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European stocks post gains with risk-on driven by Eurozone PMI data better than expected

Mar 05, 2019

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

European Markets

  • European stock close higher with the Composite PMI coming better than expected animating investors today
  • The Euro Stoxx 600 closed up +0.15%, the FTSE 100 advanced +0.69%, the DAX rose +0.24%, and the CAC 40 finished up +0.21%
  • The UK is not expecting a breakthrough at its coming meeting with EU negotiators, according to press reports
  • Markit Eurozone Composite PMI (final reading) came in at 51.9 versus a forecast of 51.4 and 51.4 in January. 
  • Chinese officials lowered their target for economic growth.  In Premier Li Keqiang’s annual report to the National People’s Congress, the target range for CY2019 GDP was set to 6.0% to 6.5% vs. 6.5% in CY2018. 
  • In addition to a lower GDP target for CY2019 (vs. CY2018), Chinese officials also announced a major tax cut The top bracket of the value-added tax (VAT) rate was dropped 3 percentages points, in an attempt to help the manufacturing sector.  The VAT cut translates to approximately RMB800 billion or USD$119 billion
  • Investor sentiment for European stocks finished trading neutral with the advance/decline ratio for the Euro Stoxx 600 currently at 1.13x
  • Telecommunications (+0.71%), Health Care (+0.66%), and Real Estate (+0.52%) stocks were the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-0.53%), Media (-0.5%), and Banks (-0.43%) stocks were the worst performers in the Euro Stoxx 600 today
  • 190 stocks in the Euro Stoxx 600 hit 4-week highs while 15 stocks closed at 4-week lows
  • 94 stocks in the Euro Stoxx 600 finished the trading session overbought while 7 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed -0.09 points today to 13.56 after closing at 13.65 yesterday

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Bed, Bath & Beyond (BBBY) was downgraded today by Barclay’s to underweight from equal-weight.  Barclay’s cut its price target for Bed, Bath & Beyond to USD$13 from USD$15, implying it sees 22% downside for the stock.  Barclay’s no longer believes in the turnaround plans of Bed, Bath & Beyond.  Bed, Bath & Beyond is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Kohl’s (KSS) fourth quarter EPS of USD$2.24 beating consensus of USD$2.18.  Kohl’s delivered same store sales growth of 1.0%, beating consensus of 0.2%.  Target fourth quarter revenue of USD$6.54 in line with consensus of USD$6.56.  Target affirmed 2019 EPS guidance of USD$5.80-6.15.  Kohl’s is rated “Attractive” in our US Large-Cap and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.   
  •  Softbank (TSE:9984) has raised a USD$3 billion loan to cover commitments as Softbank waits for funds committed to its Vision Fund.  Softbank has raised over USD$100 billion in what it calls the world’s largest pool of money to fund tech investments.  Softbank’s Vision Fund has stakes in over 70 tech companies worldwide.  Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas. 
  • Target (TGT) fourth quarter EPS of USD$1.53 matches consensus of USD$1.53.  Target delivered same store sales growth of 5.3%, beating consensus of 5.1%.  Target fourth quarter revenue of USD$22.98 matched consensus of USD$22.96.  Target affirmed 2019 EPS guidance of USD$5.75-6.05.  Target is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • The Children's Place (PLCE) had its price target cut today at B. Riley to USD$122 from USD$167 while maintaining its buy rating.  B Riley sees the heavy promotional and sales initiatives that weighed on results continuing into 2019 and likely to further weigh on financial performance.  Children’s Place is rated “Neutral” in our US Large-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  

Global Information Technology & Communication Services Stocks Trending in the News

  • Align Technology (ALGN) shares rebounded following Pipper Jaffray’s analyst Matt O’Brien defense of the stock in a note to clients. O’Brien told investors to, “buy the pullback,” that resulted from news that Align Technology will close its Invisalign Stores by April 3, 2019. Align Technology is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  
  • Altice Europe NV (ENXTAM: ATC) shares fell after they were downgraded from equal-weight to underweight at Barclays. Barclays also slashed its price target for Altice Europe NV shares from 2.80 euros/share to 1.50 euros/share, which implies a 27% downside from Monday’s closing price. Altice Europe NV is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • Juniper Networks (JNPR) announced its intent to buy Mist Systems for USD$405 million.  Mist Systems is a leader in the use of AI in the management of wireless cloud networks.  Juniper has made expansion into cloud-management of wireless network a priority.  Juniper expects the deal to close in the second quarter.  Juniper Network is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Ctrip.com International (CTRP) shares posted their largest intraday gains in over three years after reporting stronger-than-expected CY4Q2018 results. Six analysts, including Citigroup, upgraded Ctrip.com shares on the news. Ctrip.com is rated “Neutral” in our China All-Cap Global Top Stock Ideas.  
  • Papa John’s Pizza (PZZA) announced that its founder, Joh Schnatter, will be quitting the board as part of his settlement with the company he founded.  Papa John’s said Schnatter will help the board find a suitable replacement for him on the board.  The recent tension comes after Starboard Value LP mounted an activist campaign to improve performance along with its USD$200 million investment in the company.  Papa John’s Pizza is rated “Top Short” in our US Large-Cap and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.   
  • Salesforce.com (CRM) reported fourth quarter adjusted EPS of USD$0.70 beating consensus of USD$0.55.  Salesforce.com reported first quarter 2019 adjusted revenue of USD$3.6 billion in line with consensus of USD$3.54 billion.  Salesforce.com Inc gave first quarter EPS guidance of 60-61 cents per share.  Salesforce.com Inc is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. 
  • YY (YY) reported fourth quarter EPS of 12.86 yuan beating consensus of 12.66 yuan.  YY delivered fourth quarter gross margin of 35.1%, a touch better than 35.0% expected.  YY fourth quarter revenue of 4.64 billion yuan a touch better than consensus of 4.47 billion yuan.  YY affirmed first quarter revenue guidance of 4.01-4.16 billion yuan.  YY is rated “Neutral” in our China All-Cap Global Top Stock Ideas. 

