Jan 27 ,2025
Synopsis:
European equity markets closed mostly lower with technology sector sharply lower, followed by industrials. Chemicals the best performers. Switzerland +1.1%, Belgium and Norway +0.2% lead outperformers, whilst The Netherlands (0.7%) and Portugal (0.6%) lead underperformers.
More tariff headline volatility over the weekend with Colombia in the crosshairs before acquiescing to Trump's demands to take deported migrants. Politico article also discussed how despite some relief surrounding initial lack of action on tariffs, they are still very much in the pipeline. Another report also noted Trump aides want to hit Mexico and Canada with tariffs as soon as 1-Feb. While markets took some comfort from lack of tariff action last week, latest development reinforces unpredictability dynamic and Trump's wielding of tariffs to advance non-trade objectives.
Selloff a function of all the buzz surrounding Chinese AI startup DeepSeek, whose open-source models have rivaled the performance of the leading US chatbots but at just a fraction of the cost. This has heaped scrutiny on the outsized hyperscaler capex ramp, as well as pockets of the broader US exceptionalism theme. Also plays into longstanding concerns about concentration risk and has potential exacerbate US-China tech war.
Of note, China AI startup DeepSeek news are affecting European names such as ASM International (ASM.NA), BE Semiconductor Industries (BESI.IM) and Prysmian (PRY.IM); other European semiconductor firms like Infineon Technologies (IFX.GR), STMicroelectronics (STMPA.FP), and Melexis (MELE.BB), which focus more on automotive and industrial applications, seen less affected.
On macro data front, German Ifo business climate survey firmer-than-expected with an improvement in current conditions indicator. Follows weakest reading since June 2020 in December. Further in macro headlines, report from EY-Parthenon said one in five UK firms issued a profit warning in 2024, a ratio that was only great during Covid pandemic. CBI monthly growth indicator fell to lowest level since Feb-21.
On the reporting front, after the close on Friday, BASF (BAS.GR) posted preliminary FY24, flagging a non-cash-effective impairment on battery materials in the Surface Technologies segment; this morning, Ryanair (RYA.ID), Dr. Martens (DOCS.LN) and Cint Group (CINT.SS) were among few other names to update investors.
In M&A news, Bureau Veritas (BVI.FP) and SGS (SGSN.SW) ended talks about a potential business combination whilst - on the busy UK region - BHP (BHP.LN) is cooling on the idea of buying Anglo American (AAL.LN), Diageo (DGE.LN) is not considering selling Guinness or a stake in Moet Hennessy (MC.FP) and WH Smith (SMWH.LN) confirmed it is exploring potential strategic options for its High Street business including a possible sale.
Looking ahead to Monday's calendar (see - Europe Week Ahead: 27-Jan to 31-Jan attached) SAP (SAP.GR), LVMH Moet Hennessy Louis Vuitton (MC.FP), Sartorius Stedim Biotech (DIM.FP), Atlas Copco (ATCO.A.SS), and BMW ((BMW.GR) (pre-close conf call) will be among other names to update investors, whilst the macro-calendar releases will includeFrance Jan consumer confidence, Spain Q4 unemployment rate, Norway Dec retail sales, Ireland Q4 preliminary GDP, Portugal Dec retail sales, UK Jan shop price index - BRC
Digest:
Sectors - STOXX Europe 600:
Outperformers:
Chemicals +2.03%, Food & Beverage +2.03%, Persnl & HHold Goods +1.62%, Telecom +1.54%, Insurance +1.43%, Real Estate +1.35%, Health Care +1.27%, Media +1.12%, Utilities +0.85%, Autos & Parts +0.82%, Travel & Leisure +0.51%, Banks +0.16%, Retail (0.03%),
Underperformers:
Technology (3.45%), Oil & Gas (2.42%), Basic Resources (2.33%), Ind Goods & Svcs (2.14%), Construct & Mtls (0.57%), Financial Svcs (0.34%),
Macro/Peripheral markets
Geopolitics
Kremlin says it has yet to hear from US about setting up a possible Putin-Trump meeting - Reuters
Stocks Hit by AI Jitters as Traders Rush for Haven - Bloomberg
Lithuania and Estonia pledge to meet Donald Trump's 5% target on defence spending - FT
Chinese AI chatbot DeepSeek sparks market turmoil for rivals - BBC
EU
UK
Labour Tax Hikes to Push UK Closer to European-Style State - Bloomberg
UK Pension Industry Would Back Plan to Unlock Surplus Cash - Bloomberg
Reeves's 'vindictive' tax raid will destroy family businesses, says James Dyson - The Telegraph
France
Germany
