May 17 ,2024
Synopsis:
European indices ended mostly lower, with Norway closed for Constitution Day. In macro news, Eurozone inflation held steady in April at 2.4% y/y versus consensus 2.4% and prior 2.9% Last year in April, inflation rate was 7%. A slowdown was recorded in cost of services (3.7% vs 4%) and non-energy industrial goods (0.9% vs 1.1%) while prices for energy continued to decline (-0.6% vs -1.8%). Data supports ECB moving gradually towards easing policy in June. However, recent ECB speakers continue to suggest caution with rate cuts given divergence with Fed path. Analysts dismiss such concerns, suggesting more critical factors are commodity and energy prices, given Europe's energy dependencies, as well as manufacturing performance, where lower input costs aid global trade flows and Euro circulation. ECB seen able to ease policy and support growth, so long as energy prices remain contained. Also in macro, Italy's economy has outperformed recently, supported by investment boom driven partly by "Superbonus" tax incentive for residential renovations However, costly scheme has faced major revisions by statistical agency Istat due to accounting treatment, raising deficit figures and concerns over fiscal impact. Superbonus, providing deductions up to 110%, initially estimated at €35B but had already cost €219B by April 2024. Going forward, analysts suggest key questions remain over continued negative impact on Italy's deficit and high public debt levels compared to peers. While no further major revisions are expected, the scheme will weigh on finances until phased out, likely by 2026
On the reporting front, Richemont (CFR.SW) posted FY earnings, appointed a new CEO and also stated that it is still working on finding new controlling shareholder for YNAP; in France, SCOR SE (SCR.FP) and ENGIE (ENGI.FP) posted Q1 numbers. In the UK, GSK (GSK.LN) has now fully exited Haleon plc (HLN.LN), whilst Unilever (ULVR.LN) commenced the first €850M tranche of the already communicated €1.5B share buyback; in Spain, Ferrovial (FER.SM) stated that it now expects 2024-26 dividends from infrastructure assets in existing portfolio excluding Heathrow €2.2B and MERLIN Properties SOCIMI (MRL.SM) issued Q1 and appointed a new chairman. Elsewhere, holders EQT, PSP placed ~23M shares in Azelis Group (AZE.BB), Modern Times Group (MTG.B.DD) launched a new share repurchase program and Saipem (SPM.IM) announced a contract award
Next week's calendars (pls see our StreetAccount Summary - Europe Week Ahead: May 20-24 attached below) see Eurozone, France, Germany, UK May prelim. manufacturing/services PMIs, G7 finance ministers and central bank governors meeting as well as earnings as earnings from Generali (G.IM), National Grid (NG.LN), SSE (SSE.LN) and Swiss Life Holding (SLHN.SW). Of note, a handful of European markets are closed on Monday, with a Bank Holiday occurring in these as well as other countries including France, Germany and the Netherlands
Digest:
Sectors - STOXX Europe 600:
Outperformers: Basic Resources +1.33%, Banks +0.60%, Telecom +0.42%, Food & Beverage +0.34%, Persnl & HHold Goods +0.27%, Media +0.18%, Chemicals +0.09%, Insurance +0.01%, Retail (0.00%), Oil & Gas (0.09%), Financial Svcs (0.10%)
Underperformers: Utilities (0.92%), Real Estate(0.87%), Construct & Mtls (0.84%), Travel & Leisure (0.77%), Ind Goods & Svcs (0.75%), Technology (0.46%), Health Care (0.41%), Autos & Parts (0.33%)
Macro:
German defence industry says it will need government help to reduce dependence on China (Reuters)
Germany's government is barely holding together (Economist)
Why is France accusing Azerbaijan of meddling in its Pacific territory of New Caledonia? (F24)
Police kill failed asylum seeker trying to set fire to synagogue in France (Telegraph)
Zelenskiy Presses Allies for Weapons Capable of Hitting Russia (BBG)
