May 31 ,2024
Synopsis:
European equity markets ended mixed to higher with pan-European indices closing below session highs. Switzerland +1.2%, Norway 1.0%, Denmark +0.9% led the outperformers whilst Greece (0.6%) followed by Netherlands and Spain both down ~ (0.3%) led the laggards.
In macro updates, German retail sales missed expectations in April. Sales were down 1.2% m/m vs a drop of 0.3% expected. On a y/y basis, sales were up 1.8% vs 2.5% expected. Prior y/y revised higher from (2.2%) to (1.9%). Destatis noted sales in the food retail sector fell by 3.7% in real terms and by 3.4% in nominal terms on a monthly basis (Baha). In France, Q1 GDP came in line with preliminary reading. Still in France, preliminary CPI reading for May +2.2% y/y vs consensus +2.4% and 0.0% m/m vs +0.2% forecasted. In the Eurozone, May inflation update firmer than forecast for headline, core and services reading.
Meanwhile in the UK, Nationwide house price data showed a 0.4% m/m rise in May versus consensus for 0.1% increase and prior 0.4% fall. Left y/y increase at 1.3% versus prior 0.6% gain. Nationwide highlighted the resilience in the housing market when considering ongoing affordability pressures. Note, mortgage rates have fluctuated in recent weeks as markets reassessed BoE rate cut expectations, which saw a firming up in swap rates and some repricing in fixed-rate mortgage products by lenders. Also, latest BoE net mortgage approval data for April little changed at 61,100 vs consensus for 61,500 and prior 61,325. Recall that prior update was the highest level of net approvals for new mortgages since September 2022.
In political developments in the UK, election focuses on energy as Labour pledges clean energy push within months, while Conservative leader Sunak said he will not force prematurely force people into changes to achieve net zero plans.
Also making headlines, Bloomberg reported US slowing AI chip exports to Middle East with NVDA and AMD among those impacted. More scrutiny on falling China bond yields after PBOC-backed paper flagged bond sales following downward pressure on rates from redirected bank deposits.
On a light reporting front, JD Sports Fashion (JD.LN) shares traded notably down following weak FY earnings. Also in the UK, Petrofac (PFC.LN) posted FY adjusted net income ($485M) vs year-ago ($294M). In Italy, Italgas (IG.IM) guided FY24 adj. EBITDA in range of €1.32-1.35B vs FactSet €1.31B.
In M&A news, Cinven (Ephios Bidco GmbH) decided to make a public delisting acquisition offer for Synlab (SYAB.GR). Frasers Group (FRAS.LN) issued an update on its current investment in Hugo Boss, indicating that it now holds 2.47% of Hugo Boss's total share capital valued at €360M (£305M). Distribuidora Internacional De Alimentacion (DIA.SM) sold 100% of the share capital of DIA Brazil to Lyra II Fundo de Investimento em Participações Multiestratégia; expects estimated negative accounting impact in the amount of (€101M).
The week ahead sees ECB interest rate decision, Bundesbank's latest semi-annual forecasts, European parliamentary elections, May manufacturing/services PMIs from across the region, Germany May unemployment change, as well as earnings for B&M European Value Retail (BME.LN), Elekta (EKTA.B.SS), Inditex (ITX.SM), LondonMetric Property (LMP.LN), Remy Cointreau (RCO.FP) and voestalpine (VOE.AV).
