Jun 13 ,2024
Synopsis:
European equity markets ended in negative territory but off worst levels. France and Germany down ~ (2.0%), followed by Sweden (1.6%) and Portugal (1.4%) led the underperformers. Italy +0.6% bucked the lower trend.
Recent statements from ECB policymakers have maintained the cautious, data-dependent approach to future rate cuts suggested by President Lagarde in the June policy decision. Governing Council members like Vasle and Patsalides emphasize that further reductions will depend on realizing the ECB's inflation projections (Bloomberg, Bloomberg). Bundesbank chief Nagel warned of "sticky" underlying inflation, advocating a meeting-by-meeting assessment (Bloomberg). While some members see potential for more cuts this year, others like de Guindos ruled out pre-commitments due to economic uncertainties. The upcoming French elections have introduced political uncertainty, with modest widening of French and Italian bond spreads and slight increases in credit default swap spreads.
In political developments, Bild reported that the German government is planning a supplementary budget of up to €11B in the current year. Article suggested move an attempt to save coalition government after big defeat in EU election (BBC). Coalition still finalizing 2025 federal budget and Chancellor Scholz, Economics Minister Habeck and Finance Minister Lindner want it completed by 3-Jul. However, many ministers want to spend more than possible. Article said there could be a gap of up to €60B.
From a macro calendar perspective, Spanish final inflation numbers in May matched preliminary readings at +3.6% y/y and +0.3% m/m. Eurozone industrial production fell slightly more than expected in April. Meanwhile, UK RICS house price balance missed in May due to higher mortgage rates. Headline US May PPI unexpectedly declined m/m and core PPI was cooler than expected. Release noted largest goods decline since October 2023 (driven by lower gasoline) while services were flat after a 0.6% gain in April.
In corporate news, Fraport (FRA.GR) released this morning May Frankfurt Airport traffic statistics: passengers 5.5M, +6.9%y/y. Also in the DACH region, OMV (OMV.AV) to target FY30 CCS EPS of ~€10 and FY30 CCS Operating Result ≥ €6.5B. Out of the Nordics, Rusta (RUSTA.SS) posted Q4 numbers. In Italy, Stellantis (STLAM.IM) confirmed FY24 financial guidance and capital return plan at its Investor Day today.
In the UK, Virgin Money UK (VMUK.LN) posted H1 earnings and anticipates +5-10% growth across target lending segments of business and unsecured lending in FY24. Company also proposed interim dividend of 2.0p/share. Halma (HLMA.LN) FY Adj. EPS 82.4p vs FactSet 81.0p and said it has made a positive start to the new financial year. Crest Nicholson Holdings (CRST.LN) reported H1 EPS 0.7p vs year-ago 6.1p and announced retiring CEO Peter Truscott will step down from board tomorrow.
On M&A front, Infrastrutture Wireless Italiane (INW.IM) concluded agreement providing for an option right for the company to the purchase of an exclusive controlling share of 51% of the share capital of Boldyn Networks Smart City Roma S.p.A.
Digest:
Sectors - STOXX Europe 600:
Outperformers
Technology +5.11%, Health Care +2.73%, Media +1.03%, Persnl & HHold Goods +0.13%, Food & Beverage (0.54%), Financial Svcs (0.73%), Ind Goods & Svcs (1.01%),
Underperformers
Banks (5.25%), Basic Resources (4.14%), Real Estate(3.98%), Oil & Gas (3.69%), Construct & Mtls (3.65%), Autos & Parts (3.55%), Telecom (3.36%), Insurance (2.82%), Travel & Leisure (2.71%), Utilities (2.60%), Chemicals (1.96%), Retail (1.63%),
Macro/Peripheral markets:
Geopolitics
Russia practiced electronic missile launches during tactical nuclear drills - Reuters
World leaders gather in Italy with Ukraine and Israel-Gaza wars on the agenda - The Guardian
G7 summit opens with deal to use Russian assets for Ukraine as EU's traditional powers recalibrate - Independent
Central Banks
Vasle Says More 2024 ECB Cuts Probable in Baseline Scenario - Bloomberg
EU
UK
Starmer promises 'long-term strategy' in business-friendly Labour manifesto - The Guardian, The Times
Housing market recovery 'slips into reverse' amid election uncertainty - The Telegraph
More funding and fairness for Wales, says Plaid - BBC
UK capital markets show 'tentative signs' of recovery, Peel Hunt chief says - FT
UK imposes sanctions on Russian insurer protecting 'shadow fleet' of tankers - FT
France
