Oct 10 ,2024
Synopsis:
European equity markets closed mostly lower giving up earlier gains. Norway +1% was the outlier on the upside and with Italy +0.3% and Denmark +0.4% led outperformers. On the downside, Sweden (1.0%), Spain (0.7%) and Finland (0.6%) led underperformers.
Central bank narrative in focus. Latest ECB minutes for the 11-12 September meeting highlighted inflation is expected to decline towards the 2% target in the H2'25, but it is too early to declare victory against inflation. Core and services inflation may remain stickier than anticipated, potentially slowing the overall disinflationary process. Despite recent faster-than-expected inflation declines, the ECB cautioned against easing policy restrictions prematurely due to risks of delays in reaching the target. The Eurozone's economy faces potential headwinds, with falling export orders and weak manufacturing output, signalling weakening foreign demand.
In political developments, French PM Barnier to unveil budget with controversial tax hikes and spending cuts. Credibility key. Germany retail sales for August came in 1.6% m/m as statistics office resumed reporting. In the UK, RICS house price index turned positive for the first time in two years. More speculation on UK budget with Reeves ruling out exit tax for wealthy people. In addition, pound under pressure as Chancellor considering raising capital gains tax (CGT) rates up to 39% in upcoming budget, as Treasury scrambles to find ways to fill a £25B budget hole (Guardian). Zelensky on Wednesday evening said conditions becoming ripe to end Ukraine conflict.
In corporate news, ABOUT YOU Holding (YOU.GR) reported Q2 adj EBITDA (€2.3M) vs FactSet (€4.9M) and raised FY24/25 adj EBITDA guidance. Also in the DACH region, Suedzucker (SZU.GR) confirmed preliminary Q2 earnings and reiterates reduced FY forecast. Gerresheimer (GXI.GR) reported 9M adj. EPS €3.06 vs year-ago €3.10, with revenues and adj. EBITDA in line with prelim announcement. Givaudan (GIVN.SW) posted Q3 revenue CHF1.91B vs consensus CHF1.86B, with LFL growth +14.1% vs consensus +10.4%. Deutsche Telekom (DTE.GR) presented new financial targets through 2027, including share buy-backs totalling up to €6.4B and Bayerische Motoren Werke (BMW.GR) reported Q3 sales down (13.0%) y/y. Deutsche Telekom (DTW.GR) hosted its CMD with new financial targets through 2027. In France, Valneva (VLA.FP) also hosted its CMD today.
Elsewhere, BPER Banca (BPE.IM) issued its 2024-27 business plan whilst Fagron (FAGR.BB) reported Q3 revenue €214.5M, +12% vs year-ago €191.4M and reaffirmed its FY guidance. In other corporate developments, Stellantis (STLAM.IM) CEO Carlos Tavares is reportedly planning a significant management reshuffle; of note, GSK Plc (GSK.LN) announced a $2.2B Zantac litigation settlement.
On M&A front, SCOR SE (SCR.FP) entered into exclusive negotiations with Albin Michel Group for the sale of Humensis Group and Brookfield Global Asset Mgmt Ltd announced recommended 69.0p/share cash offer for Tritax EuroBox (EBOX.LN).
Digest:
Sectors - STOXX Europe 600:
Outperformers
Telecom +1.82%, Insurance +1.05%, Health Care +1.04%, Media +0.76%, Travel & Leisure +0.68%, Banks +0.61%, Construct & Mtls +0.30%, Retail +0.11%, Utilities +0.00%, Financial Svcs (0.00%)
Underperformers
Basic Resources (3.84%), Real Estate(1.77%), Oil & Gas (0.93%), Ind Goods & Svcs (0.58%), Food & Beverage (0.53%), Persnl & HHold Goods (0.48%), Technology (0.40%), Chemicals (0.23%), Autos & Parts (0.19%)
Macro/Peripheral markets:
Geopolitics
NATO
NATO to hold annual nuclear drill from Monday, alliance chief Rutte says - Reuters
EU
UK
Reeves needs £25bn tax rise to avoid austerity, says IFS - The Times, The Guardian
Reeves's borrowing binge risks 'buyers' strike' in bond market - The Telegraph
Cleverly out of Tory race 'after tactical voting backfires' - The Telegraph, BBC
Rachel Reeves considers raising capital gains tax to 39% - Guardian
France
Spain
Spain Urges EU to Avoid a Protectionist Escalation With China - Bloomberg
Portugal
Portugal plans to become low-tax haven for young people - FT
Norway
Norway Core Inflation Slowdown Backs Bets of Rate Cut This Year - Bloomberg
