Mar 21 ,2024
Synopsis:
European indices ended in positive territory, near the session's highs. Earlier this morning, the SNB kicked off the central banks session, surprising markets by cutting rates 0.25% to 1.5%. A majority of analysts polled by Reuters expecting the SNB to keep rates on hold at 1.75%. It was the first rate cut by the SNB in nine years. The rate cut aims to address reduced inflationary pressure and the appreciation of the Swiss franc. To note, Swiss inflation eased to 1.2% y/y in February. Additionally, SNB said to continue monitoring inflation closely and adjust policy as needed. The bank said global economy projected to grow moderately, with inflation expected to decrease further. Swiss GDP growth forecast raised to ~1%, despite uncertainties and vulnerabilities in mortgage and real estate markets. Several sell-side economists had highlighted risk of a surprise rate cut to counter Swiss franc strength and support growth. Right after the SNB, Norges Bank kept its policy rate at 4.5% and argued it will need to keep it where it is for some time to achieve the 2% inflation target. Statement said committee concerned about premature rate cuts leading to prolonged high inflation and the policy rate expected will remain unchanged until autumn 2024, then gradually decrease. Cited uncertainty in the economy, particularly across industries, affecting future outlook. Highlighted that if inflation remains high or krone weakens, rate may rise but if economy slows, rate may drop sooner. Finally, the BoE also left its key rate on hold, as expected. Hawkish members Haskel and Mann dropped rate hike votes, which resulted in an 8-1 vote for a steady hand. Dhingra remains the only official still voting for a rate cut. No change in emphasis on data dependence. Statement highlighted key indicators of inflation persistence remain elevated. However, it did note restrictive policy weighing on activity, leading to looser labor market, and bearing down on inflationary pressure. Reiterated it will continue to monitor range of measures, including underlying tightness of labor market, wage growth and services prices inflation. Spring Budget seen increasing GDP by 0.25% over coming years. Inflation seen under 2% target in coming months in Q2, then edging up in Q3 and Q4.
On macro data front, Eurozone flash PMI showed activity in the bloc is close to stabilizing with composite reading at a nine-month high of 49.9 versus consensus 49.7 and prior 49.2. Service sector activity the main influence at 51.0 versus 50.5 forecast and prior 50.2 reading. Manufacturing still weak at three-month low of 45.7 versus 47.0 consensus and prior 46.5. It was the first rise in new work in the services sector since June, but in manufacturing weakness still firmly entrenched. Inflationary pressures eased. Input prices in manufacturing fell, while services prices elevated, yet cooling in pace of increase in cost burdens took pressure off selling prices. UK flash PMI for March reinforced expectations economy has recovered from last year's brief recession. Composite reading at 52.9 versus consensus 53.1 and prior 53.0. Recall that reading in February was nine-month high. Services sector PMI recorded three-month low of 53.4 versus consensus 53.8 and prior 53.8, but manufacturing at 20-month high of 49.9 versus 47.8 forecast and prior 47.5. S&P Global said PMI points to Q1 expansion of 0.25%.
