Jun 18 ,2024
Synopsis:
European equity markets closed higher. Greece +1.3%, Italy +1.2% and Spain +1.0% lead outperformers, whilst Sweden +0.2% and Denmark +0.3% lead underperformers.
Sentiment remains positive after yesterday's improved tone. Recent focus has been on flip-flopping macro narrative, though path of least resistance has been to upside. Political backdrop remains uncertain in France, though markets have taken some encouragement after Le Pen's moderate tone. Meanwhile, EU leaders delay decision on top job after needing more time to reach an agreement after informal talks on Monday. More certainty surrounding Fed rate cut path. ECB seen on hold until September. BoE to wait until at least August to cut rates and likely to reiterate data-dependence on Thursday.
Press discusses EU-China trade tensions after Beijing launched anti-dumping probe into EU pork imports on Monday in response to EU levying tariffs on China EV imports. Takeaways have played down significance and fits in with targeted China response to avoid escalation. Elsewhere, press highlighted warning over UK Labour's plans for living wage.
On macro data front, Eurozone final CPI inline with flash at 2.6% yy and German ZEW sentiment improves on May reading, but below forecast. Research showed UK lowest in G7 for private investment for third year running.
In corporate news flow, out of UK, Ashtead Group (AHT.LN) trading lower after FY numbers just under consensus whilst Whitbread (WTB.LN) posted its Q1 trading update. Out of DACHs, Komax (KOMN.SW) reported a trading update updating its FY24 outlook and now expects the EBIT to be modestly positive; Santhera Pharmaceuticals (SANN.SW) announced CHF 69M secured in royalty and debt financing thus extending cash runway through to H1 of 2026. Roche (ROG.SW) receives FDA clearance on its digital pathology solution for diagnostic use. Frasers Group raises Hugo Boss (BOSS.GR) stake to 21.2% from 18.2%. In Spain, Soltec Power Holdings (SOL.SM) released Q1 numbers and - out of Nordics- Paradox Interactive (PDX.SS) has cancelled the release of the game Life by You; this impacts Q2 negatively by SEK 208M from the write-down of the game's total capitalized development costs; group has also decided to cease further operations in the wholly owned studio Paradox Tectonic (Tectonic) in Berkeley, California. Schibsted (SCHA.NO) initiated organizational changes and cost measures; reduces its workforce by 250 positions and starts extensive review for the remaining marketplaces company.
In M&A updates, media reports that KKR (KKR), TPG (TPG) submit preliminary proposals to acquire part or all of CVC's (CVC.NA) controlling stake in Recordati (REC.IM). CVC and Waldakt launches public offer for Resurs Holding (RESURS.SS) at SEK23.50/sh cash. Lufthansa (LHA. GR) offers additional concessions to soothe EU competition concerns over long-haul flights in bid for ITA stake. Advanced Energy Industries (AEIS) does not intend to make offer for XP Power (XPP.LN); XPP board confirms that it has had no contact from Advanced Energy since its indicative proposal was rejected on 13-May-24
Looking ahead to tomorrow's calendar (see - Europe Week Ahead: 17-Jun to 21-Jun attached) Young & Co.'s Brewery (YNGA.LN), Severfield (SFR.LN), Speedy Hire (SDY.LN) and Kapsch TrafficCom (KTCG.AV) will be among other names to update investors, whilst the macro-calendar releases will includeUK May CPI and Input/Output PPI and House Price Index, Eurozone Apr Construction Output. Holidays: Turkey (Eid al-Adha), USA (Juneteenth)
Digest:
Sectors - STOXX Europe 600:
Outperformers:
Utilities +1.50%, Construct & Mtls +1.22%, Insurance +1.11%, Energy+1.02%, Ind Goods & Svcs +1.00%, Financial Svcs +1.00%, Chemicals +0.99%, Basic Resources +0.89%, Banks +0.88%, Technology +0.79%,
Underperformers:
Consumer Products and Services (0.56%), Personal Care Drug and Grocery Stores (0.08%), Autos & Parts +0.06%, Food, Beverage and Tobacco +0.19%, Health Care +0.41%, Travel & Leisure +0.44%, Telecom +0.63%, Retail +0.66%, Media +0.66%,
Macro/Peripheral markets:
Geopolitics
UK
Starmer suggests savers aren't 'working people' - The Telegraph
Boris Johnson's support will make all the difference, says Rishi Sunak - The Times
