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European stocks close mixed on trade and Brexit concerns; China posted losses overnight while Japan was closed

Mar 21, 2019

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scroll down for the Asian markets recap

International Stock Markets Indexes

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

European Markets Recap

  • Europe stocks close mixed, closing off earlier session highs on trade and Brexit concerns
  • The Bank of England held interest rates steady, as expected
  • UK PM Theresa May will request a 3 month Brexit delay when she pitches the idea to EU leaders later today
  • EU leaders are indicating they want the UK Parliament to ratify any extension of Brexit agreed to by the EU
  • President Trump said tariffs will stay on Chinese goods until the two come to a trade agreement, in his attempts to get China to finalize a trade deal
  • The dovish pivot by the Fed has left many investors wondering if the growth outlook is worth than expected
  • The Euro Stoxx 600 is currently up +0.08%, the FTSE 100 is higher by +1.05%, the DAX is down -0.28%, and the CAC 40 is up +0.13%
  • Food & Beverage (+0.9%), Technology (+0.73%), and Telecommunications (+0.68%) stocks are the top performers in the Euro Stoxx 600 today
  • Banks (-1.11%), Financial Services (-0.75%), and Media (-0.53%) stocks are the worst performers in the Euro Stoxx 600 today
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.3x
  • 123 stocks in the Euro Stoxx 600 are at 4-week highs while 20 stocks are at 4-week lows
  • 66 stocks in the Euro Stoxx 600 are overbought while 2 stocks are oversold according to the 16-day RSI Measure

Asian Stock Markets Indexes

Asian Markets Recap

  • The Hang Seng ended down -0.85%, the Hang Seng China Enterprise declined -0.7%, and the CSI 300 was +0.04%
  • Japanese markets are closed today for the Vernal Equinox Holiday
  • Investor sentiment for Hong Kong stocks finished negative with the advance/decline ratio for the Hang Seng closing at 0.47x
  • 14 stocks in the Hang Seng hit 4-week highs while 1 stock reached 4-week lows
  • 3 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Conagra (CAG) reported fiscal third quarter 2019 EPS from continuing operations of 51 cents, beating the 49 cents consensus.  Conagra reported fiscal third quarter 2019 revenue of USD$2.71 billion in line with USD$2.75 billion.  Conagra CEO said the integration of Pinnacle if going well, after initial indication, a couple of months ago, were less positive.  Conagra is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.
  • Darden Restaurants Inc. (DRI) shares traded notably higher after the Olive Garden owner boosted its forecast for FY2019. Darden told analysts that it now expects same-store sales growth of 2.7%, higher than the 2.5% guidance previously provided in December. Darden’s Olive Garden observed comparable same-store sales growth of 4.3% in the quarter, marking the 18th consecutive quarter of growth for the business. Darden is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • EssilorLuxxottica Societe (ENXTPA: EL) shares fell after vice-chairman Hubert Sagnieres said in a statement that Del Vecchio holding Delfin made, “serious and false accusations,” on governance and management. Sagnieres explained further that, “This approach, which is contrary to the company’s social interest, is detrimental to the company and to all its shareholders.” EssilorLuxxottica is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  
  • Ford (F) announced plans to build an electric vehicle just outside Detroit, a year and a half after moving electric vehicle production to Mexico.  Ford will spend USD$850 million to build a factory in Flint, Michigan to build vehicles with plans to add a second shift by 2023.  Ford will also spend USD$50 million to establish a facility to add autonomous software to self-driving vehicles produced there.  Ford plans to hire 900 workers.  Ford is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.
  • IG Group Holdings Plc (LSE: IGG) shares slipped to their lowest level in nearly two years after the UK spread-betting platform said the financial market volatility dragged down its FY3Q2019 sales. IG Group told investors that net trading revenue fell 12% q/q in FY3Q2019, sending the shares lower by as much as 10%. IG Group Holding is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.  
  • Levi Strauss & Co (LEVI) is returning to the public markets today pricing shares at USD$17 and raising USD$623 million.  Levi Strauss was founded over 145 years ago and was taken private in 1985.  The IPO values the company at USD$6.6 billion.  Levi pitched investors on its opportunity in China, today it only gets 3% of its revenue from China.  Levi Strauss is not yet rated in our Global Top Stock Ideas.
  • Ted Baker (LSE:TED) issued another profit warning, saying it sees “very difficult trading conditions.”  Ted Baker said it is facing heavy discounting from other retailers.  “Trading continues to be impacted by ongoing consumer uncertainty,” the company added.  Ted Baker sees a bright spot in e-commerce where it is seeing a 20% rise in sales.  Ted Baker is not rated in our Global Top Stock Ideas.

