Bullish data from the east and the west fuel risk appetite across Europe; Asia rallies sharply overnight
Apr 01, 2019
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
- European stocks rise sharply today on a strong data from China, followed by strong data from the US; this despite weak data from Germany today
- German Manufacturing PMI for March came at 44.1, worse than the 44.7 consensus and the worst reading in 7 years
- PMIs across Asia printed better than expected, in Japan, China and South Korea readings came better than expected, indicating generally improving economic conditions
- Brexit discussions continue in Parliament with lawmakers trying to craft an updated proposal, trying to break the impasse
- Goldman Sachs and Morgan Stanley both lowered their 2019 expectation for US 10-year Treasury yield to 2.35% and 2.25%, respectively
- Morgan Stanley European Quants are out arguing that investors should buy value stocks over quality stocks. They argue the valuation for quality stocks is in the 99th percentile while stocks with high dividend yields are in the bottom decile. As a result, you may get a better “payoff” buying stocks with higher payouts.
- UBS is out arguing that global consumer discretionary stocks are set to outperforming utilities stocks. The ratio between the two sectors has dropped 15% since hitting an all-time high back in June 2018. A long-short pairing of the two is a way to play to reacceleration in global growth. Not sure we would recommend that though Consumer Discretionary has been one of our favorite sectors in US markets so far this year!
- We are focused on Germany in our Data Daily series this week: Macro Monday: Comparing Key Data Points of the German Economy
- Check out our Book of the Week: Broke Millennial: Stop Scraping By and Get Your Financial Life Together, by Erin Lowry
- The Euro Stoxx 600 closed up +1.21%, the FTSE 100 advanced +0.52%, the DAX rose +1.35%, and the CAC 40 finished up +1.03%
- Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 3.76x
- Basic Resources (+3.63%), Technology (+1.27%), and Retail (+0.83%) stocks were the top performers in the Euro Stoxx 600 today
- Telecommunications (+0.78%), Utilities (-0.34%), and Real Estate (+0.71%) stocks were the worst performers in the Euro Stoxx 600 today
- 83 stocks in the Euro Stoxx 600 hit 4-week highs while 48 stocks closed at 4-week lows
- 46 stocks in the Euro Stoxx 600 finished the trading session overbought while 10 stocks closed oversold according to the 16-day RSI Measure
Asian Stock Markets Indexes
Asian Markets Recap
- The Nikkei 225 finished up +1.43%, the Hang Seng ended up +1.76%, the Hang Seng China Enterprise up +1.56%, and the CSI 300 was +2.62%
- Investor sentiment for Japanese stocks finished positive with the advance/decline ratio for the Nikkei 225 closing at 10.84x
- 49 stocks in the Nikkei 225 hit 4-week highs while 1 stocks reached 4-week lows
- 9 stocks in the Nikkei 225 closed overbought while 3 stocks closed oversold according to the 16-day RSI Measure
- Investor sentiment for Hong Kong stocks finished positive with the advance/decline ratio for the Hang Seng closing at 24x
- 26 stocks in the Hang Seng hit 4-week highs while 1 stocks reached 4-week lows
- 16 stocks in the Hang Seng closed overbought while 0 stocks closed oversold according to the 16-day RSI Measure
Stocks Trending in the News
Click name for Q-Factor score and financial data
Global Consumer Stocks Trending in the News
- CarMax (KMX) was upgraded to overweight from equal-weight at Stephens CarMax has nice tailwind from its new omni-channel strategy with Stephens highlighting that CarMax saw double-digit sales growth where this completely on-line process has been introduced. CarMax saw its price target hiked to $93 from $83 together will the upgrade. Stephens has seen strong growth in March in its own channel-checks, reinforcing its bullish call on CarMax. CarMax is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.
- Coty (COTY) was dubbed a top short idea at JP Morgan today, saying the tender offer from majority share owner JAB will continue to put downward pressure on the shares. JP Morgan does not see any good news for the stock near-term as passive funds rebalance, selling the shares. Coty is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
- Galaxy Entertainment (SEHK:27) shares surged after China’s Gaming Inspection & Coordination Bureau said Macau’s casinos’ revenue fell just 0.4% in March, coming much better than the 3% drop that was expected. While better, casino revenue remains subdued as high rollers have yet to return to the casinos in strength. The soft revenue is expected to persist. Galaxy Entertainment is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
- Hertz (HTZ) is seeking to claw back at least $70 million in compensation from its ex-CEO and other senior executives. Hertz claims these executives pressured employees to use fraudulent accounting practices to inflate income and earnings. Hertz was forced to restate years of financials statements in the wake of these alleges misdeeds and incurred $200 million in costs. Hertz filed the lawsuit because the executives have refused to voluntarily return the compensation. Hertz is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Industrials Global Top Stock Ideas.
- Kellogg (K) said it has agreed to sell its cookies and fruit brands to Ferrero SpA (FERR) for $1.3 billion. Kellogg is selling these brands as it seeks to focus on its faster growing brands. Kellogg’s CEO said, “It was not easy to sell these brands” but that it allow for simpler operations and more focus on existing brands. Giovanni Ferrero, CEO of Ferrero, said the acquired brands fit well in their existing lineup. Kellogg is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Staples Global Top Stock Ideas.