Hungary
Hungary CPI Drops to Target as Central Bank Cautious on Rate Cut - Bloomberg
Company news:
Notable Gainers
+77.1% WDL1.GR (NAKIKI €0.93, +0.41) -- signs letter of intent for new lawsuit up to €1M
+13.6% AVCT.LN (Avacta Group £0.59, +0.07) -- new trial data presentation
+11.0% TET.LN (Treatt £4.70, +0.47) -- trading update
+9.3% 2GB.GR (2G Energy €21.85, +1.85) -- Q3 orders
+7.5% BPE.IM (BPER Banca €5.72, +0.40) -- business plan 2024-27
+7.1% GMS.LN (Gulf Marine Services £0.17, +0.01) -- contract
+6.3% ATG.LN (Auction Technology Group £4.37, +0.26) -- trading update; CFO to step down
+6.2% CANTA.SS (Cantargia SEK3.30, +0.19) -- study publication
+4.9% HPHA.GR (Heidelberg Pharma €2.57, +0.12) -- 9M earnings
+4.5% PHARM.NA (Pharming Group €0.81, +0.04) -- start of trial
+3.1% ECR.SM (Ercros €3.67, +0.11) -- Spain authorises under applicable foreign direct investment regulations the acquisition of Ercros
+3.1% GSK.LN (GSK Plc £15.05, +0.45) -- $2.2B Zantac litigation settlement
+3.1% GSK.LN (GSK Plc £15.05, +0.45) -- GSK and ViiV Healthcare to showcase advances across industry-leading infectious disease portfolio at IDWeek
+2.9% FAGR.BB (Fagron €18.46, +0.52) -- Q3 revenue
+2.9% YOU.GR (ABOUT YOU Holding €3.37, +0.10) -- Q2 earnings; narrows FY guidance
+2.6% BWLPG.NO (BW LPG NOK167.70, +4.20) -- Q3 update
+2.3% MAIRE.IM (MAIRE €7.30, +0.17) -- MAIRE's Nextchem awarded licensing and process design package to upgrade BSR's hydrogen production unit in Vietnam
+1.7% NXR.LN (Norcros £2.43, +0.04) -- trading update
+1.5% FTK.GR (flatexDEGIRO €13.97, +0.20) -- BNP Paribas Exane upgrad
+1.3% GENO.SS (Genovis SEK23.90, +0.30) -- Nordea upgrade
Notable Decliners
-19.7% CAU.LN (Centaur Media £0.24, -0.06) -- trading update; new Chair
-7.5% LIO.LN (Liontrust Asset Management £4.90, -0.40) -- trading update
-6.6% SAAB.B.SS (Saab SEK211.55, -14.85) -- US Department of Justice requests information from Saab North America, Inc. regarding Brazil's acquisition of Gripen fighters in 2014
-5.4% KURN.SW (Kuros Biosciences CHF18.16, -1.04) -- 9M earnings
-4.7% ECNL.IM (Aquafil €1.76, -0.09) -- holder Aquafin Holding S.p.A. commits to subscribe for shares in previously disclosed capital increase
-3.9% FAN.LN (Volution Group £5.85, -0.24) -- FY earnings
-3.7% RFX.LN (Ramsdens Holdings £1.98, -0.07) -- trading update
-3.7% VWS.DC (Vestas Wind Systems DKK136.75, -5.20) -- Kepler Cheuvreux downgrade
-3.3% EQT.SS (EQT AB SEK322.60, -11.00) -- Carnegie Securities downgrade
-2.7% BO.DC (Bang & Olufsen DKK9.01, -0.25) -- Q1 earnings
-2.6% RCO.FP (Remy Cointreau €60.95, -1.60) -- CIC Market Solutions downgrade
-2.6% WIZZ.LN (Wizz Air Holdings £12.42, -0.33) -- Oddo downgrade
-2.6% NCAB.SS (NCAB Group SEK60.70, -1.65) -- NCAB Group completes acquisition of DVS Global in Italy
-2.5% LIAB.SS (Lindab International SEK269.00, -6.80) -- Handelsbanken downgrade
-2.4% FEVR.LN (Fevertree Drinks £7.55, -0.19) -- BNP Paribas Exane downgrade
-2.1% SIKA.SW (Sika Group CHF255.60, -5.40) -- BofA downgrade
-1.8% KBX.GR (Knorr-Bremse €79.60, -1.50) -- BofA downgrade
-1.0% BOL.SS (Boliden SEK332.70, -3.50) -- JPMorgan downgrade
EU companies reporting tomorrow:
Earnings: Tryg (TRYG.DC), Atrium Ljungberg (ATRLJ.B.SS), TomTom (TOM2.NA)
Trading Update: DFDS (DFDS.DC), Hays (HAS.LN), Jupiter Fund Management (JUP.LN), Porsche (P911.GR), Volkswagen Group (VOW3.GR)
Data:
Economics:
Sep CPI
Denmark +1.3% y/y vs consensus +1.9% and prior +1.4%
Norway +3.0% y/y vs consensus +3.2% and prior +2.6% (2:00ET)
Greece +2.9% y/y vs consensus +2.5% and prior +3.0%
Aug Industrial Production
Italy (3.2%) y/y vs consensus (2.0%) and prior (3.3%)
Sweden (3.2%) y/y vs prior (1.6%)
Netherlands Aug Manufacturing Production +2.1% m/m vs consensus +1.0% and prior revised (0.8%) from (1.1%)
Germany Aug Retail Sales +2.1% y/y
Markets:
WTI Crude (Nov 24): +$0.38 or +0.51% to $74.76
€-$ (0.0012) or (0.11%) to 1.0928
£-$ (0.0024) or (0.18%) to 1.3047
€-£ +0.0006 to 0.8375
S&P 500 +0.51%
Performance year-to-date
FTSE 100: +6.51%
DAX: +14.67%
CAC: +0.03%
MIB: +12.18%
Stoxx 600: +8.37%
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