On the reporting front, Bayerische Motoren Werke (BMW.GR) confirmed prelim FY23 earnings as per 14-Mar update and guided FY24 EBIT margin in Automotive Segment, with Porsche Automobil Holding SE (PAH3.GR), Nemetschek (NEM.GR), PORR (POS.AV) and Heidelberg Materials (HEI.GR) among other names from the region to update investors. In the UK, Next (NXT.LN) and Centamin (CEY.LN) released their earnings, whilst Virgin Money UK (VMUK.LN) confirmed the merger with Nationwide Building Society. Elsewhere, ENAV (ENAV.IM) is holding its investor day whilst - in Switzerland - UBS Group (UBSG.SW) is closing thousands of smaller Credit Suisse accounts in Asia; also, Telecom Italia (TIT.IM) minority investor Merlyn Partners is reportedly pushing the Italian company to sell its Brazilian unit
Looking ahead to tomorrow's calendars, Phoenix Group Holdings (PHNX.LN), X5 Retail Group (FIVE.LN), JD Wetherspoon (JDW.LN), secunet Security Networks (YSN.GR), Eckert & Ziegler Strahlen- und Medizintechnik (EUZ.GR), SGL Carbon (SGL.GR), CEWE Stiftung & Co. (CWC.GR), Data Modul (DAM.GR), 4SC (VSC.GR), Bike24 Holding (BIKE.GR), Eurocommercial Properties (ECMPA.NA), Tokmanni (TOKMAN.FH) and HEXAOM (ALHEX.FP) will be among other name updating investors, whilst AstraZeneca (AZN.LN) will host its CMD. Macro-data will include Germany Mar Ifo survey, UK Feb retail sales and Ireland Feb PPI
Digest:
Sectors - STOXX Europe 600:
Outperformers: Technology +3.16%, Basic Resources +2.61%, Real Estate+2.14%, Financial Svcs +1.97%, Retail +1.94%, Banks +1.42%, Ind Goods & Svcs +1.12%, Travel & Leisure +0.96%, Construct & Mtls +0.93%
Underperformers: Utilities (0.40%), Autos & Parts (0.10%), Insurance +0.04%, Persnl & HHold Goods +0.07%, Food & Beverage +0.07%, Health Care +0.25%, Chemicals +0.34%, Telecom +0.36%, Oil & Gas +0.48%, Media +0.84%
Macro:
EU leaders discuss Ukraine aid, Gaza cease-fire in high-stakes summit (Politico)
Germany's taboo over Ukraine has been broken (FT)
Russia launches largest missile attack on Kyiv in weeks (Reuters)
Photos of Macron boxing raise eyebrows in France after he comes out swinging against Putin (Guardian)
Bank of England Inches Closer Toward Rate Cuts as Hawks Retreat (BBG)
Luis Montenegro appointed Portugal's prime minister (Le Monde)
Company news:
Notable Gainers
+24.0% KHG.FH (KH Group €0.85, +0.16) -- FY earnings
+10.8% SPG.DC (SP Group DKK202.50, +19.70) -- Q4 earning
+9.6% INTRUM.SS (Intrum SEK20.50, +1.80) -- to hold investors and analysts update call on Monday 25 March
+8.7% III.LN (3i Group £27.52, +2.19) -- CMD
+8.3% IXX.GR (init innovation in traffic systems €33.90, +2.60) -- FY earnings
+7.8% ENAV.IM (ENAV €3.50, +0.25) -- FY earnings
+6.6% NXT.LN (Next £90.82, +5.62) -- FY earnings
+4.5% CEY.LN (Centamin £1.11, +0.05) -- FY earnings
+4.0% ASCL.LN (Ascential £3.13, +0.12) -- FY earnings
+3.7% VETO.FP (Vetoquinol €100.60, +3.60) -- FY earnings
+3.5% STR.AV (STRABAG SE €43.75, +1.50) -- shares will be traded ex claim for cash distribution related to previously disclosed capital reduction from 22-Mar
+3.5% WLN.FP (Worldline €10.41, +0.35) -- will propose Wilfried Verstraete for election by the board as Chairman of the board
+3.3% SIGN.SW (SIG Combibloc Group CHF19.69, +0.63) -- says board will initiate a search for a new Chair for election at the 2025 AGM
