Jun 04 ,2024
Synopsis:
European equity markets ended mostly lower, with pan-European indices off best levels. Denmark +0.5% followed by Switzerland little change +0.0% led the outperformers whilst Greece (1.6%), Austria (1.4%) and Italy (1.1%) led the laggards.
In political developments in the UK, Prime Minister Rishi Sunak and Labour leader Keir Starmer will go head-to-head in the first debate of the general election campaign later (BBC). Meanwhile, latest YouGov poll projects 422 Labour seats (vs 202 in 2019 general election), 140 seats for Conservatives (vs 365 in 2019).
Macro data included softer than forecast Swiss CPI, while German unemployment firmer than expected. BRC update saw mild recovery in UK retail sales in May. Also in the UK, the CBI published its Business Manifesto to redefine the UK's growth trajectory and support the long-term outlook. It highlighted the need for a cutting-edging trade and investment strategy to maximize the UK's competitive advantage, growth, and productivity. It identified three big enablers for investments: a more coherent tax system to drive investment, a planning system that cuts bureaucracy and speeds up decisions and expansion in tax-free occupational health to help prevent employees leaving labor market and incentivize businesses to invest.
Elsewhere, US JOLTS job openings report for April the highlight on the US economic calendar this morning. April factory orders also on tap. Overseas, South Korean inflation slowed by more than expected. Mixed implications for Australian Q1 GDP after latest data inputs showed more pronounced negative contribution from net exports while government spending to make positive contribution and business inventories rebounding by more than expected.
In corporate news, British American Tobacco (BATS.LN) issued a trading update, said company is on track to deliver FY guidance with H1 delivery in line with expectations. Further in the UK, Chemring Group (CHG.LN) traded lower post H1 earnings, hiked interim dividend by 13% and left FY24 expectations unchanged. Wizz Air Holdings (WIZZ.LN) posted May passengers +2.1% y/y. LondonMetric Property (LMP.LN) shares were down following FY earnings and sales announcement.
From the DACHs, PSI Software (PSAN.GR) shares were notably lower at this time after group said it expects negative EBIT in the upper single-digit to lower double-digit million range in 2024. Burckhardt Compression Holding (BCHN.SW) traded comfortably in positive territory post FY numbers with group also proposing a dividend of CHF15.50/share, +29.2% y/y, and raised its 2027 sales guidance by CHF100M to CHF1.2B.
In other corporate developments, KfW sold 110M shares in Deutsche Telekom (DTE.GR) at €22.13/sh via accelerated bookbuild offering to institutional investors.
On M&A front, Sandvik (SAND.SS) acquired workholding fixtures specialist PDQ and Snam confirmed it has submitted a binding offer for Edison Stoccaggio.
Digest:
Sectors - STOXX Europe 600:
Outperformers
Health Care +0.75%, Utilities +0.68%, Food & Beverage +0.45%, Real Estate+0.34%, Persnl & HHold Goods +0.19%, Media +0.18%, Retail +0.12%, Travel & Leisure (0.05%), Technology (0.05%), Chemicals (0.20%), Financial Svcs (0.38%), Telecom (0.43%)
Underperformers
Oil & Gas (2.65%), Basic Resources (2.28%), Banks (2.10%), Insurance (1.22%), Construct & Mtls (1.10%), Ind Goods & Svcs (0.93%), Autos & Parts (0.81%)
Macro/Peripheral markets:
ECB
ECB hawks and resilient data sow doubts over pace of rate cuts - Bloomberg
Geopolitics
EU
Fears mount that EU's Michel is sabotaging von der Leyen's second term bid - Politico
UK
UK retail sales show mild recovery in May ahead of key summer events - FurnitureNews
Wet weather, cost-of-living squeeze dampen UK consumer spending in May - Reuters
Farage's surprise return deals blow to Sunak's Tories ahead of UK election - Bloomberg, Politico
Sunak and Starmer prepare for high-stakes TV debate clash in UK election campaign - FT
Sir Keir Starmer's party predicted to secure a 194-seat majority in Commons - Telegraph
Top Tory donors withhold funds over fears of electoral rout under Sunak - FT
CCLA Investment Management CEO says London says London should avoid listing companies with dubious human rights records -London Times
Spain
China urges Spain to push EU for fair treatment of its EV industry - Reuters
Greece
Greece May business expectations in industry 109.2 vs prior 108.7 and year-ago 105.1 - IOBE
SYRIZA leader challenges PM to debate - ekathimerini
Company news:
Notable Gainers
+35.2% PFC.LN (Petrofac £0.14, +0.04) -- shares restored to trading
+12.3% PHC.LN (Plant Health Care £0.07, +0.01) -- approval of an expanded product label
+8.0% ONCO.SS (Oncopeptides SEK3.45, +0.26) -- reinstated buy at DnB Markets
