May 30 ,2024
Synopsis:
European equity markets closed higher. Spain +1.8% and Switzerland +0.7% lead outperformers, whilst Greece (0.2%) and The Netherlands slightly lower buck the higher trend and lead underperformers.
Market sentiment undermined by rate backup following another softer Treasury auction. Supply concerns have added to hawkish rate repricing. Increased concerns also surrounding Tech sector. While the ECB appears comfortable with a June hike, policy thereafter is uncertain. With European economies recovering focus on inflation outlook and implications for policy. In addition, resurgent oil prices also adding to concerns, though focus for European central banks on core inflation and still-elevated services prices.
UK election headlines focus on VAT. Both Conservatives and Labour have pledged not to increase after election. Very little between the two parties on fiscal policy so far. UK election polls continue to vary widely, though Labour well ahead in all surveys and points to big majority.
Of note on the data front, Eurozone Sentiment Indicator improved in May to 96.0 versus consensus 96.2 and prior 95.6, while unemployment rate at a weaker-than-expected 6.4%. Spanish inflation accelerated for a third straight month in May, coming in at 3.8% y/y versus expectations of 3.7%. Swiss Q1 GDP firmer-than-expected, while KOF leading indicator missed.
Amidst light earnings releases, Telecom Italia (TIT.IM) Q1 domestic revenue and core profit overshadow in-line Q1 results at group level; eDreams ODIGEO (EDR.SM) FY net result turned to profit in 2023 after three years of losses due to pandemic-linked restrictions; reiterated 2025 targets of 7.25M subscribers and foresees "significant growth potential" beyond FY2025; Auto Trader Group (AUTO.LN) reported better-than-expected FY numbers. Helvetia Holding (HELN.SW) reported FY number of active insured persons +8.5% y/y.
In M&A, BHP Group (BHP.AU) walks away from talks with Anglo American (AAL.LN). Brookfield (BN.CN) consortium enters into exclusive negotiations to acquire a majority stake in Neoen (NEION.FP) and launch a €39.85/share mandatory tender offer. NZZ to acquire 25% stake in APG SGA (APGN.SW) for CHF220/sh from JCDecaux SE and Pargesa Asset Management.
Looking ahead to tomorrow's calendar (see - Europe Week Ahead: 27-May to 31-May attached) Ibersol (IBS.PL), Waste Plastic Upcycling (WPU.NO), De La Rue (DLAR.LN), Biokraft International (BIOGAS.SS) and Nynomic (M7U.GR) will be among other names to update investors, whilst the macro-calendar releases will include Germany Apr retail sales France/Finland/Austria/Belgium/Portugal/Italy Q1 final GDP, France/Italy/Eurozone/Portugal/Netherlands/Austria May preliminary CPI, France Apr PPI, consumer spending, Switzerland Apr retail sales, UK Apr mortgage approvals, M4 money supply, May house price index - Nationwide, Greece Mar retail sales, Austria unemployment rate.
Digest:
Sectors - STOXX Europe 600:
Outperformers:
Real Estate +1.92%, Retail +1.70%, Telecom +1.60%, Banks +1.43%, Food, Beverage and Tobacco +1.41%, Travel & Leisure +1.25%, Consumer Products and Services +1.15%, Chemicals +0.99%, Financial Svcs +0.88%, Utilities +0.77%, Personal Care Drug and Grocery Stores +0.70%, Health Care +0.65%,
Underperformers:
Technology (0.72%), Energy(0.46%), Media +0.02%, Insurance +0.26%, Basic Resources +0.29%, Autos & Parts +0.32%, Ind Goods & Svcs +0.54%,
Macro/Peripheral markets:
Geopolitics
NATO chief calls for discussion on restrictions for arms supplied to Ukraine - Reuters
Hungary holds up Rutte as NATO Secretary General - Handelsblatt
Russia sources ammunition faster than west, says Prague - FT
Russia/Ukraine
EU
UK
Deal to restore Northern Ireland's executive oversold, says DUP leader - FT
UK mortgage holders hardest hit by rising prices, data shows - FT
I see no reason why Diane Abbott can't stand for Labour, says Angela Rayner - BBC, The Telegraph
Starmer left-wing purge row is not dying down - BBC
Hunt puts pressure on Kretinsky to strengthen Royal Mail takeover guarantees - The Telegraph
Hunt Says Tax to Rise After UK Vote in Blow to Tory Message - Bloomberg
Germany
Italy-Germany-Austria agreement on the Hydrogen Corridor -Ansa
FDP insists on end of EEG subsidies for new plants - Handelsblatt
France
Greece
Day limit for short-term rentals - ekathimerini
Denmark
