Mar 11 ,2024
Synopsis:
European indices ended mostly lower. Major EU stock markets have managed to keep pace with US counterparts this year, yet Barclays suggests rally has legs, given improving growth and policy mix. STOXX 600 on track post seventh straight week of gains, while the STOXX 50 up over 10% YTD. Analysts noted that while some of the performance is mega-caps driven, very cheap valuation, underweight positioning and pick-up in buybacks activity may offer EU equities a positively asymmetric risk profile. Additionally, PMIs suggest EU economy including even Germany may be bottoming out. Analysts suggest economic resilience together with prospect of ECB policy easing offering conditions for ongoing market rally, giving legs to reflation trade, while low valuation and positioning provide some downside cushion. Related, ECB speakers still appear concerned over credibility. Slovakia central bank chief Kazimir, usually a hawk, said on Monday more data is required in order to be sure inflation has been tamed, and rushing into policy changes is not smart and risks undermining ECB's credibility (Bloomberg). Ireland central bank chief Makhlouf also noted that data points are never uniformly aligned and always leave room for uncertainty, so policy changes will need to be gradual when the time comes (Econostream). Still, analysts suggest case for ECB easing remains strong. Goldman Sachs in recent note alluded to much weaker EZ growth prospects, alongside gradual decline in core inflation levels. Broker sees five ECB rate cuts this year, vs just four from the Fed. On Friday, most recent ECB wage tracker showed slower wages in Q4 2024 (Bloomberg). Markets and analysts currently expect first ECB cut in June. Further out, picture appears different with analysts suggesting ~2.5% inflation in the medium term citing energy transition and structural factors such as demographics and labour productivity
In politics, Portugal's centre-right Democratic Alliance (AD) won Sunday's general election, although forming a government may prove challenging without compromise. Of note, Swedish flag was raised at NATO Headquarters for the first time today in a ceremony to mark country's membership of the Alliance. Nordic country now enjoys protection granted under Article 5, two years after Russia's invasion of Ukraine prompted reconsideration of long-held neutrality (AP). Saab (SAAB.B.SS) outperforming weakness across aerospace and defence index with analysts pointing to NATO entry as catalyst. (Saab up ~250% since Russia's invasion of Ukraine)
In the DACH region, LEG Immobilien (LEG.GR) posted its FY report, with Hypoport (HYQ.GR), Metall Zug (METN.SW) and Alstria (AOX.GR) also updating investors before the open; in Italy, Telecom Italia (TIT.IM) issued an addedum to its 2024-2026 business plan. clarifying FCF and debt numbers. In M&A news, Elliott Advisors will not to make an offer for Currys (CURY.LN), whilst Telefonica (TEF.SM) and Saudi Telecom are separately studying the purchase of Avatel; also, Qatar Investment Authority has resumed the negotiations to acquire portion of the government's 45% stake in Vodafone Egypt (VOD.SJ)
