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European stocks close higher, with risk-on led by tech sector and helped by potential second Brexit vote

May 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

  • European stocks rose today with gains led by tech and helped by news that UK PM Theresa May said her govenment will give MPs a vote on holding a second Brexit referendum
  • Where do you look: You check YOUR yield curve, I'll check mine: The Fed vs. Investors
  • Stocks the markets feels bad about: Top Trending Stocks by Negative 1-Month Sentiment
  • The Euro Stoxx 600 closed up +0.54%, the FTSE 100 advanced +0.25%, the DAX rose +0.85%, and the CAC 40 finished up +0.5%
  • Investor sentiment for European stocks finished trading positive with the advance/decline ratio for the Euro Stoxx 600 currently at 2.97x
  • Technology (+1.59%), Insurance (+0.66%), and Basic Resources (+0.64%) stocks were the top performers in the Euro Stoxx 600 today
  • Telecommunications (-0.23%), Travel & Leisure (+0.32%), and Health Care (+0.39%) stocks were the worst performers in the Euro Stoxx 600 today
  • 62 stocks in the Euro Stoxx 600 hit 4-week highs while 121 stocks closed at 4-week lows
  • 24 stocks in the Euro Stoxx 600 finished the trading session overbought while 41 stocks closed oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, closed little changed -0.78 points today to 16.6 after closing at 17.38 yesterday
  • EUR€ is currently little changed against the USD$ at 1.1161

Asian Stock Markets Indexes

Asian Markets Recap

  • The US is allowing a 90-day relief period permitting some imports of Huawei products for those broadband players that presently depend on Huawei products
  • new anti-US song is going viral in China, with the lyrics "If the perpetrator wants to fight, we will beat him out of his wits"
  • The US has dramatically slowed the approval of Chinese nationals entrance into the US for advanced manufacturing jobs, WSJ is reporting
  • Is this next in the US-China fight?   Are rare earth metals China's next weapon to deploy in the trade war?
  • The Nikkei 225 finished down --0.14%, the Hang Seng ended down -0.47%, the Hang Seng China Enterprise up +0.01%, and the CSI 300 was +1.35%
  • Investor sentiment for Japanese stocks finished negative with the advance/decline ratio for the Nikkei 225 closing at 0.84x
  • 26 stocks in the Nikkei 225 hit 4-week highs while 52 stocks reached 4-week lows
  • 8 stocks in the Nikkei 225 closed overbought while 44 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 0.47x
  • 4 stocks in the Hang Seng hit 4-week highs while 20 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 10 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

  • AutoZone (AZO) reported fiscal third quarter same store sales and earnings that beat consensus.  AutoZone reported fiscal third quarter EPS if $15.99, ahead of $15.11 consensus.  Same store sales grew 3.9%, beating 2.9% consensus.  AutoZone is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Ford (F) will eliminate about 10% of its workforce, or 7,000 employees, in its latest restructuring effort.  Ford is trying to stem years of declining profits in an industry that has seen massive changes recently.  Some of those layoffs have already occurred and the entire process should be complete by August.  The cuts are due to save $600 million annually.  Ford is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Home Depot (HD) reported first quarter earnings that beat with same store sales that trailed consensus.  Home Depot reported first quarter EPS of $2.27 beating consensus of $2.18.  First quarter revenue of $26.38 billion came in line with $26.4 consensus.  Same store sales in the first quarter grew 2.5% trailing consensus of 4.3%.  Home Depot reaffirmed full year EPS guidance of $10.03, a touch below consensus of $10.09.  Home Depot is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Consumer Discretionary Global Top Stock Ideas.  
  • JC Penny (JCP) reported a loss that was wider than expected.  JC Penny first quarter adjusted loss of 46 cents came worse than the 38 cents expected.  First quarter same store sales fell 5.5%m worse than the 3.8% drop expected.  JC Penny first quarter net sales of $2.44 billion came in line with consensus of $2.47 billion.  Inventory dropped 16% in the quarter.  JC Penny is rated “Unattractive” in our US SMID-Cap Global Top Stock Ideas and “Unattractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Kohl’s (KSS) reported first quarter same store sales that came well below consensus.  Kohl’s first quarter same store sales fell 3.4%, much worse than the 0.1% fall that was expected.  First quarter EPS of 61 cents trailed 67 cents consensus.  Total sales of $3.82 billion also trailed consensus of $3.93 billion.  Kohl’s cut full year EPS guidance to $5.15 to $5.45, down from $5.80 to $6.15 while present consensus is of $6.04.  Kohl’s is rated “Top Buy” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Consumer Discretionary Global Top Stock Ideas.  
  • Tesla (TSLA) received some unpleasant news yesterday from Morgan Stanley when it laid out its bear case scenario with a $10 price target.  Tesla’s main problem is demand and Morgan highlights the fear that the market could be saturated with its main product.  The previous bear case for Tesla was $97.  Morgan writes, “Tesla has grown too big relative to near term demand.”  Tesla is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas and “Neutral” in our US Consumer Discretionary Global Top Stock Ideas.  
  • TJX Companies (TJX) reported first quarter same store sales that beat consensus.  TJX first quarter sale store sales grew 5% while consensus was for 3.5%.  First quarter EPS of 57 cents beat 55 cents consensus.  TJX boosted full year EPS guidance to $2.56 to $2.61.  TJX 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

