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StreetAccount Summary - EU Market Recap: FTSE 100 +0.86% to 8241.26, DAX +0.41% to 18450.48, CAC40 +0.83% to 7695.78, STOXX 600 +0.56% to 517.54

Jul 04 ,2024

  • Synopsis:

    • European equity markets ended higher. Follows positive close on Wednesday. Banks, energy, and constructions/mtls outperform. Retail, utilities, tech and real estate the main laggards.

    • All about politics today. UK election today. Last set of polls released on Wednesday evening pointed to bigger Labour majority than former PM Blair achieved in 1997. Europe also gearing up for France's second round runoff vote on Sunday. Polls show efforts by mainstream parties to block the far right might reduce the number of seats they win to 190 to 220, well below the 289 needed for an absolute majority. EU-China trade tensions in the spotlight as EU confirmed tariffs on Chinese electric vehicles (EVs).

    • Quiet macro calendar in Europe. Swiss CPI unexpectedly eased in June. German factory much weaker than forecast in May release. Eurozone construction PMI deep in contraction. BoE survey of CFOs showed moderation in inflation expectations. June ECB minutes show some opposition to rate cut, which was thought to come from Austria's Holzmann. Recall that takeaways from meeting leaned hawkish after it cut rates by 25-bps but did not pre-commit to July cut. ECB Sintra conference takeaways saw policymakers broadly express concerns over escalating risks, such as political uncertainty, trade tensions and high government debt.

    • On the corporate front, DACH names in focus: Continental (CON.GR) shares big gainer after last night Q2 pre-close call, whilst Redcare Pharmacy (RDC.GR) reported prelim Q2 numbers. In the Nordics, shares in Norwegian Air Shuttle (NAS.NO) lowered its FY24 EBIT guidance (and also issued Jun stats); also, LM Ericsson (ERIC.B.SS) will record a non-cash impairment charge of SEK11.4B in Q2 mainly related to Vonage; in the UK, Great Portland Estates (GPE.LN) released a trading update saying strong performance reaffirms confidence in FY portfolio rental value guidance of +3.0-6.0% growth with guidance for prime spaces higher still at +5.0-10.0%. Assura (AGR.LN) reported Q1 annualised rent roll £149.2M and hiked the quarterly divi by +2.4% whilst Victrex (VCT.LN) posted group revenue +2% y/y to £74.0M and said it is confident in medium to long-term prospects. Of note, Peel Hunt (PEEL.LN) said in its AGM update Q1 revenues are ahead vs pcp and in line with market expectations.

    • On the M&A newsflow, banking sector in focus with Banco Sabadell (SAB.SM) Chairman Josep Oliu providing an update regarding the BBVA's offer process ahead of BBVA's EGM on 5 July; in another deal, Barclays Europe (BARC.LN) will dispose its German consumer finance business to BAWAG (BG.AV), with the acquisition impacting the BAWAG's CET1 by ~140 bps. Elsewhere, wires reported that Adecco (ADEN.SW) is exploring the sale of its technology consulting unit Akkodis and - on the activist front - Cevian Capital disclosed a 5% stake in Smith & Nephew (SN.LN); also, Bloomberg reports, citing people familiar with the matter, that HSBC Holdings Plc's sale of its German wealth-management unit is attracting initial interest from peers including BNP Paribas and UBS Group. Julius Baer Group is also among those studying the business, which could be valued at €300M to €600M in a deal, the report adds. Elsewhere, Axa (CS.FP) and BNP Paribas (BNP.FP) re-initiated tie-up talks about their Asset Management units.

    • Looking ahead to tomorrow's EU econ-calendar, notable releases will include, amongst others, Germany May industrial production, France May industrial production, trade balance, Spain May industrial production, Eurozone May retail sales, Italy May retail sales, UK Jun house price index - Halifax, and Switzerland Jun consumer confidence - SECO. Of note, Czech Republic is closed for holiday (Cyril and Methodius Day).

  • Digest:

    • Sectors - STOXX Europe 600:

      • Outperformers

        • Banks +1.31%, Oil&Gas+0.97%, Construct & Mtls +0.87%, Autos & Parts +0.76%, Insurance +0.75%, Media +0.69%, Health Care +0.62%

      • Underperformers

        • Retail (0.03%), Utilities +0.01%, Technology +0.03%, Real Estate +0.06%, Telecom +0.21%, Ind Goods & Svcs +0.38%, Chemicals +0.41%, Financial Svcs +0.42%, Food, Beverage and Tobacco +0.44%, Travel & Leisure +0.46%, Basic Resources +0.48%, Consumer Products and Services +0.49%

    • Macro:

      • Central banks:

        • ECB Officials Looked Past Some Inflation Worries With Rate Cut -- Bloomberg

      • EU:

        • EU firms up duties on Chinese EVs, skirting Berlin's pressure -- Politico

      • UK:

        • Uneven UK economic recovery poses test for election winner -- FT

        • UK employers scale back expected wage growth, Bank of England says -- BoE

      • France:

        • Macron's deal with hard Left puts France on a collision course with Brussels -- Telegraph

        • France to deploy more police to prevent trouble after Sunday election -- Reuters

    • Company news:

      • Notable Gainers

        • +24.1% DFCH.LN (Distribution Finance Capital Holdings £0.34, +0.07) -- trading update

        • +12.8% RDC.GR (Redcare Pharmacy €127.50, +14.70) -- prelim Q2 sales

        • +9.5% CON.GR (Continental €58.38, +5.14) -- Q2 pre-close call

        • +8.6% EKI.FP (Ekinops €3.75, +0.30) -- Orange Business launches its SD-WAN Essentials solution based on Ekinops' technology

