Jul 20 ,2023
Synopsis:
European indices ended mostly higher, with Denmark outperforming the region. Latest Eurostat shows Eurozone economy avoided a winter recession with revised figures showing it stagnated at the start of this year instead of shrinking as previously thought. Figures showed output in the bloc was flat in Q1 up from a prior reading of -0.1%, which - combined with a decline of the same magnitude at the end of 2022 - had suggested the first six-month contraction since the Covid-19 pandemic. Also, German finance ministry's monthly report does not expect any noticeable increase in economic activity in Q2 compared with the winter half-year. Noted hard indicators for current economic development continue to paint a cautious picture and sees downside risks ahead. Highlighted weakness in production and stagnation in exports, though imports have benefited from fall in import prices and retail sales has increased moderately. Said economic weakness has left it mark on the labor market, even if is still robust. Noted an increase in unemployment and short-term work far from pandemic highs and moving sideways. Expects inflation to decline and said slight rebound in June rate primarily due to base effects. In the UK, voters will go to the polls in three by-elections today in Uxbridge and South Ruislip, Selby and Ainsty, and Somerton and Frome, which were won by the Conservatives at the last general election in 2019. Since then, support for the Conservatives has fallen sharply with former PM Johnson forced out of his role last summer and premier Truss only in charge for 44 days after a failed budget and market turmoil. Current PM Sunak is facing possible defeat in all three elections, which would be the worst one-day mid-term result for a governing party in more than 50 years. Results of the elections will come early Friday.
In central bank news, Reuters cited ECB's Stournaras stating that another 25bp rate hike by the central bank should be enough and further tightening might damage the economy. Also, the ECB made major stress test adjustment after banks took rosy view: Bloomberg cited sources who said the ECB made one of its most forceful interventions to date in its stress tests for banks, after lenders took what it viewed as an unrealistic approach to assessing risks to their balance sheet. Banks, which are being asked in the tests to calculate the impact of specific economic scenarios, initially estimated their total capital ratio would decline by about 3.5% in a worst case The ECB subsequently adjusted the figure, leading to an impact of about 5% in the final results. BoE Deputy Governor Ramsden said late Wednesday inflation has begun to fall significantly but remains too high. He pointed out that the MPC has consistently stressed it will address the risk of more persistent strength in wages and prices setting, which was represented by upward skew in its May forecast and June policy decision. He said he will not comment on detail of June data published yesterday but emphasized it will continue to monitor closely indications of persistent inflation pressure. Added it will include tightness of labor market, wage growth and services price inflation. Comments consistent with further tightening
On a light macro-calendar, in the afternoon Eurozone Jul Flash Consumer Confidence came at (15.1) vs a consensus of (16.0), whilst German PPI slightly above consensus but well down on prior reading as disinflation trends mount