- Walt Disney (DIS) has a disappointing weekend with its debut of the live-action version of Dumbo. Disney’s Dumbo earned just $45 million in ticket sales over the weekend, a weak opening for the film. Dumbo cost $170 million to produce and this is Disney’s first flop of the year. Disney is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.
Global Information Technology and Communication Services Stocks Trending in the News
- Apple (AAPL) announced the cancellation of its AirPower wireless charging mat, in a rare move for the tech giant. Apple announced the AirPower in late 2017 with its iPhone X, with the product set to go on sale in 2018. Apple has almost never simply canceled a product it already announced. Apple is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.
- EasyJet (LSE:EZJ) warned investors that the holiday season is not likely to be as strong as the company has expected. Brexit and the associated uncertainty is dampening demand for air travel, the company advised. “We had hoped for a little more clarity and certainty at this point,” said CEO Johan Lundgren. The combination of Brexit woes plus a slowing economy is taking its toll on EasyJet shares recently. EasyJet is rated “Neutral” in our United Kingdom All-Cap Global Top Stock Ideas.
- Facebook (FB) CEO Mark Zuckerberg called for additional regulation and oversight of the internet. Critics of Facebook got a chuckle from Zuckerberg’s comments given the multitude of missteps Facebook has made on this subject. Zuckerberg called for regulation of four broad areas-harmful content, election integrity, privacy and data portability. Facebook is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
- Softbank (TSE: 9984) announced the largest local bond sale ever in Japan. Softbank will offer 500 million yen in bonds targeting individual investors. The bonds are expected to be priced on April 12. Softbank controls the $100 billion Vision Fund. Softbank is rated “Neutral” in our Japan Large-Cap Global Top Stock Ideas.
- Versum Materials (VSM) has opened the possibility for a deal with Merck KGaA (DB:MRK) of Germany after initially rejecting its $5.9 billion bid. Members of both companies met this week to discuss a potential deal. Merck’s initial offer was for $48 per share. In this meeting the CEO of Merck indicated there is room to increase its offer. Versum Materials is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas. Merck KGaA is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
Global Industrials Stocks Trending in the News
- Boeing (BA), like the rest of the world, will not see a preliminary report from regulators on the crash of the Ethiopian Airlines 737 Max. Ethiopia’s Transport Ministry said the report will not be released Monday as had been reported widely in the press after Ethiopia’s Foreign Ministry said that it would be. Initial reports are that the black box shows that the anti-stall system engaged but investigators are still looking for a part to explain why that happened. Boeing is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas
- DSV (CPSE:DSV) has agreed to acquire Panalpina Welttransport Holding ( PWTN), after the board of Panalpina agreed to the previously announced deal. The deal will create $4.6 billion logistic and cargo player than will be the largest in the world. The offer is for 196 Swiss francs per share which was a 43% premium when announced on January 15th. The merged entity will have 60,000 employees, $17.8 billion in revenue and be active in 90 countries. DSV is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas. Panalpina Welttransport Holding is rated “Neutral” in our European SMID-Cap Global Top Stock Ideas.
- Lyft (LYFT) saw the debut of its shares open 21% higher than the pricing today. Lyft saw very strong demand for its shares in the offering and closed 12% higher than pricing on its first full day of trading. Lift raised $2.34 billion in the IPO. The company closes the first day of a public company with a market valuation of over $25 billion. Lyft is not yet rated in our Global Top Stock Ideas.
Global Financial Stocks Trending in the News
Wells Fargo (WFC) was downgraded to market perform from outperform at KBW. Wells Fargo’s price target was cut to $50 from $58. Wells Fargo will have “tough sailing” without a CEO and finding a new one will not be easy. Senator Elizabeth Warren, however, is smiling. KBW fears it is not clear where Wells Fargo is headed. Wells Fargo is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
Global Health Care Stocks Trending in the News
- Celgene (CELG) was downgraded at Atlantic Equities to neutral from buy. Celgene’s price target was lowered to $101 from $103. The market the average price target of Celgene is $99.50. The downgrade is based on valuation with the recent rise in the stock price. Celgene is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas.
- Cresco Labs (CNSX:CL) is acquiring Origin House (CNSX:OH) in a C$1.1 billion all stock deal. Origin House shareholders will receive 0.8428 shares of Cresco Labs. Cresco is paying a a26% premium to the average price over the last 30 days. Origin House shareholders will hold around 20% of the resulting company. Cresco said it sees its brands in Origin’s 725 dispensaries upon completion of the deal. Neither Cresco Labs nor Origin House is rated in our Global Top Stock Ideas.
- Novartis (SWX:NOVN) will acquire the outstanding shares of IFM Tre, a unit of IFM Therapeutics. Novartis will pay $310 million up front and eligible for up to $1.265 billion in additional milestone payments. IFM Tre drug is able to fine-tune a person’s immune system and Novartis is keen to acquire its drug pipeline. Novartis is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.