Mar 08 ,2024
Synopsis:
European equity markets ended mixed Friday, and in narrow ranges of (0.6%) to +0.7%. Stoxx Europe 600 closed flat but nevertheless at fresh record highs. Index posted 8th straight week of gains. FTSE 100 however continued to underperform, and is down (1%) ytd.
In Europe, takeaways after yesterday's ECB decision highlight likelihood of June rate cut. Macroeconomic forecasts dovish with inflation forecast cut, but President Lagarde emphasized in June it will have a lot more information, including updated forecasts. Reuters cited sources saying ECB policymakers overwhelmingly back June for a first interest rate cut and some have informally floated the idea of a further move in July to win over a small group that would prefer an earlier start.
US employment data (and revisions) largely supportive of firmer growth backdrop, labor market normalization and disinflation narrative. Latter most important from a Fed pivot perspective, though market still has to deal with February CPI next Tuesday following a recent batch of hotter of inflation data that some economists partly blamed on "January effects".
Over the weekend, Portugal's parliamentary election takes place Sun (10th). Polls suggest the vote could be remarkably close, with the right-wing bloc led by the Democratic Alliance (headed by Luís Montenegro) only slightly ahead of a left-wing grouping led by the Socialists (headed by Pedro Nuno Santos (successor to António Costa)). Neither bloc is expected to secure the 116 seats needed to guarantee majority rule. The outcome might see the far right play a role in choosing the next government.
The week ahead sees Eurogroup meeting, OPEC and IEA monthly reports, earnings/updates from the likes of adidas (ADS.GR), E.ON (EOAN.GR), Generali (G.IM), H&M (HM.B.SS), Inditex (ITX.SM), Persimmon (PSN.LN), Berkeley Group (BKG.LN) and Volkswagen (VOW.GR). In the UK, next week sees some key data releases including UK Jan GDP, as well as and labour market data. On Monday, BOE's Mills is a panellist at 9:30GMT at the International Futures Industry Conf (through Wed), and on Tuesday BOE's Mann is a panellist at 11:00GMT at event hosted by NIESR.
Among sector movers today, Financial Services leading in EU trade. UBS (UBSG.SW) was upgraded to overweight at Morgan Stanley citing stars aligned for IB and WM. Insurance also outperformed with Just Group (JUST.LN) FY underlying EPS beat, and dividend up 20% y/y. Among individual stock movers, HelloFresh (HFG.GR) dived over (40%) after 2024 profit warning, withdrawal of medium term targets. Analysts highlighted the challenged business model. In M&A, Mondi (MNDI.LN) reached an agreement in principle on the key financial terms of a possible all share offer for DS Smith (SMDS.LN)
Digest:
Sectors - STOXX Europe 600:
Outperformers:
Real Estate +2.11%, Financial Svcs +1.13%, Insurance +0.63%, Consumer Products and Services +0.57%, Chemicals +0.38%, Food, Beverage and Tobacco +0.37%, Personal Care Drug and Grocery Stores +0.35%, Telecom +0.18%, Autos & Parts +0.06%, Media +0.05%, Ind Goods & Svcs +0.04%, Energy+0.03%,
Underperformers:
Technology (1.63%), Basic Resources (0.34%), Utilities (0.33%), Health Care (0.18%), Travel & Leisure (0.07%), Retail (0.01%), Banks +0.00%
Macro:
Some ECB policymakers float back-to-back June, July cuts, sources say (Reuters)
ECB Officials Back June Cut With Some Keeping Door Open to April (Bloomberg)
ECB's Key Gauge of Euro-Area Pay Eased at End of 2023 (Bloomberg)
Young voters are driving far-right surge ahead of key Europe elections (WaPo)
Portugal elections: André Ventura, ex-football pundit, shakes up vote (BBC)
Pound Extends Its Peer-Beating Rally to a Seven-Month High (Bloomberg)
Company news
Trading Higher:
