May 27 ,2024
Synopsis:
European indices ended in positive territory. Utilities, autos and energy best performers; healthcare, banks and tech the weakest. Little movement with UK markets closed for a bank holiday and US markets closed for Memorial Day.
Markets appear to be consolidating while investors remain discerning on signs of US economic health and Fed rate path.
Quiet day on the headlines front. Central bank narrative continues as ECB is the latest Council member to signal a likely 25bps rate cut at the 6-June meeting, citing Eurozone inflation declining close to the 2% target, FT reports. Chief economist Lane, a dove, also brushed off concerns about cutting rates before the Fed, noting the energy shock hit Europe harder. Lane downplayed any exchange rate concerns on divergence with Fed. ECB's Panetta and Cipollone also backed a June cut.
On a light macro-calendar, German IFO business climate indicator for May missed expectations, coming in at 89.3 vs 90.4 expected, Baha writes. Current Assessment and Expectations also missed, coming in 88.3 and 90.4 respectively, against expectations of 89.8 and 90.8. Prior Business Climate and Expectations surveys were revised lower. IFO reported that companies were less satisfied with current business situation. Still, report highlighted that industry, trade and construction recovering, while service providers suffering a setback.
Quiet in terms of corporate news. International Distributions Services (IDS.LN) released FY earnings on Friday after the close including FY adjusted EPS (14.6p) vs consensus (7.0p) and proposed a final dividend payment of 2p/sh. Retail Estates (RET.BB) posted today Q3 earnings with Q3 EPRA EPS €4.68 vs year-ago €4.49. In other corporate developments, Handelsblatt reported that EnB (EBK.GR) CEO Georg Stamatelopoulos urges Germany to be more pragmatic as he warns of rising electricity prices. Elsewhere, UBS (UBSG.SW) rules out appointing outsider to succeed CEO Sergio Ermotti when he steps down in three years; plans to create shortlist of three internal candidates as soon as next year, according to the FT.
On the M&A newsflow , Persimmon is reportedly looking at submitting £1B bid for Cala Group whilst Dr. Reddy's close to acquiring Nicotinell, others from Haleon (HLN.LN), Sky News reported.
Looking ahead to tomorrow's EU econ-calendar, notable releases will include, amongst others, UK May distributive trades survey - CBI.
Digest:
Sectors - STOXX Europe 600:
Outperformers
Utilities +1.10%, Autos & Parts +0.96%, Oil & Gas +0.95%, Chemicals +0.69%, Retail +0.65%, Construct & Mtls +0.54%, Ind Goods & Svcs +0.38%, Telecom +0.35%, Real Estate+0.32%, Persnl & HHold Goods +0.31%, Media +0.30%, Basic Resources +0.28%
Underperformers
Health Care (0.03%), Banks (0.01%), Technology +0.00%, Food & Beverage +0.08%, Financial Svcs +0.19%, Travel & Leisure +0.24%, Insurance +0.25%
Macro:
ECB:
ECB is ready to start cutting interest rates, says chief economist -- FT
UK:
National Service: What is Rishi Sunak's plan, is it mandatory and how will it work? -- Telegraph
Germany
Ifo: German business climate unchanged in May -- Baha
France
France looks to elusive EU capital market to fix start-up funding -- Reuters
Italy:
Meloni sees 'different ruling majority' in EU -- Ansa
EU companies reporting tomorrow:
Earnings:
DACHs: Dottikon ES Holding (DESN.SW), LEM Holding (LEHN.SW), PharmaSGP Holding (PSG.GR), IVU Traffic Technologies (IVU.GR), DEMIRE Deutsche Mittelstand Real Estate (DMRE.GR), BRAIN Biotech (BNN.GR), ADLER Group (ADJ.GR)
Nordics: Cadeler (CADLR.NO), Per Aarsleff Holding (PAAL.B.DC), Matas (MATAS.DC), Maha Energy (MAHA.A.SS), Q-linea (QLINEA.SS)
UK: Intermediate Capital Group (ICG.LN), Victorian Plumbing Group (VIC.LN)
Data:
Economics:
Germany May IFO
Business Climate 89.3 vs consensus 90.4 and prior revised to 89.3 from 89.4
Current Conditions 88.3 vs consensus 89.9 and prior 88.9
Expectations 90.4 vs consensus 90.5 vs prior revised to 89.7 from 89.9
Markets:
WTI Crude (Jul 24): +$0.85 or +1.09% to $78.57
€-$ +0.0014 or +0.13% to 1.0858
£-$ +0.0036 or +0.28% to 1.2774
€-£ (0.0015) to 0.8501
S&P 500 +0.00%
Performance year-to-date:
FTSE 100: +7.56%
DAX: +12.08%
CAC: +7.81%
MIB: +14.46%
Stoxx 600: +9.02%
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