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StreetAccount Summary - Europe Pre-Open: FTSE, DAX, CAC indicated little changed; France faces hung parliament

Jul 08 ,2024

  • Synopsis

    • European equity markets set to open little changed with focus on French political situation. France faces hung parliament after surprise election result (second round of voting). Official results show a victory for the left-wing New Popular Front (NFP) alliance, while France's far-right National Rally (RN) has failed to win a majority. President Emmanuel Macron's centrist Ensemble alliance came second. Reuters notes with no single group securing a working majority the possibilities include the NFP forming a minority government or the building of a broad, unwieldy coalition. (BBC, Reuters). There is likely going to be a prolonged period of political instability and policy opacity. given the deadlocked parliament, with no obvious stable coalition. Nevertheless, gridlock scenario seen by some as more market-friendly outcome given radical spending agendas of either extremes.

    • In Asia, China stocks under pressure with Hang Seng entering correction and CSI 300 down to lowest since late February. Sentiment bearish going into Third Plenum and Politburo meeting amid low expectations authorities will flag meaningful policy support to arrest waning economic momentum.

    • European macro data releases out today include Germany May trade balance, Eurozone Jul Sentix investor confidence, Sweden May industrial production, Denmark May manufacturing production

    • Elsewhere, new UK Chancellor of the Exchequer Rachel Reeves is set to outline the new Labour government's strategy to encourage private investment in her inaugural address. Spain's economy minister Cuerpo speech at 9:00CET at Europa Press event in Madrid.

    • In central banks, BOE's Benford text of speech delivered Fri (5th) at DiFoR conf released at 10:00BST whilst BOE's Haskel speech at 15:15BST at Kings College.

    • On the corporate front, Grifols founding family and Brookfield weigh €5.50B takeover bid for Grifols (GRF.SM); Edison Bidco AS to acquire Volue ASA (VOLUE.NO) at NOK 42.00 per share.

    • Other events today: Chancellor Scholz visits Siemens Healthineers (SHL.GR) in Erlangen, delivers speech to staff in the afternoon, and Germany's minister of economics Habeck attends opening of Mercedes-Benz (MBG.GR) eCampus. Informal meeting of EU competitiveness ministers (Internal market and industry) (through Tue). EU's von der Leyen receives Netherlands new PM Dick Schoof, the Dutch PM also meets with EP President Metsola. EU's Ferreira speech at 12:30CET at the Luso Spanish Chamber of Commerce and industry. EU's Dombrovskis participates in the business roundtable in the context of the EU-Türkiye High Level Dialogue on Trade, with minister of trade of Turkey Bolat.

  • Politics/Macro/World News

    • France

      • Leftist New Popular Front wins a shock victory - but now the hard part begins - France24

      • France heads back to its postwar era of ungovernability - FT

    • UK

      • Reeves to Unveil Labour's Growth Plan in First Major Speech - Bloomberg

      • Rachel Reeves speech: Labour will ease building rules and fight 'nimbys' - Times

      • Fewer UK companies plan to increase prices, survey shows

  • Top company news

    • Earnings/updates

      • IVA.FP (Inventiva) -- provides update on NATiV3 clinical program evaluating lanifibranor in patients with MASH/NASH; provides financial update

      • TGS.NO (TGS-NOPEC Geophysical Co.) -- reports preliminary Q2 revenue $224M vs FactSet $218.7M [7 est, $206.5-246M]

      • ANIM.IM (Anima Holding SpA) -- Anima Holding reports June net inflows (excl. Class I insurance) €88M (6:06ET)

      • HAUTO.NO (Höegh Autoliners) -- Jun trading update; transported 1.1M CBM of cargo on prorated basis

      • BNOR.NO (BlueNord) -- announces preliminary production for June and Q2 2024

      • Also reporting today

        • Earnings:

          • Nordics: Industrivarden (INDU.A.SS), Wallenstam (WALL.B.SS), Wihlborgs Fastigheter (WIHL.SS), Lassila & Tikanoja (LAT1V.FH)

          • UK: Solid State (SOLI.LN), Knights Group (KGH.LN)

        • Trading Update: Repsol (REP.SM), Galp Energia (GALP.PL), The UNITE Group (UTG.LN), Hunting (HTG.LN), PGS (PGS.NO)

        • Production: Ferrexpo (FXPO.LN)

    • M&A

      • GRF.SM (Grifols) -- founding family and Brookfield weigh €5.50B takeover bid for Grifols - Cinco Dias, citing sources

      • VOLUE.NO (Volue) -- Edison Bidco AS to acquire Volue ASA at NOK 42.00 per share

      • AAL.LN (Anglo American) -- preparing to launch sale process of Queensland coking coal mines - Australian Financial Review

      • HOLN.SW (Holcim) -- acquires recycling Mark Desmedt for an undisclosed sum

      • VIE.FP (Veolia Environnement) -- has reached an agreement with the Moroccan authorities for the sale to Société Régionale Multiservices Casablanca-Settat of its entire stake in Lydec, acquired during the takeover of Suez in 2022

      • LGEN.LN (Legal & General Group) -- Taylor Wimpey withdraws from the running for Legal & General's Cala Homes after its opening bid was rejected - London Times

    • Other

      • BRBY.LN (Burberry Group) -- likely to cut hundreds of jobs - Telegraph

      • DHER.GR (Delivery Hero) -- may face significant fine due to antitrust violations and intends to increase corresponding provision

      • Estimated weekend box office revenues in US, Canada $156.0M, +19.7% y/y - Box Office Mojo

  • Key rating changes

    • Upgrades

      • HSBC upgrades ML.FP, PIRC.IM

      • ACA.FP (Credit Agricole) -- to outperform from neutral at BNP Paribas Exane

      • AKE.FP (Arkema) -- to neutral from underweight at JPMorgan

      • FBK.IM (FinecoBank) -- to buy from hold at Jefferies

      • HTO.GA (Hellenic Telecommunications Organization) -- to overweight from neutral at JPMorgan

      • UBI.FP (Ubisoft Entertainment) -- to buy from underperform at Jefferies

      • MRO.LN (Melrose Industries) -- upgraded to outperform from sector perform at RBC Capital Markets

    • Downgrades

      • ZEAL.DC (Zealand Pharma) -- to hold from buy at Carnegie Securities

      • DLG.LN (Direct Line Insurance Group) -- Direct Line Insurance Group reinstated neutral at JPMorgan; prior rating was overweight

      • CATE.SS (Catena) -- to hold from buy at DnB Markets

  • Data

    • Nikkei +0.04% to 40926.89

    • Hang Seng (1.54%) to 17524.67

    • Shanghai Composite (0.55%) to 2933.74

    • S&P futures (9.5) vs prior close of 5621.5

    • €-$ +0.0008 or +0.07% to 1.0823

    • $-¥ (0.06) or (0.04%) to 160.69

    • €-¥ +0.04 or +0.02% to 173.88

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