Macron's Dire Warnings About Le Pen May Not Work This Time - Bloomberg
Germany
Germany is not coming out of the economic crisis - Handelsblatt
Germany is forgiving almost €16B in debt to other countries - Handelsblatt
Italy
Premierato, the Senate approves art. 5 with the direct election of the President of the Council - Ansa
Hungary
ECJ fines Hungary €200 million for breaking asylum rules - DW
Greece
Greece plans early repayment of €8 bln in loans - Ekathimerini
Greece must reform to protect tourism, ombudsman says - Ekathimerini
Company news:
Notable Gainers
+81.5% NHOA.FP (NHOA SA €1.06, +0.48) -- TCC Group Holdings to launch offer for remaining 11.13% of NHOA S.A at €1.1/sh cash
+20.0% TRR.LN (Trident Royalties £0.48, +0.08) -- agreement for all-cash offer for entire issued and to be issued share capital of Trident at 49p/sh, valuing Trident at ~ £144M
+17.3% ENZY.SS (Enzymatica SEK3.52, +0.52) -- announces interim report from independent clinical study of ColdZyme show duration of illness lowered by ~5 days
+13.2% HLMA.LN (Halma £26.60, +3.11) -- FY earnings
+12.7% CAPSL.NO (Capsol Technologies NOK16.00, +1.80) -- announces positive results on pre-FEED study of CapsolGT are to be presented at Carbon Capture Technology Expo North America later this month
+11.1% MDN.GR (Medion €14.00, +1.40) -- Lenovo Germany Holding GmbH submits request for transfer of the shares held by the minority shareholders of MEDION AG
+7.9% RUSTA.SS (Rusta SEK89.50, +6.55) -- Q4 earnings
+7.9% PAY.LN (PayPoint £6.12, +0.45) -- FY earnings
+7.0% NETEL.SS (Netel Holding SEK16.34, +1.06) -- three-year framework agreement with Telenor with estimated value of NOK 0.9-1.2B
+4.3% BT.A.LN (BT Group £1.35, +0.06) -- Control Empresarial de Capitales SA de CV discloses 3.2% stake in BT Group
+2.2% ELTEL.SS (Eltel SEK7.50, +0.16) -- three-year telecom frame agreement with Telenor in Norway
+2.0% CPI.LN (Capita £0.14, -0.00) -- key strategic priorities as well as updated medium-term targets
+1.9% LOTB.BB (Lotus Bakeries €10,060.00, +190.00) -- forms strategic partnership with Mondelez International (MDLZ)
+1.8% DVYSR.SS (Devyser Diagnostics SEK112.00, +2.00) -- five-year extension tender with Toscana region in Italy for up to SEK 75M
+1.1% RSW.LN (Renishaw £40.20, +0.45) -- Chairman to step down
Notable Decliners
-83.8% RQIH.LN (R&Q Insurance Holdings £0.00, -0.02) -- update on proposed sale of Accredited
-11.4% WISE.LN (Wise Plc £7.50, -0.97) -- FY earnings
-11.2% TRCS.LN (Tracsis £7.95, -1.00) -- trading update
-9.8% CRST.LN (Crest Nicholson Holdings £2.17, -0.24) -- H1 earnings; CEO to reitre
-5.6% SFSN.SW (SFS Group CHF118.60, -7.00) -- Baader Helvea downgrade
-5.2% ALO.FP (Alstom €15.91, -0.87) -- results of capital increase with preferential subscription rights of €1B
-5.2% LHA.GR (Deutsche Lufthansa €5.94, -0.33) -- EU antitrust regulators set to approve Lufthansa's €325M investment in ITA -- Bloomberg
-4.9% FRA.GR (Fraport €50.70, -2.60) -- May traffic
-3.8% OVS.IM (OVS €2.74, -0.11) -- Q1 earnings
-3.6% PEEL.LN (Peel Hunt £1.34, -0.05) -- FY earnings
-2.7% STLAM.IM (Stellantis €19.62, -0.54) -- confirms FY24 financial guidance and capital return plan; specifies H1 and H2 outlook
-2.4% TEF.SM (Telefonica €4.13, -0.10) -- Deutsche Bank downgrade
-1.8% MOTR.LN (Motorpoint Group £1.41, -0.03) -- FY earnings
-1.7% NFN.GR (NFON €5.80, -0.10) -- appoints Merano Mettbach as Chief Revenue Officers with immediate effect
-1.2% INW.IM (Infrastrutture Wireless Italiane €9.78, -0.12) -- Infrastrutture Wireless Italiane concludes agreement providing for an option right for the company to the purchase of an exclusive controlling share of 51% of the share capital of Boldyn Networks Smart City Roma S.p.A.
-1.0% IPO.LN (IP Group £0.46, -0.00) -- portfolio company Garrison acquired by Everfox
Data:
Economics:
Eurozone Apr Industrial Production (3.0%) y/y vs consensus (1.9%) and prior revised (1.2%) from (1.0%); (0.1%) m/m vs consensus +0.1% and prior revised +0.5% from +0.6%
Spain May Final CPI +3.6% y/y vs preliminary +3.6%; +0.3% m/m vs preliminary +0.3%
Switzerland May PPI (1.8%) y/y vs consensus (1.4%) and prior (1.8%); (0.3%) m/m vs consensus +0.5% and prior +0.6%
Markets:
WTI Crude (Jul 24): +$4.19 or +5.65% to $78.41
€-$ (0.0048) or (0.44%) to 1.0764
£-$ (0.0035) or (0.27%) to 1.2762
€-£ (0.0013) to 0.8434 S&P 500 +2.59%
Performance year-to-date
FTSE 100: +5.51%
DAX: +9.03%
CAC: +2.09%
MIB: +10.70%
Stoxx 600: +7.70%
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