Global Industrials Stocks Trending in the News

  • Alaska Air (ALK) has lowered revenue guidance for the first quarter.  Alaska Air see revenue growing just 1-2% in the first quarter, down from 3-4% earlier.  Poor winter weather has dampened demand early in the quarter and is the main reason for the cut to guidance.  Alaska Air is rated “Neutral” in our US Large-Cap and “Top Buy” in our US Industrials Global Top Stock Ideas 
  • Hertz Global Holdings Inc. (HTZ) shares tumbled after top shareholder Carl Icahn slashed his holdings overnight. Icahn sold about 5mm Hertz shares at about USD$19.60/share yesterday, nearly a 2% discount to the last closing price of Hertz. Icahn still, however, owns about 24mm Hertz shares. Hertz is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.  
  • JetBlue (JBLU) has improved guidance somewhat, now seeing RASM down 1.5% to 3.5%, an improvement over previous guidance of a 2% to 4% drop.  JetBlue also cut its capacity growth guidance to 6.5%, down 0.5%   JetBlue affirmed 2019 EPS guidance of USD$2.50-3.00.  JetBlue is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.  

Global Financials Stocks Trending in the News

  • Aon Plc (AON) is considering the acquisition of rival insurance brokerage Willis Towers Watson Plc (TCK), according to sources familiar with the matter. According to the sources, Aon will submit a bid in the coming weeks with the two companies having already help preliminary talks. Aon declined to comment on the report. Aon is not rated in our Global Top Stock Ideas.  
  • Raiffeisen Bank International (WBAG: RBI) shares slid following news that is predecessor, RZB, helped to launder money associated with Russian tax fraud. According to an article published on Addendum.org, a report filed by Hermitage Fund contains evidence of links to the laundered money. Raiffeisen Bank is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  
  • Societe Generale SA (ENXTPA: GLE) analysts Thomas Swoboda and Peter Clark cut their recommendation for Wacker Chemie (XTRA: WCH) from buy to hold just hours before a weaker-than-expected earnings announcement sent the stock tumbling as much as 11%. Wacker Chemie cited lower average prices for polysilicon as reasoning for the earnings slump. Societe Generale is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Wacker Chemie is rated “Top Short” in our European SMID-Cap Global Top Stock Ideas. 

Global Commodities & Power Stocks Trending in the News

  • Vale (VALE) changed the inspection company that was inspecting the dam that collapsed after the initial inspectors would not affirm the dam was safe, according to the Wall Street Journal today.  Vale rehired a past inspection company that gave the dam a passing grade, the dam that eventually collapsed killing 186 people, mostly Vale employees.  There are still 122 people missing.  Vale is rated “Neutral” in our Brazil All-Cap Global Top Stock Ideas.

Global Health Care Stock Trending in the News

  • Eli Lilly (LLY) announced it is launching an authorized generic version of its best-selling insulin Humalog that will have a list-price of 50% below Humalog.  Insulin prices have soared and have been the spotlight of much negative press for drug makers.  Humalog is a 20-year old drug and critics complain its price has only continued to rise.  Eli Lilly is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Eurofins Scientific SE (ENXTPA: ERF) shares slipped amid pressure from short sellers and reports that it pays annual rent to its founding family for laboratory space. Eurofins, which paid 26mm euros (USD$29.5mm) in rent last year to affiliates of Analytical Bioventures SCA, publicly defended its practice. Eurofins is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.  

What is Going on with European Currencies?

  • EUR€ is currently down -0.388% against the USD$ to 1.1296
  • GBP£ is currently down -0.334% against the USD$ to 1.3136
  • CHF is currently down -0.579% against the USD$ to 0.9952

Highlights from the European Bond Market

  • Generic Euro 10-Year Bonds are lower with yields up 1 basis points to 0.168%
  • German 10-Year Bunds are lower with yields up 1 basis points to 0.168%
  • French 10-Year Government Bonds are lower with yields up 0.2 basis points to 0.561%
  • UK 10-Year GILTs are lower with yields up 1.4 basis points to 1.287%
  • Italian 10-Year Government Bonds are higher with yields down -3.1 basis points to 2.707%
  • Spanish 10-Year Government Bonds are higher with yields down -1.8 basis points to 1.154%

 

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Euro Stoxx 50 Movers

In local currency.
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Outperformers Sector Price 1D % Chg Volume
Sanofi Consumer Discretionary 76.4 1.87%               2,841,417
Koninklijke Ahold Delhaize NV Consumer Discretionary 22.6 1.62%               5,436,178
Unilever NV Information Technology 47.8 1.48%               3,772,162
Anheuser-Busch InBev SA/NV Energy 72.7 1.44%               2,258,051
L'Oreal SA Health Care 226 1.34%                  368,512
 
Underperformers Sector Price 1D % Chg Volume
ING Groep NV Consumer Discretionary 11.2 -3.32%            32,831,813
Daimler AG Consumer Staples 52.9 -1.07%               2,589,265
BNP Paribas SA Financials 44.5 -0.95%               4,567,642
AXA SA Health Care 22.3 -0.76%               7,147,216
Societe Generale SA Energy 27 -0.70%               4,449,033
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