  • Baidu (BIDU) is planning to spin off its autonomous driving unit according to early reports that shortly follow the company’s first quarterly net loss since going public in 2005. According to reports, Baidu is seeking external investors amid the business’ increased financial pressures. Baidu is rated “Neutral” in our China All-Cap Global Top Stock Ideas.
  • Marvell Technology Group (MRVL) shares edged higher after announcing the acquisition of Avera Semiconductor’s chip design unit for $650 million in cash. The acquisition will reportedly introduce the capability for Marvell Technology to produce specialized semiconductors required by 5G phone networks and cloud-data centers. International Business Machines Corp. (IBM) formerly owned the business unit before selling it to Globalfoundries in 2015. Marvell Technology is not rated in our Global Top Stock Ideas. IBM is rated “Neutral” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Information Technology Global Top Stock Ideas.
  • Sony’s (SNE) CEO laid out his full long-term vision for the company at the company’s investors day.  Sony is working on a successor to the PS4.  The new console with permit remote-play on cell phones and tablets and will have load times 10 times faster than the present console.  Sony is not investing aggressively in China given the country’s uncertain censorship scenario.  Sony is rated “Attractive” in our Japan Large-Cap Global Top Stock Ideas. 
  • T-Mobile US Inc. (TMUS) and Sprint Corp. (S) shares both soared after Federal Communications Commission (FCC) Chairman Ajit Pai announced that he will recommend his agency approve the $26.5 billion merger of the two telecommunications companies. The Department of Justice does not like the deal as presently structured and Sprint may need to make further concessions.  According to Paul Gallant of Cowen & Co., however, approval from the US Justice Department “seems likely” as it has never diverged from the FCC’s decision. T-Mobile is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas. Sprint is rated “Top Short” in our US Large-Cap Global Top Stock Ideas and “Top Buy” in our US Information Technology Global Top Stock Ideas.