+2.9% EAH.LN (Eco Animal Health Group £0.88, +0.03) -- FY trading update
+2.9% POS.AV (PORR €13.46, +0.38) -- FY earnings
+2.7% DHER.GR (Delivery Hero €27.51, +0.72) -- results of offer to buy back portions of outstanding convertible bonds due 2025 and 2026
+2.7% VMUK.LN (Virgin Money UK £2.14, +0.06) -- Nationwide Building Society and company agree terms of recommended cash acquisition
+2.6% ENOG.LN (Energean £10.60, +0.27) -- FY eanrings
+2.4% DOV.IM (doValue €1.94, +0.05) -- FY earnings; business plan 2024-26; announces in exclusive talks to combine with Gardant
+2.1% ESSITY.B.SS (Essity SEK244.30, +5.00) -- completes divestment of its shares in Vinda
+2.1% HLN.LN (Haleon £3.25, +0.07) -- announces closing of Secondary Global offering by Pfizer
+1.9% FGP.LN (FirstGroup £1.85, +0.04) -- awarded London Cable Car contract; anticipates revenues of c.£60M over 8-year period
+1.8% UHR.SW (Swatch Group CHF203.10, +3.60) -- publishes Annual Report 2023; re-iterates FY24 guidance as per 23-Jan update
+0.9% IBE.SM (Iberdrola €11.17, +0.10) -- Capital Markets & ESG Day
+0.1% HHFA.GR (Hamburger Hafen und Logistik €16.74, +0.02) -- FY earnings
Notable Decliners
-34.5% SEQUA.BB (Sequana Medical €1.44, -0.76) -- prelim FY earnings ; raised €11.5M through a 7.7M new share offering priced at €1.50 per new share
-14.8% APTD.LN (Aptitude Software Group £3.12, -0.53) -- FY earnings; to accelerate Autonomous Finance; £20M share buyback programme
-6.0% LPK.GR (LPKF Laser & Electronics €8.09, -0.52) -- FY earnings
-4.4% NEXI.IM (Nexi SpA €5.80, -0.27) -- undisclosed shareholder offers 28.8M Nexi shares; priced at €5.83/sh -- Bloomberg
-3.9% JDG.LN (Judges Scientific £111.50, -4.50) -- FY earnings
-3.5% 1U1.GR (1&1 AG €16.24, -0.58) -- FY earnings
-3.5% UTDI.GR (United Internet €21.10, -0.76) -- FY earnings
-3.2% GKP.LN (Gulf Keystone Petroleum £1.06, -0.03) -- FY earnings
-3.0% STB.LN (Secure Trust Bank £6.38, -0.20) -- FY eanrings
-1.2% DOCM.SW (DocMorris CHF78.85, -0.95) -- FY earnings
-0.4% NEM.GR (Nemetschek €87.38, -0.34) -- FY earnings
EU companies reporting tomorrow:
Phoenix Group Holdings (PHNX.LN), X5 Retail Group (FIVE.LN), JD Wetherspoon (JDW.LN), secunet Security Networks (YSN.GR), Eckert & Ziegler Strahlen- und Medizintechnik (EUZ.GR), SGL Carbon (SGL.GR), CEWE Stiftung & Co. (CWC.GR), Data Modul (DAM.GR), 4SC (VSC.GR), Bike24 Holding (BIKE.GR), Eurocommercial Properties (ECMPA.NA), Tokmanni Group (TOKMAN.FH), HEXAOM (ALHEX.FP)
CMD/events: AstraZeneca (AZN.LN)
Data:
Economics:
Feb Unemployment Rate
Netherlands 3.7% vs consensus 3.6% and prior 3.6%
Norway 3.6% vs prior 4.5%
Mar Flash Manufacturing PMI
France 45.8 vs consensus 47.5 and prior 47.1
Germany 41.6 vs consensus 43.1 and prior 42.5
Eurozone 45.7 vs consensus 47.0 and prior 46.5
UK 49.9 vs consensus 47.8 and prior 47.5
France Mar Business Survey 102 vs consensus 100 and prior revised 101 from 100
Markets:
WTI Crude (May 24): ($0.46) or (0.57%) to $80.81
€-$ (0.0062) or (0.57%) to 1.0860
£-$ (0.0117) or (0.92%) to 1.2668
€-£ +0.0032 to 0.8576
S&P 500 +0.67%
Performance year-to-date
FTSE 100: +1.99%
DAX: +8.49%
CAC: +8.47%
MIB: +13.19%
Stoxx 600: +6.45%
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