Jul 03 ,2024
Synopsis:
European indices ended in positive territory, except for Denmark and Norway. In macro news, Eurozone business growth sharply declined in June, despite robust performance from the services sector, as manufacturing continued to deteriorate. Composite PMI survey fell to 50.9 in June from May's 12-month high of 52.2, remaining just above growth threshold of 50, driven by the services sector. Although the services PMI slightly dipped to 52.8 from 53.2, it still surpassed the preliminary estimate of 52.6. In contrast, manufacturing saw a significant downturn, with a separate survey indicating a sharp drop in demand despite price cuts by factories. This decline led to the composite new business index falling below breakeven for the first time since February, registering 49.4 compared to May's 51.6. Meanwhile, UK services growth slowed to a seven-month low in June but was slightly better than initially estimated. The services PMI dropped to 52.1, matching the preliminary estimate but off little from 52.9 in May, as businesses adopted a cautious stance ahead of 4-Jul vote.
Regarding tomorrow's UK elections, Survation's latest MRP poll of ~34.5K people ahead of tomorrow's UK election has Labour on course for a majority of over 300 seats, though more than 100 seats are marginal (FT). Analysts have pointed to a potential "wall of money" waiting to invest in UK assets on a big Labour win on notion of more stable governance and pro-growth reform agenda (Guardian). Labour leader Starmer and shadow chancellor Reeves have been courting businesses and City investors to buy into their agenda. Large part of their focus will be on galvanizing private investors to do the heavy lifting for their "invest for growth" policy platform. Labour's big plans for investment revolve around housebuilding and greening the economy. Its £7.3B National Wealth Fund is aimed at attracting at least three times more in private investment. Their £8.3B Great British Energy company will also partner with energy firms and co-operatives on clean power projects. The London Times noted better consumer confidence might also make a big difference as past build-up of savings moves from the sidelines.
In France, attention on developments ahead of second round of election on Sunday. France's National Rally (RN) may struggle to win an outright majority after more than 200 candidates dropped out of the race by Tuesday's deadline (Le Monde). Based on provisional numbers in the French press, ~130 candidates from the leftwing NPF have pulled out and ~80 from Macron's centrists (Bloomberg). It is hoped leaving the best candidate placed to win in each district it will limit RN's ability to form a government. However, Le Pen has said she would reach out to other allies even if her party did not win an absolute majority (FT). An adviser to Macron was cited as saying the president will probably offer RN the chance to govern if it wins 250-260 seats. Le Monde said Macron has already started planning how a 'cohabitation' with the far right might work. Source suggested Macron is taking the view that allowing RN to govern and exposing their lack of experience might prevent them from having all the power in three years' time. Note that the presidential election is due in 2027.
In corporate news, GRENKE (GLJ.GR) reported preliminary Q2 new leasing business numbers +21.5% y/y. In Belgium, bpost (BPOST.BB) announced its 2024 group EBIT outlook and updated its initial divisional guidance, following agreements with Dutch and French-speaking newspaper editors. In Italy, Stellantis (STLAM.IM) issued Q2 US sales down 21% y/y. In other corporate developments, Les Echos reported that the CEO of Renault (RNO.FP) indicated that the company is preparing its next strategic plan as it expects to achieve its objectives for 2030 earlier than expected. Also, in France, Eurofins Scientific (ERF.FP) provided detailed information to refute allegations and misleading information spread by Muddy Waters
Elsewhere, Europe potentially increases trade tensions with China, as EU Commission may impose import duties on cheap goods bought from online platforms outside the bloc. EU Commission may scrap current €150 threshold under which items can be bought duty free, a move which targets primarily China's online marketplaces Temu and AliExpress and clothing retailer Shein. EuroCommerce, a retail lobby group, applauded the measure. Despite citing concerns regarding safety and quality, measure appears to be the latest protectionist move and comes on the back of opposition to Shein's UK IPO. British Fashion Council has expressed concerns about Shein's business practices, as did the US National Retail Federation when the company attempted a US listing (SCMP). EU also recently launched investigations into Chinese electric vehicles, which resulted in the imposition of tariffs ranging from 17% to 38%. Measure has created friction amongst EU nations (Reuters). Earlier in Q2, EU initiated a probe into Chinese wind turbine manufacturers, citing concerns over potential illegal subsidies and unfair competition (Politico). The EU also conducted similar probes into Chinese solar panels and trains (FT).
