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StreetAccount Summary - EU Market Recap: FTSE 100 (0.26%) to 8227.36, DAX (0.38%) to 20137.22, CAC40 (0.31%) to 7407.86, STOXX 600 (0.55%) to 508.69

Jan 13 ,2025

  • Synopsis:

    • European indices ended in negative territory, but off the session's lows. In France, political drama approaching new juncture as PM Bayrou prepares first policy speech to lawmakers on 14-Jan, with pension reform negotiations taking center stage. Socialist Party, led by Faure, has made support conditional on Bayrou announcing suspension of Macron's controversial pension reform. Compromise proposal has emerged that would pause reform for six months, allowing unions and employers to negotiate alternative financing solution, with original reform automatically reinstating if no agreement reached. President Macron indicated openness to revising pension reform, but with strict conditions - notably that the €15B cost must be offset without increasing taxes on businesses or wealthy. Eurointelligence flagged delicate balancing act for Bayrou, who risks losing right-wing support if he concedes too much to the left. Senate leader Larcher's firm opposition to any pension reform suspension highlights precarious position. For Socialists, supporting Bayrou would mean breaking from left alliance, a politically risky move that could define their electoral future. If Bayrou's government falls, it would deepen France's political crisis and potentially threaten the stability of Macron's presidency

    • UK assets also in focus: recent market turbulence has placed both UK Treasury and BoE in challenging position. Moves may be more a function of markets preparing for Trump 2.0 rather than verdict on UK government's credibility, but sustained rise in gilt yields threatens to eliminate Chancellor Reeves's £9.9B fiscal buffer. Analysts suggest 1% yield increase could add £12B to debt servicing costs by 2029-30. Barclays suggested development may force fiscal consolidation through spending cuts or tax increases, despite already weak economic growth. To note, UK bond markets steadied somewhat on Friday as UK Chancellor Reeves appeared ready to implement deeper public spending cuts rather than raise taxes or alter fiscal rules. However, with unprotected departments already severely constrained, meaningful fiscal savings may require addressing the welfare budget. BoE faces delicate balancing act between managing inflation risks and supporting growth. While recent surveys indicate loosening labor market, inflation expectations have ticked up for two consecutive months, with firms' one-year price growth expectations reaching 3.8%. Instead, growth forecasts have been revised downward. Potential for fiscal consolidation adds further downside risks to forecasts.

    • In central bank news, recent ECB commentary has coalesced around a measured approach to monetary policy easing in 2025, with officials pushing back against expectations of an accelerated cutting cycle. Governing Council member Vujcic explicitly stated that faster rate cuts would require significant deviation from current projections, while emphasizing the merits of gradual, meeting-by-meeting decisions given elevated uncertainties. Cautious stance was echoed by Chief Economist Lane and Finnish official Rehn, who both affirmed the likelihood of continued easing while emphasizing data dependence. Key theme emerging from recent communications is ECB's policy independence from the Federal Reserve, with multiple officials stressing autonomous decision-making based on Eurozone conditions. Against a backdrop of persistent growth challenges, particularly in Germany and France, and projected disinflation toward 2% target in 2025, central bank appears poised to continue easing cycle. However, commentary suggests preference for maintaining current pace of 25bps cuts rather than accelerating to larger moves, barring material deterioration in economic conditions.