PM Rishi Sunak and Akshata Murty rise up rich list as fortune increases by £120M (Guardian)
G7 to back EU line on frozen Russian assets, Italy says (Euractiv)
Company news:
Notable Gainers
+11.9% FRP.LN (FRP Advisory Group £1.43, +0.15) -- FY trading update
+11.4% AVAP.LN (Avation £1.39, +0.14) -- sells two aircraft from orderbook
+10.6% CLARI.FP (Clariane €3.63, +0.35) -- HLD Europe plans to enter capital of company with investment representing a 20% stake
+10.5% RAY.B.SS (RaySearch Laboratories SEK140.40, +13.40) -- Q1 earnings
+9.0% HUM.LN (Hummingbird Resources £0.10, +0.01) -- restart of Corica operations at Kouroussa and corporate update
+5.7% CFR.SW (Richemont CHF145.30, +7.85) -- FY earnings; appoints new CEO
+5.5% LAGR.B.SS (Lagercrantz Group SEK171.10, +8.90) -- Q4 earnings
+5.3% CGEO.LN (Georgia Capital £10.10, +0.51) -- to commence $25M share buyback programme
+2.9% FCC.SM (Fomento de Construcciones y Contratas €13.86, +0.40) -- proposes to split the Real Estate and Cement businesses into a new listed company
+2.6% SPM.IM (Saipem €2.27, +0.06) -- contract
+1.0% MTG.B.SS (Modern Times Group MTG SEK97.70, +1.00) -- new share repurchase program of up to SEK 400M
+0.9% FER.SM (Ferrovial €37.02, +0.32) -- expects 2024-26 dividends from infrastructure assets in existing portfolio excluding Heathrow €2.2B
+0.9% ULVR.LN (Unilever £43.17, +0.39) -- buyback
+0.8% RNO.FP (Renault €50.18, +0.40) -- VW and Renault end talks to develop affordable EV -- Reuters
+0.2% ENGI.FP (ENGIE €15.81, +0.03) -- Q1 earnings
+0.1% VOW3.GR (Volkswagen €120.45, +0.15) -- VW and Renault end talks to develop affordable EV -- Reuters
Notable Decliners
-22.9% ALCAR.FP (Carmat €3.07, -0.92) -- successfully raises a total of €16.0M via issue of new shares at €3/share
-8.6% TOKMAN.FH (Tokmanni Group €13.63, -1.28) -- Q1 earnings
-8.3% EVS.BB (EVS Broadcast Equipment €30.35, -2.75) -- Q1 business update; Kepler Cheuvreux downgrade
-6.0% SCR.FP (SCOR SE €30.30, -1.92) -- Q1 earnings
-4.5% HCM.LN (Hutchmed £3.22, -0.15) -- to present Sovleplenib phase III ESLIM-01 study and Hematological malignancy programs data at EHA2024 Congress
-3.9% VPBN.SW (VP Bank CHF88.00, -3.60) -- four months IMS
-3.5% SRT3.GR (Sartorius €268.10, -9.60) -- CMD
-3.2% XLM.LN (XLMedia £0.11, -0.00) -- FY earnings
-2.8% LAND.LN (Land Securities Group £6.72, -0.20) -- FY earnings
-2.6% GOMX.SS (GomSpace Group SEK4.29, -0.12) -- Q1 earnings
-2.4% KAMUX.FH (Kamux €5.76, -0.14) -- Q1 earnings
-2.4% PRX.NA (Prosus €35.70, -0.88) -- appoints news CEO
-1.1% HLN.LN (Haleon £3.29, -0.03) -- GSK completes sale of shares in Haleon plc; fully exits position
-0.9% EQT.SS (EQT AB SEK341.90, -3.10) -- Azelis Group holders EQT, PSP offer ~23M shares -- Bloomberg
-0.9% PDL.LN (Petra Diamonds £0.42, -0.00) -- sales results for Tender 6 FY24
-0.6% GSK.LN (GSK Plc £17.73, -0.12) -- completes sale of shares in Haleon plc; fully exits position
-0.5% IBE.SM (Iberdrola €12.29, -0.06) -- reportedly close to agreement to buy out remaining Avangrid shares for $35.75/sh
EU companies reporting on Monday:
Ryanair Holdings (RYA.ID), Big Yellow Group (BYG.LN), Kainos Group (KNOS.LN), Likewise Group (LIKE.LN), Fourlis Holdings (FOYRK.GA)
Trading Update: Freelance.com (ALPRE.FP), Unifiedpost Group (UPG.BB)
CMD/events: Banca Sistema (BST.IM)
Data:
Economics:
Eurozone Apr CPI +2.4% y/y vs preliminary +2.4%; +0.6% m/m vs preliminary +0.6%
France Q1 Unemployment Rate 7.5% vs consensus 7.4% and prior 7.5%
Austria Apr CPI +3.5% y/y vs preliminary +3.5%; +0.1% m/m vs preliminary +0.1%
Markets:
WTI Crude (Jun 24): +$0.28 or +0.35% to $79.51
€-$ (0.0000) or (0.00%) to 1.0868
£-$ +0.0027 or +0.21% to 1.2698
€-£ (0.0021) to 0.8558
S&P 500 (0.03%)
Performance year-to-date
FTSE 100: +8.86%
DAX: +11.67%
CAC: +8.27%
MIB: +16.64%
Stoxx 600: +9.16%
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