Global Information Technology & Communication Services Stocks Trending in the News

  • Alphabet’s (GOOGL) Google was fined 1.49 billion euros by the European Union for thwarting advertising from its rivals.  Google has been fined a total of 8.2 billion euros for its action by the EU.  The fine involved its role as ad broker and exclusivity agreement it had signed.   Google said it has made changes to avoid further fines as this is expected to be the last fine from the EU, for now.  Alphabet is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • AT&T’s (T) CEO said today the company’s single focus at this point in paying down debt.  He said AT&T has no plans for any M&A activity right now, with debt pay-down the priority.  In discussing its wireless business, he reminded investors that mobile phone service is taxed like alcohol and cigarettes  He added that executives like him have to spend too much time in Washington, DC.  AT&T is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Canadian Solar (CSIQ) shares slid as much as 12% after the company warned that falling prices will drive the company to report lower profit in FY2019. Canadian Solar told analysts that it expects CY1Q2019 revenue between USD$450mm and USD$480mm, far lower than analyst consensus for USD$875.7mm. Canadian Solar is not rated in our Global Top Stock Ideas.  
  • China Mobile Ltd. (SEHK: 941) shares suffered their worst drop since August 2017 following scant details of its 5G spending plans, which include a smaller dividend payment and a dip in operating revenue. The company explained to investors that it would wait until the middle of the year to provide a clearer picture for its 5G plans. China Mobil is rated “Attractive” in our China All-Cap Global Top Stock Ideas.  
  • Global Payments (GPN) saw its rating cut to neutral from overweight at Atlantic Equities.  Global Payments also had its price target cut to USD$144 from USD$144.  A more challenging near-term scenario was cited as a primary reason for the downgrade.  Global Payments is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Micron (MU) reported fiscal second quarter 2019 EPS of USD$1.71 versus consensus of USD$1.65.  Micron reported fiscal second quarter 2019 net sales of USD$5.84 billion in line with USD$5.83 billion consensus.  Micron reported an adjusted gross margin of 50.2%.  Micron is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
  • Samsung Electronics Co. (KOSE: A005930) shares rallied after Micron Technology Inc. (MU) plan to cut memory chip production signaled a closer bottom to the semiconductor market than previously thought. Micron had told investors that it will cut memory chip output amid a slump in demand for the components, a move many are taking as a ploy to put upward pricing pressure on memory chips. Samsung Electronics is not rated in our Global Top Stock Ideas. Micron Technology is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Tencent (TCEHY, SEHK:700) reported fourth quarter net income of 14.2 billion yuan, a 32% fall and well below consensus of 17.55 billion yuan.   Tencent fourth quarter revenue of 84.9 billion yuan came above 83 billion yuan.  Tencent saw 8 new video games approved in the quarter but noted there is a “sizable backlog” of games to be approved.  Analysts comments are generally that the surprise came in the growth of costs being above expectation on the quarter.  Tencent is rated “Neutral” in our China All-Cap Global Top Stock Ideas.

Global Industrial Stocks Trending in the News

  • Boeing’s (BA) introduction and approval of its MCAS anti-stall feature, in focus in recent crashes, started to be probed by US officials right after the first crash.  Investigators are looking at the approval process and why the feature was not flagged in pilot manuals.  Bloomberg reports a grand jury is being used to gather information and the investigation has taken on new urgency since the second crash.  Boeing is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.
  • Siemens AG (DB: SIE) shares edged higher following reports that the company is exploring the merger of its large gas turbine business with an Asian partner. According to people familiar with the matter, Siemens has held talks with firms regarding the venture, including Mitsubishi Heavy Industries Ltd. (TSE: 7011). Options for the venture include a full or partial sale of its gas turbine business, or a joint venture. Siemens AG is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas.  Mitsubishi Heavy Industries is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.  
  • Union Pacific Railroad (UNP) said it is working around the clock to clear trees in the wake of Midwest flooding.  Union Pacific still has tracks underwater in areas between Kansas City and Council Bluffs, Iowa.  There have been numerous levees that have been breached in southwest Iowa and Union Pacific cannot say when it expects service to return to normal.  Union Pacific is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.
  • United Rentals (URI) told investors today at a conference that the first quarter has seen significant adverse weather in the midwest that could weigh on results.  He added it is “nothing that changes our outlook for the year.”  The comments at the Bank of America conference weighed on the stock despite not changing the full year view.  United Rentals is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.

Global Commodities & Energy Stocks Trending in the News

  • Murphy Oil (MUR) in exiting Malaysia, selling its assets there to PTT (PTTEP) of Thailand for USD$2.13 billion.  Murphy Oil is exiting Malaysia to focus on opportunities in the United States.  Murphy said it will use USD$750 million of the proceeds to fund expansion of its activities in the US.  Murphy Oil is rated “Top Short” in our US Large-Cap Global Top Stock Ideas.
 

Global Healthcare Stocks Trending in the News

  • Biogen Inc. (BIIB) shares tanked after the company said its experimental Alzheimer’s drug was unlikely to be effective. Biogen will halt research into the drug, sending shares plummeting as much as 29% in the stock’s largest intraday plunge since 2008. Biogen also fanned the flames of the stock selloff after it told investors it would discontinue 2 late-stage trials aimed at evaluating the efficacy and safety of its drug aducanumab. Biogen is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.  

 

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