Jun 19 ,2024
Synopsis:
European indices ended mostly lower, with France underperforming the region, Focus now shifts to tomorrow slew of central banks announcements (please find our StreetAccount Event Previews attached below): interest rate decisions include the BoE (12:00 BST), SNB (8:30 BST with press conf at 9:30 BST) and Norges Bank (9:00 BST)
In macro-news, focus today was on the UK as further easing was noted in inflation in the May update, even though services prices remained sticky. It is unlikely to have much bearing on tomorrow's BoE decision, with policy widely expected to remain unchanged. Market expectations for a BoE rate cut in August faded after UK services prices came in at a firmer-than-expected 5.7% y/y versus consensus 5.5% and prior 5.9%. Markets are pricing in a 30% chance for an August cut versus 45% prior to the release and fully priced for a move in November. EU set to admonish France and Italy, along with other countries, for breaching fiscal rules on excessive deficit. Announcement comes as no surprise. In April, Italy FinMin Giorgetti flagged possibility, with France also a candidate. Analysts concerned about Italy's economic growth following halt to Superbonus the main risk, given potential drag on economy. France seen in similar situation as announced cuts to administrative burden not enough to stimulate activity. Achieving targeted small primary surplus for debt reduction seen challenging without unpopular reforms, with €25B-€30B in savings required by 2025, far more than publicly announced. Reprimands come as bloc reinstates deficit and debt limits after providing flexibility during the pandemic and energy crisis. Also, FAZ reported that German finance minister Lindner said progress being made in 2025 budget negotiations. Despite reports of ongoing dispute and big differences between the coalition parties, Lindner left open the possibility of reaching an agreement by planned deadline of 3-Jul for a cabinet decision. Lindner argued budget not just about where to find savings and about supporting the economy.
In politics, UK election polls showed Conservatives on course to lose two out of three seats and Labour with a 256-seat majority. The latest MRP survey by Ipsos showed the Conservatives might win just 115 seats in the election versus Labour's 453, but 117 seats too close to call. Ipsos highlighted that the Conservatives are currently second in 50 of these and Labour is second if 43. It pointed out just small changes in parties' performance could result in a widely different electoral outcome. No one is predicting a Conservative election win given the consistency of polling, but it may impact the strength of opposition to the new government
In corporate news, Kapsch TrafficCom (KTCG.AV) reported its FY earnings and issued an outlook for the financial year 2024/2025. Also, In DACHs, SMA Solar Technology (S92.GR) cut its FY guidance citing persistently volatile market and delayed increase of incoming orders resulting from continued high inventories at distributors and installers. In France, Quadient (QDT.FP) has unveiled its new strategic plan, 'Elevate to 2030', during of its CMD today. In the UK, Severfield (SFR.LN), Berkeley Group Holdings (BKG.LN), Victoria (VCP.LN), Spectris (SXS.LN) and Speedy Hire (SDY.LN) were among some other names in the region that have updated investors with their latest numbers. In M&A news, Vodafone Group Plc (VOD.LN) announced that it has sold 484.7M shares in Indus Towers Limited, representing 18.0% of Indus' share capital through an accelerated book-build offering. In IPO related news, Tendam Retail (+TEND.SM) and Golden Goose (+GGOO.IM) delayed their respective IPO efforts
Looking ahead to tomorrow's calendars, DS Smith (SMDS.LN), CMC Markets (CMCX.LN), Pullup Entertainment (ALPUL.FP), Haffner Energy (ALHAF.FP), SkiStar (SKIS.B.SS), XPS Pensions (XPS.LN) and Alpha Financial Markets Consulting (AFM.LN) will be among few other companies to update update investors. Macro-data will include Eurozone prelim Jun Consumer Confidence, Germany May PPI, Switzerland May Trade Balance, Netherlands May Unemployment Rate.