Among the earnings/updates out of the DACH region were ABB Limited (ABBN.SW), Givaudan (GIVN.SW), Cembra Money Bank (CMBN.SW) and Georg Fischer (GF.SW). From Nordic based companies, Electrolux (ELUX.B.SS), Essity and Nokia (NOKIA.FH) (pre-reported last week) and Volvo Car (VOLCAR.B.SS) as well as Alfa Laval (ALFA.SS), Betsson (BETS.B.SS), Billerud (BILL.SS), Boliden (BOL.SS), Modern Times Group MTG (MTG.B.SS), PGS (PGS.NO), Saab (SAAB.B.SS), Telenor (TEL.NO), Telia Co. (TELIA.SS) and TGS-NOPEC Geophysical Co. (TGS.NO). Out of the UK, Dunelm Group (DNLM.LN) now expects FY PBT to be slightly ahead of current analysts' consensus of £188M, whilst easyJet (EZJ.LN) posted Q3. There were also updates from Anglo American (AAL.LN), Babcock International Group (BAB.LN), Fuller, Smith & Turner (FSTA.LN), Kier Group (KIE.LN), M&G (MNG.LN) and SSE (SSE.LN). Elsewhere, updates included Bankinter (BKT.SM), Getlink (GET.FP), Orange Belgium (OBRL.BB), Publicis Groupe (PUB.FP) and Sligro Food Group (SLIGR.NA). The limited M&A news flow included Bain Capital increasing its offer for SoftwareOne Holding AG (SWON.SW) to about CHF3.2B ($3.7B), Idorsia (IDIA.SW) sells its Asia Pacific (ex-China) operations to Sosei Heptares for total consideration of CHF400M and Global Auto Holdings Ltd's offer to acquire Lookers (LOOK.LN) faces increased resistance from shareholders
Looking ahead to tomorrow's calendars, NSI (NSI.NA), EMS-Chemie Holding (EMSN.SW), Topdanmark (TOP.DC), Elisa (ELISA.FH), With Secure (WITH.FH), Gjensidige Forsikring (GJF.NO), Norske Skog (NSKOG.NO), Orkla (ORK.NO), Storebrand (STB.NO), Philly Shipyard (PHLY.NO), XXL (XXL.NO), Entra (ENTRA.NO), Aker BioMarine (AKBM.NO), Tomra Systems (TOM.NO), LM Ericsson (ERIC.B.SS), EQT (EQT.SS), Samhällsbyggnadsbolaget i Norden (SBB.B.SS), Burberry Group (BRBY.LN), Ashmore Group (ASHM.LN), McBride (MCB.LN) and Liontrust Asset Management (LIO.LN) wil be among several othe rnames updating investors
Digest:
Sectors - STOXX Europe 600:
Outperformers: Health Care +1.75%, Insurance +1.57%, Basic Resources +1.56%, Energy +1.25%, Chemicals +0.86%, Telecom +0.86%, Utilities +0.79%, Media +0.66%, Banks +0.64%, Ind Goods & Svcs +0.51%, Construct & Mtls +0.50%
Underperformers: Technology (2.54%), Travel & Leisure (1.22%), Real Estate (0.41%), Consumer Products and Services (0.36%), Personal Care Drug and Grocery Stores (0.19%), Autos & Parts (0.10%), Food, Beverage and Tobacco +0.10%, Financial Svcs +0.19%
Macro:
Russia says attacks on Black Sea ports were 'retaliatory (Guardian and Reuters)
French government set for imminent reshuffle after final 'negotiations' (F24)
Germany could introduce siestas at work to help people cope with heat (Independent)
The future of Macron's foreign policy (ECFR)
Frans Timmermans bids to return to Dutch politics (Politico)
Spain Is Going to Be Absolutely Fine (NY Times)
Strike threats in Italy and stoppages in Greece as workers struggle with heat (Guardian)
Company news (earnings related otherwise specified):
Notable Gainers
+27.3% PGS.NO (PGS ASA NOK7.11, +1.53) -- new term loan facility
+14.3% STX.LN (Shield Therapeutics £0.08, +0.01) -- business update
+13.8% BAR.LN (Brand Architekts Group £0.33, +0.04) -- trading update
+13.4% BAB.LN (Babcock International Group £3.58, +0.42)
+13.4% CEVI.SS (CellaVision SEK218.50, +25.90)
+11.3% SHG.LN (Shanta Gold £0.11, +0.01) -- production update
+10.3% BHG.SS (BHG Group SEK17.18, +1.60)
