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European stocks rally, optimism wins out with plans for US and China to talk

May 14, 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

  • The Euro Stoxx 600 closed up +1.01%, the FTSE 100 advanced +1.09%, the DAX rose +0.97%, and the CAC 40 finished up +1.5%
  • What Fed Officials are saying amid US-China trade tension: What are Fed Officials saying as the Trade War Heats Up?
  • Top Stocks by sentiment: Stock Sentiment Report
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 5.06x
  • Basic Resources (+1.91%), Retail (+1.31%), and Automobiles & Parts (+1.2%) stocks were the top performers in the Euro Stoxx 600 today
  • Real Estate (-0.11%), Utilities (+0.5%), and Travel & Leisure (+0.77%) stocks were the worst performers in the Euro Stoxx 600 today
  • 24 stocks in the Euro Stoxx 600 hit 4-week highs while 322 stocks closed at 4-week lows
  • 8 stocks in the Euro Stoxx 600 finished the trading session overbought while 75 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed  down -7.52 points today to 11.91 after closing at 19.43 yesterday
  • EUR€ is currently little changed against the USD$ at 1.1213

Asian Stock Markets Indexes

Asian Markets Recap

  • President Trump said he plans to talk to China's President Xi when the 2 are at the G-20 Summit in Osaka, Japan in late June
  • Trump said he expects the talks will be "very successful" which animated European investors, sending markets there higher
  • The Nikkei 225 finished down --0.59%, the Hang Seng ended down -1.5%, the Hang Seng China Enterprise declined -1.53%, and the CSI 300 was -0.64%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.65x
  • 9 stocks in the Nikkei 225 hit 4-week highs while 152 stocks reached 4-week lows
  • 3 stocks in the Nikkei 225 closed overbought while 82 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished negative with the advance/decline ratio for the Hang Seng closing at 0.25x
  • 4 stocks in the Hang Seng hit 4-week highs while 44 stocks reached 4-week lows
  • 1 stock in the Hang Seng closed overbought while 12 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

  • Coca-Cola (KO) has a “clearly superior” growth outlook when compared to other consumer packaged goods companies, according to Morgan Stanley.   Coca-Cola was upgraded to overweight from equal-weight while its price target was hiked to $55 from $52.  Coca-Cola has “morphed into a structurally higher growth company” compared with its peers, Morgan Stanley adds.  Coca-Cola is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Staples Global Top Stock Ideas
  • Ralph Lauren (RL) reported fiscal fourth quarter earnings that beat consensus.  Ralph Lauren reported fiscal fourth quarter adjusted EPS of $1.07, beating consensus of 90 cents.  Ralph Lauren boosted its quarterly dividend to 68.75 cents, up from 62.5 cents.  Total sales rose 1% in the quarter.  Ralph Lauren sees sales growth for fiscal 2020 of 2% to 3% in constant currency.  Ralph Lauren is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas
  • Tesla (TSLA) is suffering in the US-China trade spat.  While cars are not on the list if imports being slapped with tariffs by China, many fear the day that will happen is getting close.  Analysts fear the next move on tariffs by China will include cars.  China broke ground on a battery factory in China early in the year any disruption between the countries is already negative, tariffs on their imports of cars would be disastrous.  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Walmart (WMT) announced it will offer 1-day delivery on many of its most popular items, matching Amazon’s (AMZN) new offering.  Walmart said going to a 1-day service will actually save it money by streamlining shipping.  Amazon, in contrast, said it will spend $800 million to completely roll out its 1-day delivery.  Walmart’s service starts in Phoenix and will be rolled out to the rest of the country.  Walmart is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Staples Global Top Stock Ideas.  Amazon 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