CDU, SPD and Greens show themselves capable of agreement - Handelsblatt
Tesla Faces Call for Boycott in Poland After Musk's Germany Remarks - Bloomberg
Company news:
Trading Higher:
+11.4% COST.LN (Costain Group £0.96, +0.10) -- FY trading update
+11.2% ATORX.SS (Alligator Bioscience SEK0.06, +0.01) -- mitazalimab + mFOLFIRINOX comparison study results
+9.7% HVO.LN (hVIVO plc £0.22, +0.02) -- signs LOI for Phase 3 Whooping Cough trial; Panmure Liberum upgrade
+5.9% GIVN.SW (Givaudan CHF4,038.00, +227.00) -- JPMorgan upgrade
+5.2% SGSN.SW (SGS CHF89.24, +4.46) -- combination talks with Bureau Veritas ended; Vontobel upgrade
+5.1% STR.AV (STRABAG SE €44.15, +2.15) -- FY guidance
+4.8% STAB1L.GR (Stabilus €32.55, +1.50) -- Q1 earnings
+4.4% BATS.LN (British American Tobacco £31.31, +1.33) -- UBS upgrade
+3.4% GSK.LN (GSK Plc £13.99, +0.46) -- Shingrix new prefilled syringe presentation accepted for review by EMA
+2.9% RYA.ID (Ryanair Holdings €20.34, +0.57) -- Q3 earnings
+2.6% DEC.LN (Diversified Energy Co. £13.05, +0.33) -- acquires Maverick Natural Resources for $1.28B
+2.5% IPH.FP (Innate Pharma €1.75, +0.04) -- first patient dosed in IPH4502 Phase 1 study
+1.8% EMBRAC.B.SS (Embracer Group SEK208.30, +3.60) -- Asmodee shares expected to start trading on 7-Feb
Trading Lower:
-20.1% ENR.GR (Siemens Energy €48.56, -12.11) -- China AI DeepSeek impact on EU tech
-12.5% ASM.NA (ASM International €539.80, -76.20) -- China AI DeepSeek impact on EU tech
-9.2% SU.FP (Schneider Electric €248.20, -25.00) -- China AI DeepSeek impact on EU tech
-8.2% BESI.NA (BE Semiconductor Industries €126.45, -11.15) -- China AI DeepSeek impact on EU tech
-7.5% ASML.NA (ASML Holding €653.50, -52.30) -- China AI DeepSeek impact on EU tech
-6.7% RENX.LN (Renalytix £0.11, -0.01) -- H1 trading update:
-6.7% LR.FP (Legrand €96.62, -6.92) -- Jefferies downgrade
-6.1% SKB.GR (Koenig & Bauer €16.10, -1.06) -- Hauck & Aufhäuser downgrade
-6.0% AAL.LN (Anglo American £23.97, -1.52) -- BHP cooling on idea of buying Anglo American - FT
-5.4% AIXA.GR (Aixtron €13.28, -0.76) -- China AI DeepSeek impact on EU tech
-4.5% NOD.NO (Nordic Semiconductor NOK112.65, -5.35) -- China AI DeepSeek impact on EU tech
-4.3% BRBY.LN (Burberry Group £11.27, -0.51) -- CIC Market Solutions downgrade
-4.3% GENL.LN (Genel Energy £0.61, -0.03) -- FY trading and operations update
-3.6% KIN.BB (Kinepolis Group €37.60, -1.40) -- Estimated weekend box office revenues in US, Canada $65.9M, +20.9% y/y - Box Office Mojo
-3.3% TPE.GR (PVA TePla €13.01, -0.44) -- China AI DeepSeek impact on EU tech
-3.3% STX.LN (Shield Therapeutics £0.03, -0.00) -- new CEO
-2.2% NHY.NO (Norsk Hydro NOK65.26, -1.44) -- SEB downgrade
-2.0% COK.GR (CANCOM €23.94, -0.48) -- China AI DeepSeek impact on EU tech
-1.9% BVI.FP (Bureau Veritas €29.42, -0.56) -- combination talks with Bureau Veritas ended; Vontobel upgrade
EU companies reporting tomorrow:
Earnings:
Benelux: NSI (NSI.NA)
DACHs: SAP (SAP.GR), Sartorius (SRT.GR), Logitech International (LOGN.SW)
Denmark: Netcompany (NETC.DC)
Finland: Saga Furs (SAGCV.FH)
France: LVMH Moet Hennessy Louis Vuitton (MC.FP), Sartorius Stedim Biotech (DIM.FP), Groupe Partouche (PARP.FP)
Sweden: Atlas Copco (ATCO.A.SS), Nordnet (SAVE.SS), Getinge (GETI.B.SS), HEXPOL (HPOL.B.SS), HMS Networks (HMS.SS), Xvivo Perfusion (XVIVO.SS), Probi (PROB.SS), Elanders (ELAN.B.SS), Micro Systemation (MSAB.B.SS), BE Group (BEGR.SS),
UK: SThree (STEM.LN), Idox (IDOX.LN)
Trading Update: Computacenter (CCC.LN), Synthomer (SYNT.LN), Pets At Home Group (PETS.LN), A.G. BARR (BAG.LN), Compagnie des Alpes (CDA.FP), Aramis (ARAMI.FP), EXEL Industries (EXE.FP), Figeac Aero (FGA.FP), Safilo (SFL.IM)
CMD/events: BMW (BMW.GR) pre-close conf call
Data:
Economics:
Denmark Dec Retail Sales +1.5% y/y vs consensus +3.5% and prior +3.4%
Sweden Dec Trade Balance SEK6.2B vs consensus SEK9.0B and prior revised SEK7.5B from SEK7.2B
Norway Dec Unemployment Rate 4.2% vs consensus 3.8% and prior 3.7%
Germany Jan IFO survey - release
Business Climate 85.1 vs consensus 84.9 and prior 84.7
Current Conditions 86.1 vs consensus 85.4 and prior 85.1
Expectations 84.2 vs consensus 84.0 vs prior 84.4
Markets:
WTI Crude (Mar 25): ($1.34) or (1.79%) to $73.32
€-$ +0.0018 or +0.17% to 1.0502
£-$ +0.0009 or +0.07% to 1.2481
€-£ +0.0007 to 0.8414
S&P 500 (1.94%)
Performance year-to-date
FTSE 100: +4.05%
DAX: +6.90%
CAC: +7.12%
MIB: +5.86%
Stoxx 600: +4.35%
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