Digest:
Sectors - STOXX Europe 600:
Outperformers: Basic Resources +0.67%, Travel & Leisure +0.59%, Insurance +0.33%, Banks +0.26%, Autos & Parts +0.12%, Telecom +0.04%, Oil & Gas (0.01%), Financial Svcs (0.09%), Media (0.13%), Construct & Mtls (0.15%), Food & Beverage (0.16%), Health Care (0.16%), Retail (0.16%)
Underperformers: Real Estate (1.25%), Technology (1.15%), Chemicals (0.60%), Persnl & HHold Goods (0.26%), Utilities (0.24%), Ind Goods & Svcs (0.23%)
Macro:
Europe gives China a taste of its own trade medicine (Politico)
Czech Central Bank Chief Says No Victory Yet in Inflation Fight (BBG)
Germany debates scrapping benefits for Ukrainians (dw)
I won't take PM role without an absolute majority, says French far-right leader Bardella (Reuters)
France's Macron defends decision on snap elections, urges voters to defeat far-right (France24)
France risks EU fines as Macron rebuked over borrowing binge (Telegraph)
UK inflation falls to lowest level in almost three years (BBC)
EC opens excessive deficit procedure against Italy (Ansa)
Company news:
Notable Gainers
+13.9% APH.LN (Alliance Pharma £0.40, +0.05) -- FY earnings
+13.9% ESENSE.FH (Enersense International €2.70, +0.33) -- revises its strategy; abandons its previous strategic goal of becoming a producer of zero-emission energy
+10.4% AWDR.NO (Awilco Drilling NOK21.30, +2.00) -- entered into an agreement with KFELS (now Seatrium New Energy Limited) and RigCo Holding Pte Ltd to settle all claims
+8.3% GAW.LN (Games Workshop Group £102.20, +7.85) -- FY trading update
+6.8% ADJ.GR (ADLER Group €0.18, +0.01) -- recapitalisation update
+5.6% SPNO.DC (Spar Nord Bank DKK134.80, +7.20) -- raises FY profit guidance; ABG Sundal Collier upgrade
+5.5% JTC.LN (JTC £9.48, +0.49) -- acquisition of FFP for a maximum consideration of $110.0M
+5.0% VAR.NO (Vår Energi NOK36.32, +1.72) -- Springpoint sells shares
+2.5% GSP.IM (Gas Plus €2.47, +0.06) -- confirms start of the long production test for Longanesi project
+1.1% ENI.IM (Eni €13.93, +0.15) -- picks advisors for €1B Ivory Coast's 30% stake sale -- Bloomberg
+0.9% VWS.DC (Vestas Wind Systems DKK177.25, +1.55) -- receives 577 MW order in Australia for second stage of the 1.3 GW Golden Plains wind project
+0.8% ZURN.SW (Zurich Insurance Group CHF483.20, +3.60) -- completes acquisition of majority stake in Kotak Mahindra General Insurance Company
+0.6% SOBI.SS (Swedish Orphan Biovitrum SEK273.00, +1.60) -- European Commission grants Sobi Marketing Authorisation for ALTUVOCT for treatment of haemophilia A
+0.6% VCP.LN (Victoria £1.73, +0.01) -- FY earnings
+0.3% EFGN.SW (EFG International CHF13.12, +0.04) -- and Julius Baer merger talks were halted due to Swiss regulatory concerns - Reuters
+0.2% SLHN.SW (Swiss Life Holding CHF648.40, +1.00) -- plans capital increase of around CHF 610M in July
+0.1% EQT.SS (EQT AB SEK307.70, +0.30) -- considering sale of Karo Healthcare for more than €2B - Bloomberg
Notable Decliners
-30.0% S92.GR (SMA Solar Technology €29.04, -12.46) -- cuts FY profit guidance
-15.9% ALCOX.FP (Nicox €0.21, -0.04) -- €3.3M capital increase
-15.7% QDT.FP (Quadient €18.46, -3.44) -- new strategic plan 'Elevate to 2030'
-6.7% HTWS.LN (Helios Towers £1.15, -0.08) -- holders sell 67.6M shares or ~3% stake at £1.15/each
-6.0% SXS.LN (Spectris £30.16, -1.92) -- Q2 trading update; new CFO
-5.7% BKG.LN (Berkeley Group Holdings £47.26, -2.84) -- FY earnings
-3.3% CRNA.NO (Circio Holding NOK2.66, -0.09) -- rights issue update
-2.0% BAER.SW (Julius Baer Group CHF50.94, -1.06) -- and EFG International merger talks were halted due to Swiss regulatory concerns - Reuters
-1.2% YNGA.LN (Young & Co.'s Brewery £9.76, -0.12) -- earnings
-0.4% SALME.NO (Salmon Evolution NOK7.83, -0.03) -- placement
-0.1% SRS.IM (Saras €1.62, -0.00) -- Vitol launches mandatory tender offer for Saras
EU companies reporting tomorrow:
France: Pullup Entertainment (ALPUL.FP), Haffner Energy (ALHAF.FP)
Nordics: SkiStar (SKIS.B.SS)
UK: DS Smith (SMDS.LN), CMC Markets (CMCX.LN), XPS Pensions (XPS.LN), Alpha Financial Markets Consulting (AFM.LN)
Data:
Economics:
UK May
CPI +2.0% y/y vs cons +2.0% and prior +2.3%; +0.3% m/m vs consensus +0.4% and prior +0.3%
Core +3.5% y/y vs consensus +3.5% and prior +3.9%
RPI +3.0% y/y vs consensus +3.1% and prior +3.3%; +0.4% m/m vs consensus +0.5% and prior +0.5%
Output PPI +1.7% y/y vs consensus +1.9% and prior +1.1%; (0.1%) m/m vs consensus +0.1% and prior revised +0.3% from +0.2%
Input PPI (0.1%) y/y vs consensus (0.3%) and prior revised (1.4%) from (1.6%); 0.0% m/m vs consensus +0.4% and prior revised +0.8% from +0.6%
Eurozone Apr Construction Output (1.1%) y/y vs consensus +1.1% and prior revised (0.7%) from +0.1%
Sweden May Unemployment Rate 8.7% vs consensus 8.8% and prior 8.9%
Markets:
WTI Crude (Jul 24): +$0.21 or +0.26% to $81.78
€-$ +0.0005 or +0.05% to 1.0745
£-$ +0.0016 or +0.13% to 1.2725
€-£ (0.0011) to 0.8443
S&P 500 +0.00%
Performance year-to-date
FTSE 100: +6.06%
DAX: +7.86%
CAC: +0.31%
MIB: +9.48%
Stoxx 600: +7.32%
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