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European stocks caught in the crossfire of US-China trade fight and close lower as tension ratchets higher

May 13, 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

  • European stocks close lower with trade fears dominating sentiment and no clear end in sight for US-China tension
  • Looking at iron ore: The Ore Score: What in the World is going on with Iron Ore?
  • The Euro Stoxx 600 closed down -1.21%, the FTSE 100 declined -0.55%, the DAX fell -1.52%, and the CAC 40 finished down -1.22%
  • Investor sentiment for European stocks finished trading negative with the advance/decline ratio for the Euro Stoxx 600 currently at 0.12x
  • Chemicals (-1.25%), Utilities (+0.23%), and Industrial Goods & Services (-1.98%) stocks were the top performers in the Euro Stoxx 600 today
  • Automobiles & Parts (-2.68%), Travel & Leisure (-1.17%), and Personal & Household Goods (-0.92%) stocks were the worst performers in the Euro Stoxx 600 today
  • 44 stocks in the Euro Stoxx 600 hit 4-week highs while 121 stocks closed at 4-week lows
  • 11 stocks in the Euro Stoxx 600 finished the trading session overbought while 47 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  moving down -6.6 points today to 11.91 after closing at 18.51 last week
  • EUR€ is currently little changed against the USD$ at 1.1235

Asian Stock Markets Indexes

Asian Markets Recap

  • President Trump warned China not to retaliate against the US trade sanctions, saying directly to President Xi, "...China will be hurt badly if you don't make a deal because companies will be forced to leave China for other countries."
  • Apparently China did not hear him because they announced new measures of their own shortly after Trump's warning, set to go into effect June 1st; a 25% tariff will be slapped on almost 3,000 items
  • The US is set to provide details later today on a 25% tariff on the $300 billion in Chinese imports  that does not already have tariffs
  • White House Economic Adviser Larry Kudlow said China invited the US for more talks in China, though a firm date has yet to be set
  • The Nikkei 225 finished down --0.72% and the CSI 300 was -1.65%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.53x
  • 11 stocks in the Nikkei 225 hit 4-week highs while 103 stocks reached 4-week lows
  • 3 stocks in the Nikkei 225 closed overbought while 68 stocks closed oversold according to the 16-day RSI Measure
  • Hong Kong is closed for a holiday

Stocks Trending in the News

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Global Consumer Stocks Trending in the News

  • Bed, Bath and Beyond (BBBY) shares traded higher after the company announced CEO Steven Temares will step down from his role after he came under the fire of activist investors for the lagging performance of the company. Mary Winston, a recent addition to Bed, Bath and Beyond’s Board of Directors, will serve as interim CEO while a committee searches for a permanent replacement. Bed, Bath & Beyond is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.
  • Marriott International (MAR) reported first quarter earnings that beat consensus.  Marriott posted first quarter EPS of $1.41, beating consensus of $1.34.  First quarter revenue of $5.01 billion trailed consensus of $5.13 billion.  Marriott gave EPS guidance for the second quarter of $1.52 to $1.58 while consensus is $1.62.  Full year EPS guidance of $5.97 to $6.19, consensus is $6.09.  Marriott International 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 Stocks Trending in the News

  • Motorola Solutions (MSI) received a favorable court ruling related to patents.  The US Patent and Trademark Office upheld Motorola’s patents after Hytera Communications (SZSE:002583)challenged their validity with the Patent Office.  The Patent Office rejected all claims submitted by Hytera in its written ruling.  Motorola Solutions is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.  Hytera Communications is not rated in our Global Top Stock Ideas.
  • Nvidia (NVDA) saw its price target raised to $170 from $148 at Morgan Stanley.  Nvidia’s equal-weight rating was maintained.   Nvidia could deliver upside on its gaming chips business as the bar is set very low there.  Morgan Stanley writes that Nvidia has one of the better secular outlooks among chip stocks.  Nvidia is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.  
  • Vodafone Group Plc (LSE: VOD) shares slipped lower intraday by the most in nearly 4 months after the Sunday Times reported that the phone carrier will announce a cut to its dividend alongside financials on Tuesday. The Sunday Times does not cite the source of its information but does say that the dividend cut would help Vodafone cover the cost of spectrum auctions in both Italy and Germany. Jefferies analyst Jerry Dellis told the Sunday Climes that Vodafone will need to cut its dividend by at least 40% to address debt concerns. Vodafone is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Walt Disney (DIS) again ruled the box office this past weekend with its “Avengers” film still #1 in ticket sales.  “Avengers” has hauled a total, so far, of $723 million in US ticket sales with a global total of $2.49 billion.  That total leaves it about $300 million behind the all-time top-grossing film, “Avatar.”  Walt Disney is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas

Global Industrials Stocks Trending in the News

  • Boeing (BA) could see its 737 Max aircraft return to service as soon as this summer.  Boeing, however, will have a challenge convincing passengers and airlines that the plane.  Industry watchers agree this will be one of the greatest consumer-relations challenges in decades.   It is likely the grounding will be lifted in June with the planes returning to service later in the summer.  Boeing is rated “Top SHort” in our US Large-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Linde Plc (LIN) saw positive moves by 2 banks, with Deutsche Bank raising its target and BMO upgrading the stock.  Deutsche Bank hiked its price target to $205 from $190, maintaining its buy rating, saying it sees a solid 2019 ahead.  BMO upgraded Linde to outperform from market perform.  BMO also hiked its price target to $210 from $178.  Linde is not rated in our Global Top Stock Idea
  • Lockheed Martin (LMT) said if India decides to buy its new F-21 fighter jet, Lockheed will not sell the jet to any other country, as it tries to win the mega-order for 114 planes.  Lockheed has said that if it wins the deal, Lockheed will help India to develop its defense industry together with local players.  Lockheed Martin is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Uber Technologies Inc. (UBER) shares continued their rout in Monday’s trading with shares of the ride-hailing giant falling as much as 11% intraday. After Uber sold 180 million shares at $45/share on Thursday, the stock closed down 7.6% at $41.57 in its first day of public trading. The rout in Uber shares follows an IPO earlier in the year by ride-hailing rival Lyft (LYFT), whose stock has fallen 29% from its IPO price. Uber Technologies is not rated in our Global Top Stock Ideas. Lyft is not rated in our Global Top Stock Ideas.
  • WestJet Airlines Ltd. (TSX: WJA) shares soared by more than 60% after the company announced it entered a definitive agreement to be acquired and taken private by Onex Corp. (TSX: ONEX) for CAD$31/share. The CAD$31/share price implies a 67% premium to WestJet Airlines shares as of its price close. The acquisition is expected to close in the second half of 2019 or in early 2020. WestJet Airlines is rated “Attractive” in our Canada All-Cap Global Top Stock Ideas. Onex Corp. is rated “Unattractive” in our Canada All-Cap Global Top Stock Ideas.

Global Financial Stocks Trending in the News

  • Citibank (C) is intensely focused on digital banking, convinced that is the best way for it to grow.  Citibank has been shrinking its footprint while other players have expanded.  Citibank added over $1 billion in the first quarter with the vast majority coming from new customers.  More importantly, over half came from people who did not live close to a bank branch, reinforcing its decision to focus on digital and not physical locations.  Citibank is rated “Neutral” in our US Large-Cap Global Top Stock Ideas
  • Grayscale Bitcoin Trust (OTCPK: GBTC), Riot Blockchain (RIOT), and other cryptocurrency-focused stocks outperformed in today’s trading after major benchmark cryptocurrency Bitcoin (BTC) extended its rally to 11 days, sending the coin above $7,800 for the first time since July 2018. Grayscale Investment Trust is not rated in our Global Top Stock Ideas. Riot Blockchain is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas.
  • Metro Bank Plc (LSE: MTRO) shares continued to slide on Monday even though the British lender attempted to assure investors that its 350 million pound ($456 million) share sale was well advanced. The lender’s shares have lost three quarters of their value since regulators initially discovered Metro Bank assigned its mortgages incorrect risk weightings. Metro Bank is rated “Unattractive” in our United Kingdom All-Cap Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • Royal Dutch Shell (LSE:RDSA) was upgraded to buy at HSBC.  Shell is set up for an extended period of growing free cash flow which should lead to greater cash distribution for shareholders.  HSBC is comfortable with Shell’s financial framework and likelihood for greater share buybacks.  Shell is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas and “Attractive” in our United Kingdom All-Cap Global Top Stock Ideas
  • ThyssenKrupp (XTRA:TKA) has abandoned its plan to split itself, separating its steel and capital goods businesses.  Since its announcement in September its stock has fallen 45%, reaching a 15-year low.   ThyssenKrupp is considering a listing of its prized asset, its elevator business.  ThyssenKrupp expects to make a final decision about that listing in the coming months.  ThyssenKrupp is rated “Top Short” in our European Large-Cap Global Top Stock Ideas.
  • Vale (VALE) announced it will take two to three years to reach its 400 million tons target it originally set for 2019.  Vale shuttered 93 million tons of production in the wake of its mine disaster.  Vale indicated little of that production is likely to return this year, pressuring ore iron prices which are about 30% higher.  Vale reiterated its 2019 production target of 307 to 332 million tons of production.  Vale is rated “Attractive” in our Brazil All-Cap Global Stock Ideas

Global Healthcare Stocks Trending in the News

  • Insys Therapeutics Inc. (INSY) shares tanked by more than 75% after the opioid maker announced that it may seek bankruptcy protections after spending tens of millions of dollars relating to legal settlements and the defense of former company executives who are convicted of bribing doctors to prescribe powerful opioid medications. Insys Therapeutics is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas.
  • Mylan NV (MYL), Novartis AG (SWX: NOVN), and Teva Pharmaceuticals (TEVA) fell alongside other major generic drug makers following an announced lawsuit by over 40 US states that accuses 20 companies in their subsidiaries of colluding to price fix more than 100 different products in the US. The lawsuit filing represents the expansion of an initial 2016 lawsuit made by many of the states included in the most recent lawsuit. The names of more than a dozen executives from these 20 generic drug makers were also mentioned as a part of the civil complaint. Mylan NV is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas. Novartis is rated “Neutral” in our European Large-Cap Global Top Stock Ideas. Teva Pharmaceuticals is not rated in our Global Top Stock Ideas.

 

 

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