        • +6.9% SN.LN (Smith & Nephew £10.58, +0.68) -- Cevian Capital discloses 5.02% stake in Smith & Nephew -- filing

        • +5.5% NIVI.B.SS (Nivika Fastigheter SEK42.40, +2.20) -- earnings

        • +4.4% KRN.GR (Krones €120.80, +5.20) -- targets consolidated revenue to increase to €7B by 2028

        • +4.3% AKBM.NO (Aker BioMarine NOK90.90, +3.60) -- sale of Feed Ingredients business

        • +3.9% ERA.FP (Eramet €104.90, +3.90) -- aims to start production at Argentina lithium plant in November, ramping up to 24K tons by mid-'25

        • +3.1% BG.AV (BAWAG Group €62.95, +1.95) -- Follow-up: BAWAG acquires Barclays Consumer Bank Europe; CET1 impact of the transaction is expected at ~140 bps

        • +2.8% BARC.LN (Barclays £2.21, +0.06) -- Europe to dispose of its German consumer finance business to BAWAG P.S.K. for a small premium to net assets, payable in cash on completion

        • +2.4% ELLAKTOR.GA (Ellaktor €2.60, +0.06) -- signs agreement for the sale of Helector to Motor Oil's Manetial (post EU close 3-Jul)

        • +1.9% EMGS.NO (Electromagnetic Geoservices NOK2.57, +0.05) -- secures prefunding for multi-client acquisition in Norway

        • +1.8% BCP.PL (Banco Comercial Portugues €0.36, +0.01) -- informs about Bank Millennium's estimated level of provisions against legal risk related to FX mortgage loans portfolio in Q2 2024.

        • +1.8% SXS.LN (Spectris £29.00, +0.50) -- acquires SciAps for consideration of up to $260M (£205M)

        • +1.7% MRX.GR (Mister Spex €2.91, +0.05) -- Chairman to resign with immediate effect

        • +1.6% AMS.LN (Advanced Medical Solutions Group £2.18, +0.04) -- completes acquisition of Peters Surgical

        • +1.3% CS.FP (AXA €32.34, +0.41) -- Axa and BNP Paribas reinitiate Asset Management tie-up talks -- Bloomberg

        • +1.2% SAB.SM (Banco de Sabadell €1.87, +0.02) -- Banco Sabadell Chairman Josep Oliu updates on BBVA's offer process ahead of BBVA's EGM on 5 July

      • Notable Decliners

        • -16.4% NAS.NO (Norwegian Air Shuttle NOK10.78, -2.10) -- lowers FY24 EBIT guidance (inc Widerøe) to NOK 2.1B-NOK 2.6B from prior NOK 2.5B-3.2B and FactSet NOK2.87B; reports June traffic +16.0% y/y

        • -9.3% PLX.FP (Pluxee €25.21, -2.62) -- reports Q3 revenue €297M vs year-ago €261M; FY24 organic revenue growth objective upgraded to ~+18% from prior 15%-17%

        • -6.5% KAMBI.SS (Kambi Group SEK102.80, -7.00) -- withdraws its 2027 financial targets

        • -6.2% VOLCAR.B.SS (Volvo Car SEK32.99, -2.09) -- reports June car sales +8% y/y to 71,514 units

        • -3.8% STLN.SW (Swiss Steel Holding CHF10.20, -0.40) -- EU sets a provisional deadline of 7-Aug to rule on Marcegaglia Group's acquisition of Ascometal's Fos-sur-Mer site

        • -3.6% BOSS.GR (Hugo Boss €41.03, -1.52) -- Michael Ashley now holds 19.81% of voting rights attached to shares and through instruments in Hugo Boss vs prior 16.83% - filing

        • -1.8% NHOA.FP (NHOA SA €1.06, -0.02) -- Italy looking at TCC Group's offer to buy remainder of NHOA - Reuters

        • -1.6% WG.LN (John Wood Group £1.96, -0.03) -- John Wood group announces extension to put up or shut up deadline in connection with Sidara's offer

        • -1.2% ERIC.B.SS (Telefonaktiebolaget LM Ericsson SEK65.20, -0.80) -- to record non-cash impairment charge of SEK11.4B in Q2 mainly related to Vonage

        • -1.1% ROG.SW (Roche Holding CHF242.20, -2.60) -- SKYSCRAPER-06 study of Genentech's Tecentriq does not meet primary endpoints

        • -1.1% HAFNI.NO (Hafnia NOK86.20, -1.00) -- CEO sells 1.0M shares

    • EU companies reporting tomorrow:

      • Earnings: Catena (CATE.SS), Fabege (FABG.SS), Atrium Ljungberg (ATRLJ.B.SS), ABG Sundal Collier Holding (ABG.NO)

  • Data:

    • Economics:

      • Switzerland

        • Jun Unemployment Rate (sa) 2.4% vs consensus 2.4% and prior 2.4%

        • Jun CPI +1.3% y/y vs consensus +1.4% and prior +1.4%

      • Germany

        • May Factory Orders (1.6%) m/m vs consensus +0.5% and prior revised (0.6%) from (0.2%)

        • Jun Construction PMI 39.7 vs consensus 45.1 and prior 38.5

      • UK Jun Construction PMI 52.2 vs consensus 54.0 and prior 54.7

    • Markets:

      • WTI Crude (24-Aug): +$0.07 or +0.08% to $83.95

      • €-$ +0.0027 or +0.25% to 1.0815

      • £-$ +0.0021 or +0.16% to 1.2765

      • €-£ +0.0006 to 0.8472

      • S&P 500 +0.00%

      • Performance year-to-date:

        • FTSE 100: +6.57%

        • DAX: +10.14%

        • CAC: +2.02%

        • MIB: +12.37%

        • Stoxx 600: +8.05%

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