Looking ahead to tomorrow's calendars, Generali (G.IM), Vienna Insurance (VIG.AV), Wacker Chemie (WCH.GR), BKW (BKW.SW), Tecan Group (TECN.SW), Galenica (GALE.SW), Sensirion (SENS.SW), Siltronic (WAF.GR), Kongsberg Automotive (KOA.NO, De'Longhi (DLG.IM), Italgas (IG.IM), ERG (ERG.IM), TOD'S (TOD.IM), National Bank of Greece (ETE.GA), Aegean Airlines (AEGN.GA), Persimmon (PSN.LN) and DFDS (DFDS.DC), Groupe Partouche (PARP.FP) will be among few other companies to update investors. On the macro-calendar, Germany Feb final CPI, UK Feb claimant count, Netherlands Feb final CPI and Portugal Feb final CPI are due for release
Digest:
Sectors - STOXX Europe 600:
Outperformers: Real Estate+0.76%, Food & Beverage +0.25%, Persnl & HHold Goods +0.22%, Insurance +0.15%, Health Care +0.12%, Banks (0.16%), Travel & Leisure (0.17%), Telecom (0.21%), Utilities (0.23%), Oil & Gas (0.26%), Autos & Parts (0.30%), Financial Svcs (0.33%)
Underperformers: Technology (2.09%), Media (1.21%), Ind Goods & Svcs (0.74%), Retail (0.51%), Construct & Mtls (0.48%), Basic Resources (0.45%), Chemicals (0.39%)
Macro:
France finds Baltic allies in its spat with Germany over Ukraine troop deployment (Politico)
Deutsche Bahn files legal action over German rail strike (Guardian)
Swedish flag raised at NATO Headquarters (NATO)
UK-Morocco Power Cable Could Be Scrapped in Favor of Germany (BBG)
Portugal's centre-right prepares to rule, far-right warns of instability (Reuters)
Great pride at centre-right success in Abruzzo says PM Meloni (Ansa)
Lee Anderson: Ex-Tory MP defects to Reform UK (BBC)
Company news:
Notable Gainers
+31.1% VRS.LN (Versarien £0.00, -0.00) -- agrees to sale of Korean Plant for £604K to MCK Tech
+12.5% GCM.LN (GCM Resources £0.08, +0.01) -- enters $1B (£777.9M) contract with PowerChina at Phulbari coal, power project
+6.4% ODHN.SW (Orascom Development Holding CHF4.50, +0.27) -- announces its Egyptian Subsidiary (ODE) FY23 Financial Results
+6.3% NANO.LN (Nanoco Group £0.20, +0.01) -- proposes return of up to £33M to shareholders
+6.3% PEUG.FP (Peugeot Invest €112.00, +6.60) -- initiates managerial transition
+5.8% TCAP.LN (TP ICAP Group £1.99, +0.11) -- TP ICAP Group may sell or list Parameta Solutions - FT
+5.4% GMS.LN (Gulf Marine Services £0.19, +0.01) -- contract
+5.0% QBY.GR (q.beyond €0.63, +0.03) -- FY earnings
+4.8% AML.LN (Aston Martin Lagonda Global Holdings £1.64, +0.08) -- increases new super senior revolving credit facility agreement and announces notes offering
+4.7% LEG.GR (LEG Immobilien €75.82, +3.40) -- FY earnings
+3.2% HYQ.GR (Hypoport €201.80, +6.20) -- FY earnings
+3.2% IMB.LN (Imperial Brands £17.48, +0.54) -- to commence second £550M tranche already communicated buyback
+3.1% BIOA.B.SS (BioArctic SEK240.20, +7.20) -- study updtae
+2.9% MZX.GR (Masterflex €8.60, +0.24) -- prelim FY earnings
+2.5% SPIE.FP (SPIE €33.86, +0.82) -- to acquire ~92 % of ICG Group in Germany
+2.4% FING.B.SS (Fingerprint Cards SEK0.98, +0.02) -- supports Thales Biometric Payment Card first launch in Türkiye with Garanti BBVA
+2.2% FRP.LN (FRP Advisory Group £1.14, +0.03) -- acquires specialist business advisory firm GWC in the Isle of Man