Starmer questioned over Corbyn, council tax and Israel during phone-in - The Guardian
EU
France
Far-right leader Bardella says he needs absolute majority to govern France effectively - Reuters
French Power Languishes at Record Discount to German Price - Bloomberg
French Bonds Drift as Market Takes Stock After Sharp Selloff - Bloomberg
Brussels to chide France over deficit as spending clash looms - FT
Germany
Germany faces threats from extremists, Russia and China - DW
German deputy leader visits China as EU tariff tensions simmer - Reuters
AfD und BSW in Thüringen zusammen bei fast 50 Prozent - Handelsblatt
Germany continues to fall behind as a business location - Handelsblatt
Italy
Giorgia Meloni rejects deal struck over EU top jobs after talks snub - FT
Hungary
Hungary Slows Rate-Cut Pace, Sees Limited Easing Room Ahead - Bloomberg
Company news:
Trading Higher:
+34.7% RESURS.SS (Resurs Holding SEK22.92, +5.91) -- CVC and Waldakt launches public offer for company at SEK23.50/share cash
+13.6% BIOPOR.DC (BioPorto DKK1.85, +0.22) -- raises gross proceeds of DKK 81.4M in oversubscribed private placement
+6.5% DOCM.SW (DocMorris CHF58.70, +3.55) -- Zürcher Kantonalbank upgrade
+5.8% NSIS.B.DC (Novonesis DKK424.80, +23.30) -- issues updated outlook ahead of Capital Markets Day
+5.3% HL.LN (Hargreaves Lansdown £11.28, +0.57) -- receives new offer of 1,140p/share from Consortium
+5.2% ALVU.FP (Vente-Unique.com €15.05, +0.75) -- H1 earnings
+5.0% SCHP.FP (Seche Environnement €95.30, +4.60) -- signs share purchase agreement to acquire ECO Industrial Environmental Engineering Pte Ltd in Singapore for ~ SGD605M (~ €417M)
+3.8% SCHA.NO (Schibsted NOK298.60, +11.00) -- initiates organisational changes and cost measures
+3.8% ADMIE.GA (Admie Holdings (IPTO) €2.20, +0.08) -- Q1 earnings
+3.6% TOM.NO (Tomra Systems NOK138.30, +4.80) -- to collaborate with Carbios to scale circularity of polyester textiles
+2.9% ALFEN.NA (Alfen €34.18, +0.95) -- contract
+2.7% TAM.LN (Tatton Asset Management £6.16, +0.16) -- FY earnings
+2.6% PAG.LN (Paragon Banking Group £7.75, +0.20) -- Redburn Atlantic upgrade
+2.1% REC.IM (Recordati €48.44, +0.98) -- KKR, TPG submit preliminary proposals to acquire part or all of CVC's controlling stake in Recordati - Bloomberg
+1.8% WTB.LN (Whitbread £29.68, +0.52) -- Q1 trading update
+1.6% FACC.AV (FACC €7.64, +0.12) -- resumed buy at Stifel
+1.5% PIHLIS.FH (Pihlajalinna €9.70, +0.14) -- signs €170M sustainability-linked loan facilities agreement
Trading Lower:
-14.3% FING.B.SS (Fingerprint Cards SEK0.11, -0.02) -- preliminary outcome in rights issue through Pareto Securities
-13.9% OBD.LN (Oxford BioDynamics £0.06, -0.01) -- H1 earnings
-11.2% BIOVIC.B.SS (Biovica International SEK2.22, -0.28) -- Q4 earnings
-10.1% XPP.LN (XP Power £14.00, -1.58) -- Advanced Energy Industries does not intend to make offer for company; had no contact from AEIS since its indicative proposal was rejected on 13-May-24; FY trading expectations remain unchanged
-9.4% PDX.SS (Paradox Interactive SEK129.40, -13.30) -- has decided to cease further operations in the wholly owned studio Paradox Tectonic (Tectonic) in Berkeley, California; cancels release of "Life by You," impacts Q2 with SEK 208M write-down
-4.3% CA.FP (Carrefour €13.94, -0.62) -- Carrefour may be fined €200M by French Finance Minister -- Le Lettre
-2.9% KOMN.SW (Komax Holding CHF135.40, -4.00) -- FY trading update
-2.7% COLO.B.DC (Coloplast DKK830.40, -22.80) -- Nordea downgrade
-2.3% ROVI.SM (Laboratorios Farmaceuticos Rovi, S.A. €85.20, -2.00) -- BNP Paribas Exane downgrade
-2.0% AHT.LN (Ashtead Group £53.54, -1.10) -- FY earnings
EU companies reporting tomorrow:
Earnings: Young & Co.'s Brewery (YNGA.LN), Severfield (SFR.LN), Speedy Hire (SDY.LN), Kapsch TrafficCom (KTCG.AV)
Data:
Economics:
Germany Jun ZEW Economic Sentiment Indicator 47.5 vs consensus 49.6 and prior 47.1
Eurozone May Final CPI +2.6% y/y vs preliminary +2.6%
Markets:
WTI Crude (Jul 24): +$1.21 or +1.51% to $81.54
€-$ +0.0002 or +0.02% to 1.0739
£-$ (0.0010) or (0.08%) to 1.2694
€-£ +0.0009 to 0.8460
S&P 500 +0.12%
Performance year-to-date
FTSE 100: +5.92%
DAX: +8.24%
CAC: +1.14%
MIB: +9.77%
Stoxx 600: +7.52%
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