  • Alphabet’s (GOOGL) Google is opening the Google Safety Engineering Center in Munich.  Google is creating a $10 million grant fund to hand out grants to groups focused on tackling hate and extremism.  Google will double the number of privacy engineers at the center to 200 making Munich a hub for privacy engineering.  Alphabet 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.  
  • Apple (AAPL) suffered a setback at the Supreme Court today.  The Supreme Court ruled that consumers can move ahead with their case against Apple alleging that it used its market dominance to artificially inflate prices at its App Store.  Apple will now be under further pressure to cut its 30% commission it charges sellers on its App Store.  Consumers are seeking hundreds of millions of dollars in damages in the case.  Apple is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.
  • Bilibili Inc. (BILI) saw its American depository receipts upgraded from outperform to buy at Daiwa Securities. Bilibili currently maintains 16 buy, 1 hold, and 0 sell recommendations across analyst forecasts. Over the last 3 months, analyst have raised their consensus price target for Bilibili shares by 16%. Bilibili is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Facebook’s (FB) WhatsApp is encouraging users to update their software to the most recent version after finding a vulnerability in the software.  Facebook said it found a vulnerability that could allow hacking into it using commercially available software from Israel.  Tracking software can be installed on a phone with the vulnerability.  Facebook is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Information Technology Global Top Stock Ideas.  
  • Scout24 AG (XTRA: G24) shares traded lower after shareholders rejected the 4.9 billion euro ($5.5 billion) bid for the German classified company from private equity companies. Only 42.8% of Scout24 investors holding company shares approved the acquisition offer while the minimum threshold for the deal to be approved was 50%. The deal would have seen Scout24 AG be acquired by private equity firms Blackstone Group LP (BX) and Hellman & Friedman. Scout24 is rated “Attractive” in our European SMID-Cap Global Top Stock Ideas. Blackstone is rated “Neutral” in our US Large-Cap Global Top Stock Ideas. 
  • STMicroelectronics (ENXTPA: STM) shares jumped higher after CEO Jean-Marc Chery said at the investor day conference that the company is targeting $12 billion in revenues and an operating margin, “in the high teens,”. Chery also noted that market conditions in the second half in 2019 will be stronger than those of the first half. STMicroelectronics is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.
  • Take-Two Interactive (TTWO) reported fiscal fourth quarter earnings that beat consensus.  Take-Two reported fiscal fourth quarter of 78 cents, beating consensus of 74 cents.  Take-Two gave full year EPS guidance of $3.75 to $4.00, well below consensus of $4.84 and full year adjusted revenue of $2.5 billion to $2.6 billion, below consensus of $2.76 billion.  Take-Two Interactive is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.  
  • Tencent Music Entertainment Group (TME) shares slid after the China-centric online music streaming business announced earnings in the first quarter that beat analyst expectations, although a member of senior management unexpectedly departed the company. Tencent generated a net profit of 987 million yuan in the first quarter, or about $0.09/share, while analyst had expected earnings of $0.08/share. Tencent Music’s Guomin Xie, a former board member and Co-President of the company, unexpectedly left the company. Tencent Music is rated “Neutral” in our China All-Cap Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Bayer (DB:BAYN) suffered a huge defeat in a Roundup case in California.  A jury in California awarded $2.055 billion when it ruled Bayer’s Roundup was responsible for the couple’s cancer.  This is the third defeat for Bayer in court and shareholders are revolting over its acquisition of Monsanto that brought with it 13,400 Roundup cases.  Bayer Interactive is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas
  • Deere & Co (DE) was downgraded to underweight from neutral at JP Morgan.  Deere also saw its price target dropped to $132 from $154 at the same time.  The new price target implies a 10% downside to the last price.  JP Morgan said the fundamentals of the US agro-business is rapidly deteriorating.  Deere & Co. is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  
  • Navistar (NAV) shares traded notably higher following speculation from DealReporter in a morning flash that Volkswagen (XTRA: VOW3) could use the proceeds from the IPO of its trucking unit to acquire the remainder of Navistar. Prior to the report from DealReporter, Volkswagen acquired a 16.79% stake in Navistar back in April 2018. Navistar is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas. Volkswagen is rated “Neutral” in our European Large-Cap Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • Fortescue Metals Group Ltd. (ASX: FMG) shares surged higher after the world’s fourth largest exporter of iron ore announced a surprise AUD$1.85 billion of dividends. The extra AUD$0.60/share dividend payout by the iron ore supplier was possible due to price spikes in iron ore due to supply outages in Brazil. Fortescue Metals Group is rated “Attractive” in our Australia Large-Cap Global Top Stock Ideas.
  • Gazprom PJSC (MISX: GAZP) shares surged by double digits and the most intraday in over a decade after the Russian gas giant announced a proposal to increase its dividend payment by 59%. Gazprom announced it would pay a total 16.61 billion rubles dividend to investors, up from 10.43 billion rubles a year prior. Gazprom is rated “Attractive” in our European Large-Cap Global Top Stock Ideas.

Global Healthcare Stocks Trending in the News

  • Insys Therapeutics (INSY) saw its price target slashed to $1 from $11 at Janney Montgomery.  Insys said it may need to file for bankruptcy in the wake of so many settlements for its sale of opioids.  Insys said it may not be able to complete the $150 million settlement it agreed to with the US Justice Department.  Insys is rated “Unattractive” in our SMID-Cap Global Top Stock Ideas
  • Mylan NV (MYL) is poised to bounce back after it hit a 7-year low, according to a note from Bernstein.  Mylan should be able to hit its guidance for 2019.  Bernstein noted the first quarter is normally a seasonally weak time so the weakness seen in its results is not the main concern.  A lack of strategic direction for Mylan is the main concern.   Mylan is rated “Unattractive” in our Large-Cap Global Top Stock Ideas

 

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