Denmark Asks Doctors to Move Ozempic Patients to Cheaper Drugs- Bloomberg
Company news:
Trading Higher:
+18.8% YIT.FH (Yit €2.55, +0.40) -- Danske Bank upgrade
+14.6% AUTO.LN (Auto Trader Group £8.39, +1.07) -- FY earnings
+12.7% BIOVIC.B.SS (Biovica International SEK2.40, +0.27) -- trial results
+10.9% BWLPG.NO (BW LPG NOK210.40, +20.70) -- Q1 earnings
+9.0% ENQ.LN (EnQuest £0.16, +0.01) -- operations update
+8.7% CURY.LN (Currys £0.78, +0.06) -- Berenberg upgrade
+4.9% ORY.SM (Oryzon Genomics €2.01, +0.09) -- trial results
+4.5% APGN.SW (APG SGA CHF208.00, +9.00) -- NZZ to acquire 25% stake in APG SGA for CHF220/share from JCDecaux SE and Pargesa Asset Management
+4.4% 8TRA.GR (TRATON €32.35, +1.35) -- initiated buy at Pareto
+4.2% MGN.NO (Magnora NOK33.40, +1.35) -- Helios owners sell all shares to French infrastructure group Vinci for an upfront payment of €73M
+3.6% SOP.FP (Sopra Steria Group €221.60, +7.60) -- BNP Paribas Exane upgrade
+3.2% PGS.NO (PGS ASA NOK9.31, +0.29) -- final permit for large 4D survey over Barracuda Caratinga fields
+2.4% AET.LN (Afentra £0.59, +0.01) -- FY earnings
+2.3% SBB.B.SS (Samhällsbyggnadsbolaget i Norden SEK4.96, +0.11) -- agreement with Kåpan Tjänstepension to divide SBB Kåpan Bostad
+2.0% SUBC.NO (Subsea 7 NOK193.00, +3.80) -- contract
+1.7% RWI.LN (Renewi £6.43, +0.11) -- FY earnings; to sell UK Municipal to Biffa Limited
+1.6% EDR.SM (eDreams ODIGEO €6.91, +0.11) -- Q4 earnings
Trading Lower:
-13.7% OVH.FP (OVHCloud €5.15, -0.82) -- Stifel downgrade
-12.7% SALT.LN (MicroSalt £0.88, -0.13) -- FY earnings
-12.1% ALNOV.FP (Novacyt €0.68, -0.09) -- FY earnings
-9.5% SAS.SS (SAS SEK0.04, -0.00) -- Q2 earnings
-9.0% BGBIO.NO (BerGenBio NOK13.00, -1.28) -- to effect reverse share split and change of ISIN today
-7.1% PMI.LN (Premier Miton Group £0.73, -0.06) -- H1 earnings
-6.9% INTEG.B.SS (Integrum SEK51.60, -3.80) -- Q4 earnings
-6.7% ALL.LN (Atlantic Lithium £0.23, -0.02) -- commences field work at Senya Beraku Licence
-5.1% ALCOX.FP (Nicox €0.34, -0.02) -- launch of a capital increase with maintenance of preferential subscription rights in the form of ABSA for a maximum amount of ~€3.8M
-4.4% PIRC.IM (Pirelli & C. €5.92, -0.27) -- China's Silk Road to sell ~9% stake of Pirelli for ~$553M - Bloomberg
-4.3% NKT.DC (NKT A/S DKK592.00, -26.50) -- Carnegie Securities dowgrade
-3.1% VRCI.LN (Verici Dx £0.08, -0.00) -- FY earnings
EU companies reporting tomorrow:
Earnings: Ibersol (IBS.PL), Waste Plastic Upcycling (WPU.NO), De La Rue (DLAR.LN), Biokraft International (BIOGAS.SS)
Trading Update: Nynomic (M7U.GR)
Data:
Economics:
Q1 GDP
Sweden +0.7% y/y vs preliminary (1.1%)
Switzerland +0.6% y/y vs consensus +0.6% and prior revised +0.5% from +0.6%
Apr Unemployment Rate
Denmark 2.5% vs consensus 2.5% and prior 2.5%
Italy 6.9% vs consensus 7.2% and prior 7.2%
Eurozone 6.4% vs consensus 6.5% and prior 6.5%
Greece 10.8% vs consensus 10.3% and prior revised 10.8% from 10.2%
Apr PPI
Greece (1.0%) y/y vs consensus +3.1% and prior (0.1%)
Italy (5.9%) y/y vs consensus (6.4%) and prior (9.6%)
Switzerland
Apr Trade Balance CHF4.32B vs consensus CHF3.9B and prior revised CHF3.77B from CHF3.54B
May KOF Leading Indicators 100.3 vs consensus 102.3 and prior revised 101.9 from 101.8
Spain May Preliminary CPI +3.6% y/y vs consensus +3.7% and prior +3.3%
Eurozone May Economic Sentiment Indicator 96.0 vs consensus 96.2 and prior 95.6
Markets:
WTI Crude (Jul 24): ($0.64) or (0.81%) to $78.59
€-$ +0.0041 or +0.38% to 1.0844
£-$ +0.0044 or +0.34% to 1.2745
€-£ +0.0004 to 0.8509
S&P 500 (0.48%)
Performance year-to-date
FTSE 100: +6.49%
DAX: +10.42%
CAC: +5.77%
MIB: +13.50%
Stoxx 600: +7.83%
This information and data is provided for general informational purposes only. The Bank of New York Mellon and our information suppliers do not warrant or guarantee the accuracy, timeliness or completeness of this information or data. We provide no advice nor recommendation or endorsement with respect to any company or securities. We do not undertake any obligation to update or amend this information or data. Nothing herein shall be deemed to constitute an offer to sell or a solicitation of an offer to buy securities.
Please refer to "Terms Of Use".
DEPOSITARY RECEIPTS:
NOT FDIC, STATE OR FEDERAL AGENCY INSURED
MAY LOSE VALUE
NO BANK, STATE OR FEDERAL AGENCY GUARANTEE