Digest:
Sectors - STOXX Europe 600:
Outperformers
Health Care +1.06%, Utilities +1.12%, Telecom +0.78%, Oil & Gas +0.77%, Food & Beverage +0.62%, Insurance +0.49%, Financial Svcs +0.54%, Media +0.34%, Travel & Leisure +0.44%, Persnl & HHold Goods +0.55%, Real Estate+0.38%
Underperformers
Technology (1.33%), Construct & Mtls (0.69%), Retail (0.68%), Basic Resources +0.03%, Ind Goods & Svcs +0.07%, Autos & Parts +0.17%, Banks +0.24%, Chemicals +0.15%
Macro/Peripheral markets:
ECB
ECB to begin rate cuts amid economic rebound and inflation concerns - Bloomberg
OPEC
UK
UK business confidence reaches highest level in a decade, boosting optimism for economic recovery - London Times
UK markets show optimism amid likely Labour election victory and stability prospects - Bloomberg
ITV announce a multi-party (Conservative Party, Labour Party, Liberal Democrats, SNP, Reform UK, Green Party and Plaid Cymru) 90-minute General Election debate for 13-Jun, at 20:30BST - ITV
Germany
Germany to scrap gas levy over neighbours' threats to boost Russian imports - FT
Ireland
AIB Economic Outlook Report: GDP forecast 2024 +2.4%, 2025 +2.6%, 2026 +2.4% - AIB Economic Outlook Report
Belgium
Voters elect a new federal parliament, regional parliaments and members of the European Parliament on 9-Jun - Politico
Company news:
Notable Gainers
+31.1% LLQ.SW (Lalique Group CHF39.60, +9.40) -- CHF40/sh cash tender offer by Silvio Denz
+13.9% NEL.NO (NEL ASA NOK8.00, +0.97) -- purchase order
+12.1% JIN.NO (Jinhui Shipping & Transportation NOK7.40, +0.80) -- Q1 earnings
+10.0% VOW.NO (Vow ASA NOK6.96, +0.63) -- contract award
+8.7% RBG.LN (Revolution Bars Group £0.01, -0.00) -- continues M&A process and launches restructuring plan
+8.6% BHG.SS (BHG Group SEK17.46, +1.39) -- Carnegie Securities upgrade
+5.6% SAAB.B.SS (Saab SEK250.80, +13.40) -- SEK 7.7B contract
+4.1% BAVA.DC (Bavarian Nordic A/S DKK184.85, +7.35) -- submits sBLA seeking FDA approval of freeze-dried formulation of smallpox and Mpox vaccine
+4.0% ALFA.LN (Alfa Financial Software Holdings £1.77, +0.07) -- holder CHP Software and Consulting Holdings Limited sells 14.5M ordinary shares, ~4.9% of the company's share capital at 173p per share
+3.8% AGY.LN (Allergy Therapeutics £0.04, -0.00) -- presents portfolio key scientific findings at EAACI Congress
+3.6% BMN.LN (Bushveld Minerals £0.01, -0.00) -- announces Competition Commission of South Africa has unconditionally approved the proposed sale of Mokopane by SPR Fund I
+3.6% ZEAL.DC (Zealand Pharma DKK639.50, +22.00) -- EU's CHMP adopted a positive opinion recommending the granting of a marketing authorisation for the medicinal product Zegalogue
+3.3% BWLPG.NO (BW LPG NOK217.40, +7.00) -- Fearnley upgrade
+2.7% CNA.LN (Centrica £1.43, +0.04) -- RBC Capital Markets upgrade
+2.7% GFRD.LN (Galliford Try Holdings £2.65, +0.07) -- two new contracts worth £101M
+2.6% IDIA.SW (Idorsia CHF2.58, +0.07) -- present data from PRECISION study at the European Society of Hypertension meeting
+2.3% DPP.LN (DP Poland £0.11, -0.00) -- FY earnings
+2.1% NOVN.SW (Novartis CHF92.96, +1.94) -- Novartis Scemblix Phase III data first to show superior efficacy with a favorable safety and tolerability profile vs. standard-of-care TKIs in adults with newly diagnosed CML
+2.0% EUZ.GR (Eckert & Ziegler Strahlen- und Medizintechnik €45.94, +0.92) -- EU's CHMP adopted a positive opinion recommending the granting of a marketing authorisation for Eckert & Ziegler's GalliaPharm
