News

  • Brembo SpA (BIT: BRE) shares fell lower after it told investors that it expects to report volumes and profitability levels this year in-line with levels of 2018. The company cited that it is competing, “in a complex market scenario,” while Chairman Alberto Bombassei said, “We must take the unquestionably negative signs from the economy and international politics as a further driver of development.” Brembo shares were halted in Milan. Brembo is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • Lockheed Martin (LMT) will see a reduced order for F-35 jets in 2020.  The Pentagon will request 78 jets be built in 2020, down from the initially expected 84.  The report appeared in Bloomberg and has yet to be confirmed by the Pentagon.  Lockheed Martin is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • Rotork (LSE: ROR) shares traded lower following its FY2019 guidance that indicated slower than expected growth in FY2019. Morgan Stanley wrote in a note to clients that the company’s guidance implies, “low single-digital,” cut to consensus estimates. This comes after a 3% Ebitda beat by Rotork in FY2018. Rotork is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.  

Global Financials Stocks Trending in the News

  • Aviva (LSE:AV) announced Maurice Tulloch will be appointed CEO effective today.  Aviva has spent 5 months searching for a new CEO.  Tulloch is a veteran if the company, having joined in 1992.  He is presently head of the international insurance business and was appointed to the board 2 years ago.  Aviva is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas. 
  • Nordea Bank (OM:NDA SE) is falling today after a report that it is being implicated in the larger money laundering investigation going on in the country.  Sweden’s largest broadcaster reported today that Nordea in involved in the money laundering scandal as investigators expand the existing investigation. Nordea Bank is rated  “Top Short” in our European Large-Cap Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • Newmont Mining (NEM) has rejected the unsolicited USD$17.4 billion offer from Barrick Gold (ABX).  The deal would have created the world’s largest gold company.  Newmont’s board unanimously rejected the offer and submitted a proposal to create a JV encompassing both companies’ Nevada operations.  Newmont Mining is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.  Barrick Gold “Neutral” in our Canada All-Cap Global Top Stock Ideas.
  • Vale (VALE) saw most of its senior executives leave over the weekend.  Regulators in Brazil recommended the removal of the CEO and most other senior executives in the wake of the dam disaster.  The interim CEO is a 10-year veteran of the company as a search for a new CEO begins.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Biogen (BIIB) is acquiring Nightstar Therapeutics (NITE) for USD$25.50 per share.  Biogen is looking to establish a clinical pipeline in ophthalmology.  Biogen is paying a 70% premium over its last closing price.  Biogen is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  Nightstar is not rated in our Global Top Stock Ideas.
  • Fresenius Medical Care AG & Co. KGaA (XTRA: FME), DaVita Inc. (SVA), and other dialysis companies fell today following a Reuters report that the US Centers for Medicare and Medicaid Services is beginning to consider a trial payment design favoring home dialysis treatments to clinical ones. Fresenius Medical and Davita combined control roughly 70% of the US dialysis market. Fresenius is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. DaVita is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  

What is Going on with European Currencies?

  • EUR€ is currently down -0.282% against the USD$ to 1.1333
  • GBP£ is currently little changed against the USD$ at 1.3189
  • CHF is currently little changed against the USD$ at 1.0004

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are higher with yields down -2.5 basis points to 0.158%
  • German 10-Year Bunds are higher with yields down -2.5 basis points to 0.158%
  • French 10-Year Government Bonds are higher with yields down -1.9 basis points to 0.559%
  • UK 10-Year GILTs are higher with yields down -2.3 basis points to 1.273%
  • Italian 10-Year Government Bonds are lower with yields up 0.5 basis points to 2.738%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
ASML Holding NV Health Care 164 1.50%                  964,106
Koninklijke Philips NV Financials 35.9 1.44%               2,272,129
Sanofi Consumer Discretionary 75 1.39%               1,982,860
Unibail-Rodamco-Westfield Telecommunication Services 144 1.37%                  491,498
Schneider Electric SE Industrials 70 1.33%               1,250,881
 
Underperformers Sector Price 1D % Chg Volume
Koninklijke Ahold Delhaize NV Consumer Discretionary 22.3 -2.41%               6,146,858
Linde PLC Real Estate 148 -1.89%                  901,757
Anheuser-Busch InBev SA/NV Energy 71.7 -1.58%               2,650,858
Engie SA Industrials 13.2 -1.05%               5,010,194
Amadeus IT Group SA Materials 65.9 -0.81%                  870,532
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