Global Industrials Stocks Trending in the News

  • Astaldi Spa (BIT: AST) shares jumped following reports that the company and its Turkish partner IC Yatirim Holding AS have resumed talks to sell a bridge linking Europe and Asia to a group of Chinese investors. The reports shortly follow the resolution of a dispute relating to toll charges. The two parties are in talks with a consortium of Chinese investors led by China Merchants Group, according to reports. Astaldi is rated “Unattractive” in our European SMID-Cap Global Top Stock Ideas.
  • Crane Co. (CR) is making a hostile bid for rival Circor International (CIR).  Crane is making an all-cash offer valued at $1.7 billion, according to press reports.  Crane tried to privately acquire Circor earlier in the year but was rebuffed by management.  Crane is not taking the offer directly to shareholders.  Crane is rated “Top Buy” in our US SMID-Cap Global Top Stock Ideas and “Top Buy” in our US Industrials Global Top Stock Ideas.  Circor International is rated “Neutral” in our US SMID-Cap Global Top Stock Ideas and “Neutral” in our US Industrials Global Top Stock Ideas.  
  • Lockheed Martin (LMT) is locked in a battle with the Pentagon that is jeopardizing funding for spare parts for the F-35.  The Pentagon wants Lockheed Martin to sell it technical data related to the spare parts, data that will allow it to have other manufacturers make the parts as it attempts to contain costs.  Lockheed has yet to sign an agreement relating to this and without one, half of the funding for spare parts is being withheld.  Lockheed Martin is rated “Attractive” in our US Large-Cap Global Top Stock Ideas and “Attractive” in our US Industrials Global Top Stock Ideas.  
  • Royal Mail (LSE: RMG) shares slid to a record low prior to its FY2019 results which Jefferies believes will be weighed down by deteriorating revenue trends and rising cost pressures. Jefferies expects Royal Mail to report a 26% y/y decrease in operating profit to between 500 million pounds and 530 million pounds. The company’s progressive dividend policy may also face challenges as a result. Royal Mail is rated “Top Short” in our United Kingdom All-Cap Global Top Stock Ideas.
  • Senvion (DB: SEN) shares soared following reports that cited unidentified people familiar with the matter that Toshiba (TSE: 6502), Siemens AG (DB: SIE), and Blackstone (BX) are among the parties interested in acquiring the distressed maker of wind turbines. According to reports, Senvion has hired Rothschild to advise on the sale of the company prior to insolvency proceedings that begin on July 1st. Senvion is not rated in our Global Top Stock Ideas. Toshiba is not rated in our Global Top Stock Ideas. Siemens is rated “Unattractive” in our European Large-Cap Global Top Stock Ideas. Blackstone is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • United Airlines (UAL) saw its price target hiked to $110 from $101 at Morgan Stanley.  Its buy rating on United Airlines was reiterated.  Morgan said of United, “…United has done a solid job executing on its mid-continent strategy” and expects the strong performance to continue.  United will have significant competition near-term in those new markets.  United Airlines is rated “Attractive” 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

  • Eaton Vance (EV) shares traded higher after the company announced adjusted earnings in the fiscal second quarter that beat the highest analyst estimate. Eaton Vance observed adjusted earnings of $0.89/share that came ahead of all analysts estimates ranging between $0.71/share and $0.82share. Eaton Vance’s revenue of $411.9 million in the fiscal second quarter, however, fell from $414.3 million a year prior although it beat consensus of $409.4 million. Eaton Vance is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.
  • Morgan Stanley (MS) is planning to make job cuts at its London equities business, according to reports that cite people familiar with the matter. According to reports, five Morgan Stanley employees at the firm’s equities trading and sales business in London have already been affected. The news follows Morgan Stanley earnings, which contained equities revenue that trailed the average analyst estimate. Morgan Stanley is rated “Unattractive” in our US Large-Cap Global Top Stock Ideas.

Global Commodities & Power Stocks Trending in the News

  • Lynas Corp. (ASX: LYC), China’s largest producer of rare earth products outside of China, told investors that it plans to increase output and extend its footprint to the US. Lynas shares soared by more than 20% on the news that shortly follows worries China will weaponize its leading status in the rare earth metals industry in trade negotiations with the US. Lynas intends to double its output of rare earths neodymium and praseodymium by 2025. Lynas is rated “Unattractive” in our Australia Large-Cap Global Top Stock Ideas.

Global Health Care Stocks Trending in the News

  • Merck & Co. (MRK) announced the acquisition of Peloton Therapeutics Inc. for up to $2.2 billion in cash and other payments just a day before the company planned to IPO.  Merck will pay $1.05 billion in cash for the developer of cancer therapies in addition to $1.15 billion of additional payments based on the success of Peloton’s experimental drugs that will be further developed by Merck. Analysts expected Peloton to IPO at a market value of roughly $756 million. Merck & Co. is rated “Neutral” in our US Large-Cap Global Top Stock Ideas.

 

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