+9.3% BFG.SS (BYGGFAKTA GROUP SEK33.00, +2.80)
+7.4% MSAB.B.SS (Micro Systemation SEK50.80, +3.50)
+7.0% NPH.SJ (Northam Platinum Holdings ZAR152.54, +9.98) -- accepts terms of Implats offer for its 34.5% stake in RBPlat
+6.7% TEL.NO (Telenor NOK110.40, +6.95)
+5.6% KIE.LN (Kier Group £0.89, +0.05) -- trading update
+4.8% FAN.LN (Volution Group £4.01, +0.18) -- pre-close trading update
+4.1% SAAB.B.SS (Saab SEK601.00, +23.60)
+4.0% IGG.LN (IG Group Holdings £7.20, +0.28)
+3.9% SWON.SW (SoftwareONE Holding CHF18.87, +0.70) -- Bain Capital has increased its offer for SoftwareOne AG to about CHF3.2B - Bloomberg
+3.7% SLIGR.NA (Sligro Food Group €16.88, +0.60)
+3.6% AAL.LN (Anglo American £23.87, +0.83) -- production update
+3.4% ABBN.SW (ABB Limited CHF34.58, +1.13)
+3.4% PRIC.B.SS (Pricer SEK7.56, +0.25)
+3.1% BIOGAS.SS (Biokraft International SEK20.20, +0.60)
+2.8% FTON.SW (Feintool International Holding CHF23.50, +0.65) -- contract
+2.4% KER.FP (Kering €543.20, +12.80) -- Activist Bluebell acquires stake in Kering, seeks changes at Gucci - Bloomberg
+2.2% DNLM.LN (Dunelm Group £11.38, +0.25) -- trading update
+2.1% PUB.FP (Publicis Groupe €73.04, +1.52)
+1.5% HNSA.SS (Hansa Biopharma SEK45.06, +0.66)
+1.5% HUH1V.FH (Huhtamaki €32.00, +0.46)
+1.4% BAS.GR (BASF SE €47.74, +0.67) -- CEO Martin Brudermüller backing director Markus Kamieth as his successor - FT
+1.3% INDT.SS (Indutrade SEK224.00, +2.80)
+1.2% MTG.B.SS (Modern Times Group MTG SEK69.45, +0.85)
+1.0% TELIA.SS (Telia Co. SEK24.53, +0.24)
+0.8% NOKIA.FH (Nokia €3.55, +0.03) -- final Q2
+0.7% LEON.SW (Leonteq CHF42.75, +0.30)
+0.6% ALBBV.FH (Alandsbanken €33.20, +0.20)
+0.6% ALIG.SS (Alimak Group SEK82.20, +0.50)
+0.6% AMS.SJ (Anglo American Platinum ZAR905.69, +5.69) -- production update
+0.4% PHAR.LN (Pharos Energy £0.23, -0.00) -- trading and operational update
Notable Decliners
-20.7% NOBI.SS (Nobia SEK10.94, -2.85)
-20.3% ELUX.B.SS (Electrolux SEK122.30, -31.15) -- to divest non-core assets
-17.4% FAG.SS (Fagerhult Group SEK53.00, -11.20)
-14.8% KNOW.SS (Knowit SEK145.60, -25.20)
-12.7% BOL.SS (Boliden SEK285.90, -41.65)
-11.1% NET.LN (Netcall £1.00, -0.13) -- trading update
-9.4% LOOK.LN (Lookers £1.08, -0.11) -- updates on Letters of Intent
-9.3% MIPS.SS (MIPS SEK483.40, -49.80)
-9.2% NXQ.LN (Nexteq £1.48, -0.15) -- trading update
-9.1% NOLA.B.SS (Nolato SEK44.78, -4.50)
-8.8% ALBPS.FP (Biophytis €0.02, -0.00) -- requests pre-submission FDA meeting for EUA of Sarconeos (BIO101) to treat COVID-19
-8.6% ESSITY.B.SS (Essity SEK258.20, -24.30)
-7.9% GF.SW (Georg Fischer CHF62.30, -5.35) -- Uponor updates on expiration of US Hart-Scott-Rodino Waiting period;
-7.9% MEDX.SW (medmix CHF23.80, -2.05)
-7.8% CMBN.SW (Cembra Money Bank CHF68.05, -5.75)
-7.2% HFG.GR (HelloFresh €22.27, -1.73) -- guidance
-6.5% METSO.FH (Metso Corp. €10.56, -0.73)
-6.5% MNTC.SS (Mentice SEK43.20, -3.00) -- interim CEO
-6.4% ARBN.SW (Arbonia CHF9.77, -0.67) -- trading update
-6.3% IDIA.SW (Idorsia CHF6.74, -0.46) -- sells its Asia Pacific (ex-China) operations to Sosei Heptares for total consideration of CHF400M
-5.7% CGCBV.FH (Cargotec €45.50, -2.76)
-4.7% SSH1V.FH (SSH Communications Security €1.43, -0.07)
-4.6% SZG.GR (Salzgitter €30.30, -1.46) -- reports preliminary H1 pretax income €243M vs year-ago €971M; reaffirms FY guidance
-4.2% VOLCAR.B.SS (Volvo Car SEK48.09, -2.13)
-3.8% EZJ.LN (EasyJet £4.76, -0.19) -- trading update
-3.6% MSON.B.SS (Midsona SEK7.80, -0.29)