Looking ahead to tomorrow's calendars, FastPartner (FPAR.A.SS), Eastnine (EAST.SS), Bang & Olufsen (BO.DC), Trifast (TRI.LN) and Norwegian Air Shuttle (NAS.NO) will be among few other companies to update investors. Macro-data will include Switzerland Jun CPI & unemployment rate, Germany May factory orders, Jun construction PMI and UK Jun construction PMI
Digest:
Sectors - STOXX Europe 600:
Outperformers: Basic Resources +2.26%, Real Estate+1.90%, Travel & Leisure +1.82%, Technology +1.76%, Ind Goods & Svcs +1.52%, Construct & Mtls +1.50%, Utilities +1.47%, Retail +1.36%, Banks +1.34%, Autos & Parts +1.15%, Chemicals +0.87%
Underperformers: Health Care (0.82%), Oil & Gas +0.09%, Insurance +0.22%, Media +0.53%, Persnl & HHold Goods +0.57%, Financial Svcs +0.62%, Telecom +0.65%, Food & Beverage +0.74%
Macro:
French legislative election: Leftists appeal for centrist votes to stop Le Pen (Politico)
Conservatives say Labour rivals heading for record-breaking UK election win (Reuters)
Labour expects surge of 'shy Reform' voters in some northern and Midlands seats (Guardian)
Labour 'will launch £15B tax raid' if it wins super-majority (Telegraph)
Chancellor Scholz tells Bundestag that the budget is "in the final stages" -- ZDF
German Onshore Wind Auction Saw Participation at 7-Year High (BBG)
Germany Jun new passenger car registrations 297,329, +6.1% y/y - KBA/VDIK
EC gives green light to ITA-Lufthansa deal (Ansa)
Company news:
Notable Gainers
+26.9% SYS1.LN (System1 Group £6.55, +1.40) -- reports FY EPS 16.0p vs year-ago 3.2p; guides Q1
+18.4% GLJ.GR (GRENKE €24.55, +3.85) -- reports prelim Q2 new leasing business +21.5% y/y to €790.3M vs year-ago €650.3M
+9.2% MAAT.FP (Maat Pharma €7.80, +0.66) -- first DSMB positive review of ongoing phase 2 clinical trial
+9.0% NKR.NO (Nekkar NOK11.50, +0.95) -- enters two-stage transaction to acquire Globetech AS by 2027
+7.5% BESI.NA (BE Semiconductor Industries €168.05, +11.70) -- target increased at Morgan Stanley; cites Apple possibly adopting Hybrid Bonding in 2H25
+7.3% C5H.ID (Cairn Homes €1.69, +0.12) -- trading update
+6.1% ELABS.NO (Elliptic Laboratories NOK11.10, +0.64) -- contract
+6.1% STX.LN (Shield Therapeutics £0.02, -0.00) -- enters $5.7M milestone monetization agreement with AOP
+5.9% AOM.LN (Activeops £1.09, +0.06) -- earnings
+5.8% DOFG.NO (DOF Group NOK104.10, +5.70) -- to acquire Maersk Supply Service A/S for consideration of ~$1.112B; NOK1.06B private placement
+5.8% BMPS.IM (Banca Monte dei Paschi di Siena €4.90, +0.27) -- Italian banking sector in focus after Unipol increases stake in BPE
+4.8% RHM.GR (Rheinmetall €505.00, +23.20) -- and Leonardo sign strategic partnership for the development of the next land defense systems
+3.9% ZEHN.SW (Zehnder Group CHF56.30, +2.10) -- agrees to acquire Siber for ~€86M
+3.9% BPE.IM (BPER Banca €5.06, +0.19) -- Italian banking sector in focus after Unipol increases stake in BPE
+3.9% LDO.IM (Leonardo €22.38, +0.84) -- and Rheinmetall sign strategic partnership for the development of the next land defense systems
+3.8% MAERSK.B.DC (Maersk DKK13,125.00, +475.00) -- DOF Group to acquire Maersk Supply Service A/S
+3.5% JMAT.LN (Johnson Matthey £16.34, +0.56) -- commences buyback
+3.5% LHA.GR (Deutsche Lufthansa €5.95, +0.20) -- EU conditionally clears Deutsche Lufthansa's acquisition of 41% stake in ITA Airways
+3.3% BCG.LN (Baltic Classifieds Group £2.48, +0.08) -- reports FY EPS €0.09 ex-items vs FactSet €0.09 [3 est, €0.09-0.09]
+3.2% KTN.GR (Kontron €19.88, +0.62) -- order
+3.0% RIO.LN (Rio Tinto $53.27, +1.53) -- Rio Tinto exercises options to invest further A$18.5M in Sovereign Metals, increasing holding to 19.76%
+2.9% KWS.LN (Keywords Studios £23.86, +0.68) -- Keywords Studios and EQT reach agreement on terms of a recommended cash acquisition for Keywords Studios at 2,450p/share