    • On the reporting front, Porsche (P911.GR) reported 2024 worldwide deliveries were down 310,718 (3%) y/y whilst - still in the DACH region - Teva became the strategic commercialization partner for Formycon (FYB.GR) biosimilar candidate FYB203 (Eylea/ aflibercept) in major parts of Europe and Israel; still in the pharma sector, US Appeals Court reversed-in-part, affirmed-in-part district court ruling of Novartis (NOVN. SW) Entresto patent and Molecular Partners (MOLN.SW) outlined clinical expansion plans and strengthens radiopharma strategic focus for 2025. In the Nordics, Swedish Orphan Biovitrum (SOBI.SS) announced FY24 revenue were ~SEK 26.00B vs FactSet SEK 25.45B, whilst Norwegian Air Shuttle (NAS.NO) is now forecasting FY group operating profit of ~ NOK 1.85B vs prior guidance of NOK 2.1- 2.4B; shares down ~(6%) on the news. In the UK, PageGroup (PAGE.LN) released its Q4 trading update and also guided FY24 operating profit towards the lower end of the consensus range, whilst Entain (ENT.LN) reiterated FY24 EBITDA guidance. In M&A news, GSK (GSK.LN) entered into an agreement to acquire IDRx, Inc. for $1B with potential for an additional $150M, whilst local Italian press reported that the govt is preparing a formal review of UniCredit (UCG.IM) offer for Banco BPM (BAMI.IM) under golden power regulations

    • Looking ahead to tomorrow's calendars, Volkswagen (VOW3.GR) deliveries, Sudzucker (SZU.GR), AGRANA Beteiligungs (AGR.AV), Chocoladefabriken Lindt & Spruengli (LISN.SW), Partners Group (PGHN.SW), OMV (OMV.AV), JD Sports Fashion (JD.LN), Persimmon (PSN.LN), Ocado (OCDO.LN), Grafton (GFTU.LN), Esker (ALESK.FP), Cairn Homes (C5H.ID), Integrafin Holdings (IHP.LN), Hunting (HTG.LN), MJ Gleeson (GLE.LN), The Gym Group (GYM.LN), Robert Walters (RWA.LN) Unieuro (UNIR.IM), and Ramsdens (RFX.LN) will be among few other companies updating investors

  • Digest:

    • Sectors - STOXX Europe 600:

      • Outperformers: Oil & Gas +1.07%, Basic Resources +1.06%, Banks +0.53%, Chemicals +0.22%, Telecom +0.12%, Utilities (0.06%), Food & Beverage (0.48%), Insurance (0.49%)

      • Underperformers: Real Estate (1.25%), Media (1.25%), Technology (1.24%), Retail (1.21%), Health Care (1.20%), Ind Goods & Svcs (1.05%), Construct & Mtls (1.00%), Travel & Leisure (0.94%), Financial Svcs (0.93%), Autos & Parts (0.72%), Persnl & HHold Goods (0.57%)

    • Macro:

      • AfD embraces mass deportation of migrants as German election nears (BBC)

      • Aliice Weidel: the former Goldman analyst leading Germany's far-right (FT)

      • French minister sees Germany's likely next chancellor as positive for EU (Politico)

      • Macron's Approval Rating Drops to Six-Year Low in Ipsos Poll (BBG)

      • PM Starmer refuses to say Reeves will be Chancellor at next election (Telegraph)

      • Spending review will be 'ruthless', says Starmer, as he refuses to rule out further cuts (Guardian)

    • Company news:

      • Notable Gainers

        • +13.0% OLTH.GA (Thessaloniki Port Authority €27.00, +3.10) -- Leonidsport tender offer for 2.1M shares at €27/sh

        • +10.3% JLP.LN (Jubilee Metals Group £0.04, -0.00) -- H1 operational update

        • +10.2% QTX.LN (Quartix Technologies £1.68, +0.16) -- trading statement

        • +4.3% MXCT.LN (MaxCyte £3.66, +0.15) -- prelim Q4 earnings

        • +4.0% BIM.FP (bioMerieux €110.40, +4.30) -- acquires SpinChip Diagnostics

        • +3.7% MAHA.A.SS (Maha Energy SEK7.22, +0.26) -- to receive $4.4M earn out for the 2023 sale of Brazilian assets

        • +3.0% NDX1.GR (Nordex €11.62, +0.34) -- 247MW order

        • +2.9% SOBI.SS (Swedish Orphan Biovitrum SEK322.60, +9.20) -- announces FY 2024 revenue ~SEK 26.00B vs FactSet SEK 25.45B