-3.3% CRAD.B.SS (C-RAD SEK28.00, -0.95)
-3.3% OBEL.BB (Orange Belgium €13.88, -0.48)
-3.1% BKT.SM (Bankinter €5.95, -0.19)
-3.0% FING.B.SS (Fingerprint Cards SEK1.95, -0.06)
-2.9% COIC.SS (Concentric SEK192.00, -5.80) -- contract extension
-2.1% ZEHN.SW (Zehnder Group CHF65.60, -1.40) -- prelim earnings
-1.8% INTRUM.SS (Intrum SEK75.40, -1.36)
-1.7% GIVN.SW (Givaudan CHF2,922.00, -51.00)
-1.6% BILL.SS (Billerud SEK85.78, -1.36)
-1.6% GET.FP (Getlink €15.83, -0.25)
-1.2% ENGCON.B.SS (engcon SEK81.30, -0.95)
-0.9% ENENTO.FH (Enento Group €21.25, -0.20)
-0.2% BOSN.SW (Bossard Holding CHF193.20, -0.40)
-0.2% SVIK.SS (Studsvik SEK103.20, -0.20)
-0.1% BETS.B.SS (Betsson SEK120.62, -0.10)
-0.1% RIEN.SW (Rieter Holding CHF91.50, -0.10)
EU companies reporting tomorrow:
Benelux: NSI (NSI.NA)
DACH: EMS-Chemie Holding (EMSN.SW)
Denmark: Topdanmark (TOP.DC)
Finland: Elisa (ELISA.FH), With Secure (WITH.FH)
Norway: Gjensidige Forsikring (GJF.NO), Norske Skog (NSKOG.NO), Orkla (ORK.NO), Storebrand (STB.NO), Philly Shipyard (PHLY.NO), XXL (XXL.NO), Carasent (CARA.NO), Elkem (ELK.NO), Entra (ENTRA.NO), Aker BioMarine (AKBM.NO), Tomra Systems (TOM.NO)
Sweden: Telefonaktiebolaget LM Ericsson (ERIC.B.SS), EQT (EQT.SS), Axfood (AXFO.SS), Arjo (ARJO.B.SS), Pandox (PNDX.B.SS), Lammhults Design Group (LAMM.B.SS), Traction (TRAC.B.SS), Nexam Chemical Holding (NEXAM.SS), Desenio Group (DSNO.SS), Coor Service Management Holding (COOR.SS), Bravida Holding (BRAV.SS), HMS Networks (HMS.SS), Lifeco (LIFCO.B.SS), Scandic Hotels Group (SHOT.SS), SignUp Software (SIGNUP.SS), Netel Holding (NETEL.SS), Gränges (GRNG.SS), Inwido (INWI.SS), AddLife (ALIF.B.SS), Duni (DUNI.SS), Avanza Bank Holding (AZA.SS), Lime Technologies (LIME.SS), Momentum Group (MMGR.B.SS), Nilörngruppen (NIL.B.SS), Mycronic (MYCR.SS), Vitrolife (VITR.SS), Nederman Holding (NMAN.SS), AQ Group (AQ.SS), Corem Property Group (CORE.B.SS), Peab (PEAB.SS), Castellum (CAST.SS), Proact IT Group (PACT.SS), Wallenstam (WALL.B.SS), Doro (DORO.SS), Samhällsbyggnadsbolaget i Norden (SBB.B.SS), Vitec Software Group (VIT.B.SS), Serneke Group (SRNKE.B.SS), Cloetta (CLA.B.SS), Dedicare (DEDI.SS), Byggmax Group (BMAX.SS), KlaraBo (KLARA.B.SS), Nelly Group (NELLY.SS), Episurf Medical (EPIS.B.SS), Fortnox (FNOX.SS), PowerCell Sweden (PCELL.SS), FormPipe Software (FPIP.B.SS), Addnode Group (ANOD.B.SS), Rejlers (REJL.B.SS), CDON (CDON.SS), Balco Group (BALCO.SS), Elos Medtech (ELOS.B.SS), Bergman & Beving (BERG.B.SS), Addtech (ADDT.B.SS)
UK: musicMagpie (MMAG.LN), Zoo Digital (ZOO.LN)
Trading Update: Burberry Group (BRBY.LN), Ashmore Group (ASHM.LN), McBride (MCB.LN), Liontrust Asset Management (LIO.LN), Ninety One (N91.GR)
Data:
Economics:
Eurozone Jul Flash Consumer Confidence (15.1) vs consensus (16.0) and prior (16.1)
Germany Jun PPI +0.1% y/y vs consensus 0.0% and prior +1.0%
Switzerland Jun
Trade Balance CHF4.82B vs consensus CHF4.0B
Swiss Watch Exports +14.0% to CHF 2.45B
France Jul Business Survey 100 vs consensus 100 and prior 100 revised from 101
Spain May Trade Balance (€3.11B) vs consensus (€7.0B) and prior (€4.38B)
Netherlands Jun Unemployment Rate 3.5% vs consensus 3.5% and prior 3.5%
Markets:
WTI Crude (Aug 23): +$0.09 or +0.12% to $75.44
€-$ (0.0063) or (0.56%) to 1.1141
£-$ (0.0088) or (0.68%) to 1.2853
€-£ +0.0012 to 0.8668
S&P 500 (0.28%)
Performance year-to-date
FTSE 100: +2.67%
DAX: +16.36%
CAC: +14.11%
MIB: +21.59%
Stoxx 600: +9.21%
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