+6.8% CCL.LN (Carnival £11.69, +0.75) -- to sunset P&O Cruises Australia brand and fold Australia operations into Carnival Cruise Line in March 2025; Peel Hunt upgrade
+6.4% OBD.LN (Oxford BioDynamics £0.09, +0.01) -- develops multi-cancer diagnostic test for dogs
+4.5% BCHN.SW (Burckhardt Compression Holding CHF632.00, +27.00) -- FY earnings
+4.3% NWL.IM (Newlat Food €8.80, +0.36) -- publishes 2024-20 Business Plan following the acquisition of Princes
+4.2% CWR.LN (Ceres Power Holdings £2.27, +0.09) -- contract
+4.1% SYSR.SS (Systemair SEK79.40, +3.10) -- Q4 earnings
+4.0% WAVE.FP (Wavestone €62.50, +2.40) -- FY earnings
+4.0% GEMD.LN (Gem Diamonds £0.13, +0.01) -- recovery of a 172.06 Carat Type II White Diamond
+3.6% IPH.FP (Innate Pharma €2.62, +0.09) -- presents study results
+3.3% FNTN.GR (Freenet €25.30, +0.80) -- UBS upgrade
+2.7% DUE.GR (Duerr €24.24, +0.64) -- reviews strategic options for the environmental technology business; reaffirms FY and mid-cycle targets
+2.7% XXL.NO (XXL ASA NOK0.73, +0.02) -- intend to establish strategic partnership with Frasers Group
+2.2% WRKS.LN (TheWorks.co.uk £0.25, +0.01) -- holder Hudson Management Limited raises stake in the company to 14.78% as of 30-May from previous 12.22%
+2.1% LOGI.A.SS (Logistea SEK14.70, +0.30) -- completes the acquisition of a property in Åmål valued at SEK185M
+1.8% STMPA.FP (STMicroelectronics €39.01, +0.70) -- signs supply agreement with Geely Auto Group
+1.8% MHPC.LN (MHP £3.34, +0.06) -- Q1 earnings
+1.7% FUTR.LN (Future Plc £11.18, +0.19) -- Berenberg upgrade
+1.7% SRG.IM (Snam €4.49, +0.07) -- Snam confirms submits binding offer for Edison Stoccaggio
+1.3% PHM.SM (Pharma Mar €38.32, +0.48) -- presents study results
Notable Decliners
-45.4% FARN.LN (Faron Pharmaceuticals £1.07, -0.89) -- to carry out directed share issue to raise at least ~ €15M
-9.6% CKT.LN (Checkit £0.24, -0.03) -- announces formal approach to Crimson Tide's board regarding possible all-share offer
-6.4% ALFEN.NA (Alfen €34.26, -2.34) -- Berenberg downgrade
-6.2% NIBE.B.SS (NIBE Industrier SEK52.48, -3.48) -- Barclays downgrade
-6.0% PSAN.GR (PSI Software €20.20, -1.30) -- FY earnings
-5.9% GHH.LN (Gooch & Housego £5.40, -0.34) -- H1 earnings
-4.8% STAN.LN (Standard Chartered £7.39, -0.37) -- tandard Chartered's Iran transactions subject of fresh whistleblower claims -- FT
-4.0% MIRI.LN (Mirriad Advertising £0.01, -0.00) -- FY earnings; Chairman to step down
-3.9% EQNR.NO (Equinor NOK292.10, -11.75) -- selling 19.5% interests in production licenses PL 048E
-3.2% PAF.LN (Pan African Resources $0.24, -0.01) -- concludes five-year wage agreement at Barberton mines
-3.0% ALV.GR (Allianz €262.60, -8.20) -- Citi downgrade
-2.9% VK.FP (Vallourec €15.85, -0.47) -- presents new energies solutions to investors
-2.8% TETY.SS (Tethys Oil SEK34.20, -1.00) -- announces field development plan for Block 56 submitted to the MEM
-2.7% TTE.FP (TotalEnergies €64.15, -1.76) -- increases LNG deliveries to Asia with two new Medium and Long-Term Contracts
-1.6% SMDS.LN (DS Smith £3.76, -0.06) -- International Paper reaffirms commitment to merger partner DS Smith - Bloomberg
-1.5% DTE.GR (Deutsche Telekom €22.30, -0.34) -- KfW sells 110M shares in company at €22.13/share
-1.1% WLN.FP (Worldline €12.39, -0.14) -- Credito Emiliano enters into exclusive negotiation with company over the sale of Merchant acquiring business
-1.1% SAND.SS (Sandvik SEK223.00, -2.40) -- acquires workholding fixtures specialist PDQ in US
-1.1% HUM.LN (Hummingbird Resources £0.09, -0.00) -- unit Pasofino Gold completes drilling at Bukon Jedeh gold camp at Dugbe Gold Project in Liberia
-0.9% NHH.SM (Minor Hotels Europe & Americas €4.24, -0.04) -- Minor Hotels Europe & Americas' CEO Ramón Aragonés to retire effective 31-Dec-24
EU companies reporting tomorrow:
Earnings:
DACHs: voestalpine (VOE.AV), Fabasoft (FAA.GR)
Nordics: Sectra (SECT.B.SS), Elekta (EKTA.B.SS), Clas Ohlson (CLAS.B.SS)
Southern Europe: Inditex (ITX.SM)
UK: B&M European Value Retail SA (BME.LN), Paragon Banking Group (PAG.LN), Ninety One (N91.LN), Workspace Group (WKP.LN), discoverIE Group (DSCV.LN), Vp (VP.LN), Ramsdens Holdings (RFX.LN)
Data:
Economics:
Switzerland May CPI +1.4% y/y vs consensus +1.6% and prior +1.4%; +0.3% m/m vs consensus +0.4% and prior +0.3%
Spain May Unemployment Change (58.7K) vs consensus (55.4K) and prior (60.5K)
Germany May
Unemployment Change 25K vs consensus +10K and prior +10K
Unemployment Rate 5.9% vs consensus 5.9% and prior 5.9%
Markets:
WTI Crude (Jul 24): ($0.77) or (1.04%) to
$73.45 €-$ (0.0019) or (0.17%) to 1.0885
£-$ (0.0021) or (0.16%) to 1.2787
€-£ (0.0005) to 0.8510
S&P 500 (0.38%)
Performance year-to-date
FTSE 100: +6.47%
DAX: +9.94%
CAC: +5.26%
MIB: +13.04%
Stoxx 600: +7.98%
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