Sep 12 ,2024
Synopsis:
European indices have ended in positive territory. Focus on ECB policy decision, after the central bank cut rates by 25 bp, bringing the deposit rate to 3.5%. Move, which was widely expected, marked second rate cut in ECB's easing cycle. Statement also flagged further moderation in degree of policy restriction going forward (please see our comment StreetAccount Event Recap: ECB 12-Sep policy decision attached below). In other macro-news, UK headline CPI for August, due next week just ahead of the BoE decision, expected to remain stable at 2.2% y/y while core CPI projected to settle at 3.5% y/y. Deutsche Bank sees services CPI rising to 5.5% y/y, with RPI inflation forecasted at 3.3% y/y. Projections still slightly below BoE's forecasts, primarily due to weaker energy and services prices, particularly in airfares and accommodation. Looking ahead, Deutsche Bank CPI projections for 2024 remain at 2.5% y/y, with core CPI at 3.7% y/y. Lower-than-expected inflation figures could potentially lower the bar for September rate cut. However, given recent firm growth data and elevated underlying price pressures, Goldman Sachs sees MPC likely to hold rates steady at 5% in September, with 7-2 vote. However, broker expects MPC to accelerate pace of cuts citing gradual loosening of labour market, declining wage growth, progress on services inflation, and sequential rate cuts from most DM central banks. Broker now sees 40% chance of sequential Bank Rate cuts from November to terminal rate of 3% in Q3 2025 versus prior Q3 2026.
In corporate news, Baloise (BALN.SW) reported H1 net income CHF219.8M, +7% y/y, launched refocusing strategy, raised payout rate and aims for return on equity of between 12-15%. Also in the DACH region, Flughafen Wien (FLU.AV) reportedAug Group total passenger traffic +8.7% to ~4.44M. Out of the Nordics, Puuilo (PUUILO.FH) reported Q2 EPS €0.22 in line with FactSet and specifies FY24 outlook. In the UK, Renishaw (RSW.LN), Spire Healthcare (SPI.LN) and Trainline (TRN.LN) issued earnings/trading updates prior to the market open. On the speculation front, EQT (EQT.SS) reportedly exploring sale of its majority stake in Banking Circle. Commerzbank (CBK.GR) is said is preparing defense strategy for possible UniCredit (UNI.IM) takeover. Still on the banking front, Dutch government confirmed reduction in stake in ABN AMRO Bank (ABN.NA) to 40.5% from prior 49.5%
Looking ahead to tomorrow's calendars, Earnings: Virbac (VIRP.FP) and Ibersol (IBS.PL) and Italian Wine Brands (IWB.IM) are expected to report, whilst France Aug final CPI, Finland Aug CPI and Eurozone Jul industrial production will be the mina key macro releases
Digest:
Sectors - STOXX Europe 600:
Outperformers: Basic Resources +2.39%, Technology +1.99%, Retail +1.91%, Ind Goods & Svcs +1.70%, Financial Svcs +1.55%, Banks +1.35%, Media +1.13%, Oil & Gas +1.11%
Underperformers: Utilities (0.36%), Health Care (0.21%), Autos & Parts +0.02%, Persnl & HHold Goods +0.05%, Chemicals +0.11%, Construct & Mtls +0.19%, Food & Beverage +0.30%, Insurance +0.35%, Telecom +0.42%, Travel & Leisure +0.50%, Real Estate+0.55%
Macro:
ECB cuts interest rates as growth dwindles (Reuters)
Brussels questions whether Starmer really wants a Brexit reset (Politico)
France's Bruno Le Maire leaves government to enter academia (EA)
Germany upsets its neighbours with border clampdown (FT)
Greece warns Germany over 'unilaterally scrapping' free-movement Schengen zone to tackle migration (Independent)
UK government finances are on an 'unsustainable' path, watchdog warns (FT)