        • +2.4% CRW.LN (Craneware £21.05, +0.50) -- H2 trading update

        • +1.6% P911.GR (Porsche €59.80, +0.92) -- reports 2024 worldwide deliveries 310,718 vehicles, (3%) y/y

        • +0.7% PLUS.LN (Plus500 £26.54, +0.18) -- FY trading udpate

        • +0.7% UCG.IM (UniCredit €40.31, +0.27) -- Italy preparing formal review of UniCredit's offer for Banco BPM under golden power regulations - La Stampa

        • +0.6% POLR.LN (Polar Capital Holdings £4.85, +0.03) -- 9M AuM

        • +0.3% ENT.LN (Entain £6.26, +0.02) -- reiterates FY24 EBITDA guidance

        • +0.2% BAMI.IM (Banco BPM €7.98, +0.02) -- Italy preparing formal review of UniCredit's offer for Banco BPM under golden power regulations - La Stampa

      • Notable Decliners

        • -23.1% EYE.LN (Eagle Eye Solutions Group £3.57, -1.09) -- H1 trading update; multi-year global OEM agreement

        • -8.7% BIOVIC.B.SS (Biovica International SEK1.77, -0.17) -- SEK2.3M work order

        • -7.6% IDIA.SW (Idorsia CHF0.72, -0.06) -- calls for bondholder meeting

        • -5.4% NAS.NO (Norwegian Air Shuttle NOK10.02, -0.57) -- lowers FY group operating profit guidance

        • -3.7% PAGE.LN (PageGroup £3.00, -0.12) -- Q4 trading update

        • -3.3% FYB.GR (Formycon €60.60, -2.10) -- Teva becomes strategic commercialization partner for Formycon's biosimilar candidate FYB203 (Eylea/ aflibercept) in major parts of Europe and Israel

        • -0.9% MAGI.SS (MAG Interactive SEK11.15, -0.10) -- divests quiz app Primetime

        • -0.1% NOVN.SW (Novartis CHF90.97, -0.12) -- comments on Entresto US patent upheld by US Court of Appeals

    • EU companies reporting tomorrow:

      • DACHs: Sudzucker (SZU.GR), AGRANA Beteiligungs (AGR.AV)

      • Southern Europe: Unieuro (UNIR.IM)

      • UK: Games Workshop (GAW.LN), Knights Group (KGH.LN), Ramsdens (RFX.LN)

      • Trading Update: Volkswagen (VOW3.GR) 2024 deliveries, Chocoladefabriken Lindt & Spruengli (LISN.SW), Partners Group (PGHN.SW), OMV (OMV.AV), JD Sports Fashion (JD.LN), Persimmon (PSN.LN), Ocado (OCDO.LN), Grafton (GFTU.LN), Esker (ALESK.FP), Cairn Homes (C5H.ID), Integrafin Holdings (IHP.LN), Hunting (HTG.LN), MJ Gleeson (GLE.LN), The Gym Group (GYM.LN), Robert Walters (RWA.LN)

      • Traffic: Flughafen Zurich (FHZN.SW):

  • Data:

    • Economics:

      • Switzerland Dec SECO Consumer Sentiment (30.3) vs consensus (35.0) and prior (37.2)

      • Greece Dec CPI +2.6% y/y vs consensus +2.3% and prior +2.4%

    • Markets:

      • WTI Crude (Feb 25): +$2.10 or +2.74% to $78.67

      • €-$ (0.0034) or (0.33%) to 1.0210

      • £-$ (0.0041) or (0.34%) to 1.2161

      • €-£ (0.0001) to 0.8395

      • S&P 500 (0.60%)

      • Performance year-to-date

        • FTSE 100: +0.66%

        • DAX: +1.15%

        • CAC: +0.37%

        • MIB: +1.77%

        • Stoxx 600: +0.21%

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