+1.4% BRNK.GR (Branicks Group €1.03, +0.01) -- renews and concludes four lease agreements for a total of 72,100 sqm of office and logistics space
Notable Decliners
-70.7% LOOP.LN (LoopUp Group £0.01, -0.01) -- FY trading update
-46.6% VANQ.LN (Vanquis Banking Group £0.66, -0.58) -- prelim FY earnings
-26.0% FXPO.LN (Ferrexpo £0.53, -0.18) -- provides update regarding Ukrainian subsidiary
-7.5% RBI.AV (Raiffeisen Bank International €18.38, -1.49) -- EU banks in Russia react to US sanctions threat
-6.3% CURY.LN (Currys £0.61, -0.04) -- Elliott Advisors will not to make an offer for company
-5.4% CHAR.LN (Chariot £0.07, -0.00) -- completion of feasibility study on green hydrogen project in Mauritania
-4.3% TIT.IM (Telecom Italia €0.21, -0.01) -- issues addedum to 2024-2026 business plan
-3.4% A2A.IM (A2A €1.69, -0.06) -- to buy 90% of new company from e-distribuzione for €1.22B
-3.0% OUT1V.FH (Outokumpu €3.81, -0.12) -- downgrades its guidance for Q1; adj EBITDA expected to be at similar or lower level compared to Q4 2023 due to the political strike in Finland
-2.3% PHXM.FP (Phaxiam Therapeutics €2.92, -0.07) -- announces effectiveness of voluntary delisting of American Depositary Shares from Nasdaq Stock Market
-2.1% METN.SW (Metall Zug CHF1,370.00, -30.00) -- FY earnings
-1.7% AOX.GR (Alstria €3.40, -0.06) -- FY earnings
-0.7% ALHGR.FP (Hoffmann Green Cement Technologies €8.86, -0.06) -- signs commercial partnership with Tartarin
EU companies reporting tomorrow:
DACHs: Vienna Insurance (VIG.AV), Mayr-Melnhof Karton (MMK.AV), Wacker Chemie (WCH.GR), BKW (BKW.SW), Tecan Group (TECN.SW), Galenica (GALE.SW), Sensirion (SENS.SW), Medartis (MED.SW), Komax (KOMN.SW), VP Bank (VPBN.SW), PolyPeptide (PPGN.SW), FUCHS (FPE.GR), Siltronic (WAF.GR), TAG Immobilien (TEG.GR) MAX Automation (MXHN.GR)
France: Lumibird (LBIRD.FP), Maisons du Monde (MDM.FP)
Nordics: Kongsberg Automotive (KOA.NO)
Southern Europe: Generali (G.IM), De'Longhi (DLG.IM), Italgas (IG.IM), ERG (ERG.IM), TOD'S (TOD.IM), Esprinet (PRT.IM), Toscana Aeroporti (TYA.IM), Gefran (GE.IM), National Bank of Greece (ETE.GA), Aegean Airlines (AEGN.GA)
UK: Persimmon (PSN.LN), Hill & Smith (HILS.LN), Domino's Pizza (DOM.LN), Genuit (GEN.LN), TI Fluid Systems (TIFS.LN), Fonix Mobile (FNX.LN), Synthomer (SYNT.LN), Costain (COST.LN), H&T (HAT.LN)
CMD/events: Demant (DEMANT.DC), Mendus (IMMU.SS), UCB (UCB.BB)
Trading Update: DFDS (DFDS.DC), Groupe Partouche (PARP.FP)
Traffic: Flughafen Zurich (FHZN.SW
Data:
Economics:
Spain Jan retail sales +0.3% y/y vs consensus +3.7%, prior revised +2.7% from +3.1%
Netherlands Jan manufacturing production (4.7%) m/m vs consensus (3.4%), prior revised +4.1% from +6.8%
Norway Feb
CPI +4.5% y/y vs consensus +4.9%, prior +4.7%
PPI (12.6%) y/y vs consensus (10.0%), prior (12.9%)
Denmark
Feb CPI +0.8% y/y vs consensus +0.9%, prior +1.2%
Jan trade balance DKK22.9B vs consensus DKK29.8B, prior revised DKK31.3B from DKK32.8B
Markets:
WTI Crude (Apr 24): +$0.43 or +0.55% to $78.44
€-$ (0.0014) or (0.13%) to 1.0927
£-$ (0.0054) or (0.42%) to 1.2808
€-£ +0.0021 to 0.8530
S&P 500 (0.18%)
Performance year-to-date
FTSE 100: (0.83%)
DAX: +5.91%
CAC: +6.32%
MIB: +9.79%
Stoxx 600: +4.69%
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