+200.0% OXUR.BB (Oxurion €0.00, -0.00) -- holder Atlas Special Opportunities holds 15.72% stake
+31.7% MTW.LN (Mattioli Woods £7.94, +1.90) -- agrees cash offer by Tiger Bidco at 804p/share
+20.1% GRF.SM (Grifols €8.08, +1.39) -- releases 2023 consolidated annual accounts
+18.8% ARCH.NO (Archer NOK1.00, +0.17) -- initiated buy at Carnegie Securities
+13.2% JUST.LN (Just Group £0.96, +0.12) -- FY earnings
+10.8% PFC.LN (Petrofac £0.26, +0.03) -- $200M operations contract
+7.3% JDC.GR (JDC Group €21.00, +1.50) -- FY earnings
+7.2% VETN.SW (Vetropack Holding CHF37.45, +2.60) -- Stifel upgrade
+6.6% RUI.FP (Rubis €26.36, +1.68) -- FY earnings; new CFO
+5.4% MOZN.SW (mobilezone holding CHF14.82, +0.74) -- FY earnings
+5.3% SMDS.LN (DS Smith £3.45, +0.17) -- possible all share offer by Mondi
+5.1% PDL.LN (Petra Diamonds £0.38, +0.02) -- CFO steps down
+5.0% DAN.IM (Danieli & C. Officine Meccaniche €33.35, +1.60) -- H1 earnings
+4.5% CLTN.SW (Coltene Holding CHF57.70, +2.50) -- final FY earnings
+4.1% UBSG.SW (UBS Group CHF27.02, +1.08) -- Morgan Stanley upgrade
+3.0% MIKN.SW (Mikron Holding CHF17.00, +0.50) -- FY earnings
+2.8% BWE.NO (BW Energy NOK27.40, +0.75) -- strarts production from DHBSM-1H well in Hibiscus South field
+2.7% VACN.SW (VAT Group CHF466.00, +12.40) -- BofA upgrade
+2.3% DAL.IM (Datalogic €5.92, +0.13) -- sale of Informatics Holdings for $34M
+1.2% FCT.IM (Fincantieri €0.50, +0.01) -- FY earnings
Trading Lower:
-41.9% HFG.GR (HelloFresh €6.94, -4.97) -- prelim. FY earnings; Oddo and Societe Generale downgrade
-18.3% MITRA.BB (Mithra Pharmaceuticals €0.31, -0.06) -- FY earnings
-14.9% ASTK.NO (Asetek NOK7.18, -1.18) -- FY earnings
-8.0% ULTI.NO (Ultimovacs NOK7.03, -0.70) -- DnB Markets downgrade
-7.8% SMHN.GR (SÜSS MicroTec €39.10, -3.25) -- Hauck & Aufhäuser downgrade
-5.2% AZM.IM (Azimut Holding €0.00, -1.34) -- FY earnings
-2.6% VIV.FP (Vivendi €9.85, -0.26) -- FY earnings
-2.6% MNDI.LN (Mondi £13.46, -0.36) -- possible all share offer for DS Smith
-2.2% TNXT.IM (Tinexta €17.75, -0.41) -- FY earnings
-1.8% DB1.GR (Deutsche Börse €188.60, -3.50) -- appoints Stephan Leithner as CEO for a period of five years with effect from 1-Oct-24
-0.9% PZC.LN (PZ Cussons £0.94, -0.01) -- Barclays downgrade
-0.9% SPX.LN (Spirax Group plc. £103.85, -0.95) -- Stifel downgrade
-0.2% PGHN.SW (Partners Group Holding CHF0.00, -2.50) -- is looking into sale of German renewable energy company VSB Group - Reuters, citing sources
EU companies reporting Monday:
Earnings:
DACHs: LEG Immobilien (LEG.GR), Hypoport (HYQ.GR), Logwin (TGHN.GR), alstria office REIT (AOX.GR), q.beyond (QBY.GR), Metall Zug (METN.SW)
France: Seche Environnement (SCHP.FP)
Southern Europe: GR Sarantis (SAR.GA)
Ireland: Mincon Group (MIO.ID)
Data:
Economics:
Germany Jan
Industrial production +1.0% m/m vs consensus +0.6%, prior revised (2.0%) from (1.6%)
PPI (4.4%) y/y vs consensus (6.6%), prior revised (5.1%) from (8.6%)
Sweden Jan industrial production +1.2% y/y vs consensus (0.6%), prior revised (0.1%) from +0.1%
France Jan trade balance (€7.39B) vs consensus (€6.2B), prior revised (€6.42B) from (€6.83B)
Italy Jan PPI (10.7%) y/y vs consensus (9.0%), prior (16.0%)
Spain Jan Industrial Production (0.6%) y/y vs consensus +0.1%, prior revised (1.4%) from (0.2%)
Eurozone Q4 GDP +0.1% y/y vs 2nd estimate +0.1%; 0.0% q/q vs 2nd estimate 0.0%
Greece
Jan Industrial Production +10.3% y/y vs consensus +2.8%, prior revised +4.5% from +4.3%
Feb CPI +2.9% y/y vs consensus +3.2%, prior +3.1%
Markets:
WTI Crude (Apr 24): ($0.96) or (1.22%) to $77.97
€-$ (0.0002) or (0.02%) to 1.0946
£-$ +0.0044 or +0.34% to 1.2854
€-£ (0.0032) to 0.8516
S&P 500 (0.01%)
Performance year-to-date
FTSE 100: (0.95%)
DAX: +6.34%
CAC: +6.43%
MIB: +10.06%
Stoxx 600: +5.07%
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