+2.7% VIRP.FP (Virbac €346.50, +9.00) -- finalizes minority shares' acquisition of Globion; terms undisclosed
+2.6% FNTL.LN (Fintel £3.14, +0.08) -- completes acquisition of Threesixty Services for £14.6M in cash; deal was announced on 28-Jun
+1.7% CNE.LN (Capricorn Energy £1.82, +0.03) -- Operational and Trading Update; Consistent payments continue in Egypt and production on track to meet the midpoint of guidance
+1.7% TNXT.IM (Tinexta €16.74, +0.28) -- notes receipt of notice from selling shareholders regarding Defence Tech call option
+1.5% MERY.FP (Mercialys €10.87, +0.16) -- announces disposal of four hypermarkets for €117.5M
+1.2% AZA.SS (Avanza Bank Holding SEK261.40, +3.00) -- reports Jun preliminary net inflow SEK 4.29B vs year-ago SEK 5.01B
+1.2% EUZ.GR (Eckert & Ziegler Strahlen- und Medizintechnik €45.50, +0.56) -- Eckert & Ziegler Group's Pentixapharm acquires target discovery business of Glycotope GmbH; price not disclosed
+1.2% RNO.FP (Renault €49.83, +0.57) -- prepares its next strategic plan as it expects to achieve its objectives for 2030 earlier than expected -- Les Echos
+1.2% SAVE.SS (Nordnet SEK228.00, +2.80) -- Monthly statistics June: 3.77M trades in listed financial instruments vs year-ago 3.64M
+0.9% ABN.NA (ABN AMRO Bank €15.86, +0.15) -- completes the acquisition of neobroker BUX, deal announced 14-Dec-23
+0.9% ERF.FP (Eurofins Scientific €44.60, +0.40) -- detailed information to refute allegations by Muddy Waters
+0.9% VOW3.GR (Volkswagen €106.80, +0.90) -- Germany to block sale of MAN Energy Solutions' gas turbine business to GHGT - Reuters
+0.7% NACON.FP (Nacon €1.16, +0.01) -- rights issue
+0.7% STLAM.IM (Stellantis €18.35, +0.13) -- FCA US reports Q2 sales of 344,993 vehicles, (21%) y/y
+0.3% EPI.A.SS (Epiroc SEK209.50, +0.70) -- completes acquisition of remaining share of autonomous solutions provider ASI Mining; terms undisclosed
Notable Decliners
-6.7% BPOST.BB (bpost €2.93, -0.21) -- guides FY adjusted EBIT between €165-185M prior to the consolidation impact of Staci, provides updated divisional guidance following Press negotiations
-5.8% DEZ.GR (Deutz AG €5.74, -0.36) -- capital increase
-4.0% BIOA.B.SS (BioArctic SEK226.20, -9.40) -- lower on FDA approval of competitor's drug for Alzheimer's
-2.7% TPT.LN (Topps Tiles £0.40, -0.01) -- Q3 trading update; total group sales (6.9%) y/y during the quarter
-1.9% AWRD.SS (Awardit SEK126.00, -2.50) -- discontinues presentation of quarterly reports
-1.1% AKRBP.NO (Aker BP NOK275.20, -3.10) -- reports Q2 Net production mboepd 444.1K vs prior 448.0
-0.8% EQLS.LN (Equals Group £1.19, -0.01) -- trading update
-0.5% EQT.SS (EQT AB SEK315.80, -1.70) -- Keywords Studios and EQT reach agreement on recommended cash acquisition for Keywords Studios at 2,450p/sh
-0.3% ZAG.AV (Zumtobel Group €6.20, -0.02) -- reports FY EPS €0.57 vs FactSet €0.62 [1 est]
EU companies reporting tomorrow:
Earnings: FastPartner (FPAR.A.SS), Eastnine (EAST.SS), Bang & Olufsen (BO.DC), Trifast (TRI.LN)
Trading Update: Victrex (VCT.LN)
Traffic: Norwegian Air Shuttle (NAS.NO)
CMD/events: IGD SIIIQ (IGD.IM), Expert.ai (EXAI.IM)
Data:
Economics:
Jun Services PMI
UK 52.1 vs preliminary 51.2
Eurozone 52.8 vs preliminary 52.6
Germany 53.1 vs preliminary 53.5
France 49.6 vs preliminary 48.8
Italy 53.7 vs consensus 53.7 and prior 54.2
Sweden 51.8 vs consensus 49.5 and prior revised 49.8 from 49.5
Spain 56.8 vs consensus 56.4 and prior 56.9
Eurozone May PPI (4.2%) y/y vs consensus (4.1%) and prior (5.7%); (0.2%) m/m vs consensus (0.1%) and prior (1.0%)
Markets:
WTI Crude (Aug 24): ($0.09) or (0.11%) to $82.72
€-$ +0.0057 or +0.53% to 1.0800
£-$ +0.0074 or +0.58% to 1.2760
€-£ (0.0008) to 0.8464
S&P 500 +0.22%
Performance year-to-date
FTSE 100: +5.69%
DAX: +9.72%
CAC: +1.28%
MIB: +11.55%
Stoxx 600: +7.49%
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