+1.7% OPM.FP (OPmobility €10.91, +0.18) -- CRRC contract
+1.4% UBSG.SW (UBS Group CHF28.45, +0.38) -- UBS Group completes merger of UBS AG and Credit Suisse AG
Notable Decliners
-24.0% AFRN.LN (Aferian £0.05, -0.02) -- FY earnings
-10.5% MBTN.SW (Meyer Burger Technology CHF0.01, -0.00) -- proposes reverse share split in the ratio 750:1
-7.7% B8FK.GR (Biofrontera AG €3.10, -0.26) -- Q1 earnings
-5.2% DBV.FP (DBV Technologies €1.12, -0.06) -- provides update on ADS ratio change
-4.7% CAP.FP (Capgemini €185.50, -9.15) -- JPMorgan downgrade; Jefferies downgrade
-4.5% JD.LN (JD Sports Fashion £1.27, -0.06) -- FY earnings
-4.2% ABF.LN (Associated British Foods £25.48, -1.12) -- holder Howard Investments Limited sells ~10.3M ordinary shares at price of 2,550p/share raising gross proceeds of £262M
-3.7% TRMD.A.DC (TORM Plc DKK254.60, -9.80) -- holder Oaktree sells 6.9M share
-3.2% PLAY.IR (Fly Play ISK2.98, -0.10) -- CEO Einar Örn Ólafsson has taken on the position of interim CFO appoints; Ólafur Þór Jóhannesson, the outgoing CFO, will step down as of today
-2.7% FDR.SM (Fluidra €22.38, -0.62) -- Bestinver Securities downgrade
-2.7% TIT.IM (Telecom Italia €0.24, -0.01) -- closing of NetCo sale to KKR expected to be completed on schedule
-1.1% AZA.SS (Avanza Bank Holding SEK273.80, -3.00) -- Swedish National Debt Office quarterly report Swedish systemically important banks' compliance with MREL at the end of Q1
EU companies reporting on Monday:
Earnings:
The week ahead sees ECB interest rate decision, Bundesbank's latest semi-annual forecasts, European parliamentary elections, May manufacturing/services PMIs from across the region, Germany May unemployment change, as well as earnings for B&M European Value Retail (BME.LN), Elekta (EKTA.B.SS), Inditex (ITX.SM), LondonMetric Property (LMP.LN), Remy Cointreau (RCO.FP) and voestalpine (VOE.AV).
Data:
Economics:
France
May Preliminary CPI +2.2% y/y vs consensus +2.4% and prior +2.2%
Q1 GDP +1.1% y/y vs preliminary +1.1%
Apr Consumer Spending (0.8%) m/m vs consensus +0.2% and prior revised to +0.5% from +0.4%
Apr PPI (5.4%) y/y vs consensus (3.5%) and prior revised (6.6%) from (7.5%)
Austria May preliminary CPI +3.3% y/y vs consensus +3.6% and prior +3.5%
UK
May House Prices +1.3% y/y vs prior +0.6% - Nationwide
Apr M4 Money Supply +0.1% m/m vs consensus +0.4% and prior +0.7%
Apr Mortgage Approvals 61.14K vs consensus 61.5K and prior revised 61.26K from 61.33K
Greece Mar Retail Sales +5.2% y/y vs consensus +1.5% and prior revised to (9.5%) from (9.8%)
Netherlands May preliminary CPI +2.7% y/y vs consensus +2.7% and prior +2.7%
Finland Q1 GDP (1.2%) y/y vs preliminary (0.4%)
Germany Apr Retail Sales (0.6%) y/y vs consensus (1.0%) and prior +0.3%
Switzerland Apr Retail Sales +2.7% y/y vs consensus +0.2% and prior revised (0.2%) from (0.1%)
Italy May prelim CPI +0.8% y/y vs consensus +0.8% and prior +0.8%; +0.2% m/m vs consensus +0.2% and prior +0.1%
Eurozone May prelim CPI +2.6% y/y vs consensus +2.5% and prior +2.4%; +0.2% m/m vs consensus +0.1% and prior +0.6%
Markets:
WTI Crude (Jul 24): ($0.68) or (0.87%) to $77.23
€-$ +0.0016 or +0.15% to 1.0850
£-$ (0.0007) or (0.05%) to 1.2727
€-£ +0.0017 to 0.8527
S&P 500 (0.54%)
Performance year-to-date
FTSE 100: +7.04%
DAX: +10.34%
CAC: +5.80%
MIB: +13.61% Stoxx 600: +8.13%
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