European Auto Stocks Can Drop a Lot More Before Finding a Floor (BBG)
Company news:
Notable Gainers
+10.6% NCC.LN (NCC Group £1.67, +0.16) -- trading update
+10.3% VVY.NA (Vivoryon Therapeutics €2.09, +0.20) -- Q1 earnings
+10.0% DSV.DC (DSV A/S DKK1,375.00, +125.50) -- DSV in advanced talks to purchase Deutsche Bahn's Schenker business in potential €14B transaction -- Bloomberg
+10.0% GMS.LN (Gulf Marine Services £0.17, +0.02) -- raises FY guidance; contract
+8.3% TRN.LN (Trainline £3.25, +0.25) -- trading update: raises FY guidance
+8.0% RUSTA.SS (Rusta SEK74.45, +5.55) -- Q1 earnings
+5.8% ALL.LN (Atlantic Lithium £0.13, +0.01) -- Ghana's EPA grants environmental permit in respect of Ewoyaa Lithium Project
+5.8% KAMBI.SS (Kambi Group SEK128.70, +7.00) -- multi-year online sportsbook partnership with KTO Group in Brazil
+5.8% MRL.LN (Marlowe £4.55, +0.25) -- demerger of Occupational Health division
+5.7% PGHN.SW (Partners Group Holding CHF1,175.00, +63.00) -- and BlackRock form retail wealth partnership
+4.0% EQT.SS (EQT AB SEK337.30, +13.00) -- EQT AB exploring sale of its majority stake in Banking Circle -- Reuters, citing sources
+4.0% MYCR.SS (Mycronic SEK380.20, +14.60) -- order
+3.0% ECNL.IM (Aquafil €2.09, +0.06) -- proposes share capital increase of ~ €40M to support plan
+2.8% BIOVIC.B.SS (Biovica International SEK2.59, +0.07) -- Q1 earnings
+2.7% SYENS.BB (Syensqo €70.83, +1.88) -- Standard Investments LLC announces 3% stake in Syensqo
+2.7% UCG.IM (UniCredit €37.11, +0.96) -- Commerzbank preps defense strategy for possible UniCredit takeover -- Bloomberg
+2.6% ABN.NA (ABN AMRO Bank €15.61, +0.40) -- Dutch government confirms reduction in stake in ABN AMRO Bank to 40.5% from prior 49.5%; JPMorgan upgrade
+2.5% AET.LN (Afentra £0.46, +0.01) -- H1 earnings
+2.4% DFV.GR (DFV Deutsche Familienversicherung €6.40, +0.15) -- H1 earnings
+2.3% CBK.GR (Commerzbank €15.05, +0.34) -- Commerzbank preps defense strategy for possible UniCredit takeover -- Bloomberg, citing sources; JPMorgan upgrade
+2.2% VTY.LN (Vistry Group £13.74, +0.30) -- launches previously announced £130M share buyback
+1.5% KEYS.LN (Keystone Law Group £6.70, +0.10) -- H1 earnings
+0.4% AENA.SM (Aena S.M.E. €189.10, +0.80) -- Aug traffic
Notable Decliners
-14.9% ETH.IM (Eurotech SpA €1.02, -0.18) -- asks AGM to authorize a capital increase of up to €20M over a period of 2 years
-11.1% FEVR.LN (Fevertree Drinks £7.64, -0.96) -- H1 earnings
-7.8% SANN1.SW (Santhera Pharmaceuticals Holding CHF9.00, -0.76) -- H1 earnings
-7.5% RBO.FP (Roche Bobois €45.50, -3.70) -- H1 earnings; Midcap Partners downgrade
-3.6% SOL.IM (SOL €32.05, -1.20) -- H1 earnings
-2.8% IPH.FP (Innate Pharma €2.12, -0.06) -- H1 earnings
-2.2% ROG.SW (Roche Holding CHF263.00, -5.80) -- discloses reported weight-loss reduction in ph1 obesity pill trial was from only 6 patients
-1.6% BRK.LN (Brooks MacDonald Group £18.65, -0.30) -- Canaccord Genuity Group (CF.CN) to acquire BMI from Brooks MacDonald Group for £28.0M (C$49.6M) in cash; new CFO; FY earnings
EU companies reporting tomorrow:
Earnings: Virbac (VIRP.FP), Ibersol (IBS.PL), Italian Wine Brands (IWB.IM)
Data:
Economics:
Spain Aug Final CPI +2.3% y/y vs preliminary +2.2%
Sweden Aug CPI +1.9% y/y vs consensus +2.1% and prior +2.6%
Markets:
WTI Crude (Oct 24): +$2.28 or +3.39% to $69.59
€-$ +0.0021 or +0.19% to 1.1035
£-$ +0.0032 or +0.25% to 1.3074
€-£ (0.0006) to 0.8439
S&P 500 +1.14%
Performance year-to-date
FTSE 100: +6.52%
DAX: +10.48%
CAC: (1.52%)
MIB: +10.13%
Stoxx 600: +6.87%
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