Jan 31 ,2025
Synopsis:
European equity markets closed broadly higher but off the session's best levels. Follows record close for Stoxx 600 on Thursday. Tech, Industrials and Retail topped outperforming sectors whilst Chemicals and Food&Bev lagged.
Markets focusing on latest tariff headlines after Trump said 25% tariffs will be imposed on Canada and Mexico from Saturday, and that China will also be targeted with 10%. Still some uncertainty whether tariffs will go ahead, or Trump pulls back at last minute like he did with Colombia. Press sources left open possibility of Canada and Mexico tariffs being averted or scaled back depending on whether Trump's demands are met. Trump this week also flagged universal tariffs "much higher" than 2.5%, targeting select commodities mostly.
European gas prices posted 15-month highs, with Dutch TTF reaching beyond €51/MWh, highlighting growing concerns about energy security and market tightness (Reuters). Price rally driven by multiple factors. Storage currently well below historical averages, raising concerns about meeting mandatory 90% fill target by November 2026. Situation further complicated by recent halt of Russian gas transit through Ukraine and heightened competition in global LNG markets. Germany subsidy proposal, and Italy's plan to anticipate refill season highlight fragility of supply (Reuters, Oilprice).
French lawmakers reportedly facing challenges negotiating final draft of 2025 budget plan (Euronews). Even if agreement is reached, bill's adoption by lower house next week uncertain. Socialist Party's stance crucial, as they have threatened a no-confidence motion without concessions. Socialists yesterday reported difficulties getting demands through in the joint committee, which will today for a second day of negotiations. Eurointelligence suggested potential for censure motion to succeed.
On the macro front, German state inflation and French CPI weaker-than-expected after firmer Spanish reading on Thursday. ECB consumer inflation expected firmer in December. However, despite the recent pickup in inflation, ECB sounded confident on meeting its inflation target later this year. Cut key rate by 25 bps as expected. Maintained data-dependent approach. Lagarde warnings on near-term weakness in Eurozone economy and Thursday's figures which showed stagnation in Q4 growth reinforced expectations of a March rate cut. Elsewhere, German retail sales weak, unemployment up. UK Lloyds business barometer hit its lowest level in over a year. House price inflation cooled in January. French lawmakers reached a deal on 2025 budget version.
On the reporting front, shares of Novartis (NOVN.SW) closed higherafter a strong Q4 and FY25 outlook whilst Commerzbank (CBK.GR) reported preliminary FY net income €2.68B vs FactSet €2.36B and announced intention to execute another up to €400M share buyback. On a busy Nordics front, Hexagon (HEXA.B.SS), Svenska Cellulosa (SCA.B.SS), Elisa =(ELISA.FH), Holmen (HOLM.B.SS), Electrolux Professional (EPRO.B.SS), Lifco (LIFCO.B.SS), Scatec (SCATC.NO) and Beijer Ref (BEIJ.B.SS) were among few other names updating investors before the open. In Italy, Salvatore Ferragamo (SFER.IM) Q4 2024 results showed mixed performance, with sales declining 4% at constant exchange rates; while retail sales improved, wholesale remained weak.
Elsewhere, Sixt (SIX2.GR) holders placed ~600k shares and Mercedes-Benz Group (MBG.GR) is reportedly exploring the sale of its Athlon car-leasing business; in the UK, Smiths Group (SMIN.LN) will divest Smiths Interconnect, whilst Smiths Detection is to be separated.
Digest:
Sectors - STOXX Europe 600:
Outperformers:
Technology +1.65%, Ind Goods & Svcs +0.52%, Retail +0.47%, Oil & Gas +0.43%, Travel & Leisure +0.42%, Health Care +0.39%, Real Estate +0.37%, Utilities +0.36%, Financial Svcs +0.19%
Underperformers:
Chemicals (0.70%), Food & Beverage (0.66%), Persnl & HHold Goods (0.57%), Telecom (0.56%), Banks (0.35%), Insurance (0.32%), Autos & Parts (0.13%), Basic Resources (0.08%), Construct & Mtls (0.05%), Media +0.05%
Macro:
ECB:
France:
French lawmakers reportedly facing challenges negotiating final draft of 2025 budget plan (Euronews).
Germany:
German retail sales unexpectedly declined in Dec-2024, marking sharpest decline in over two years (Sharecast).
UK:
UK business confidence dips in January, but trading prospects show resilience - London Times, Reuters
How five years of Brexit reshaped Britain - FT
Company news:
Notable Gainers
+26.8% NSKOG.NO (Norske Skog NOK24.00, +5.08) -- company and its insurance company agree on a NOK 540M settlement
+19.8% EPEN.SS (Ependion SEK122.20, +20.20) -- Q4 earnings
+15.9% TRB.LN (Tribal Group £0.45, +0.06) -- FY trading update
+14.7% ANOD.B.SS (Addnode Group SEK118.10, +15.10) -- Q4 earnings
+11.4% SMIN.LN (Smiths Group £20.78, +2.13) -- strategic update, updates on cyber incident
+11.3% VRLA.FP (Verallia €29.86, +3.04) -- Verallia holder Moreira Salles family reportedly examines offer to acquire remaining shares -- Bloomberg
+9.8% MCAP.SS (MedCap SEK403.00, +36.00) -- Q4 earnings; to acquire 85% stake in Danrehab for DKK51M
+9.0% HEXA.B.SS (Hexagon SEK129.60, +10.65) -- Q4 earnings
+7.1% VOW.NO (Vow ASA NOK1.75, +0.12) -- announces NOK 500M newbuild contract confirmed
+6.7% LAGR.B.SS (Lagercrantz Group SEK236.00, +14.80) -- Q3 earnings
+5.9% QLINEA.SS (Q-linea SEK0.33, +0.02) -- preliminary outcome of the rights issue; indicates has been subscribed to ~90.5% with and without the support of unit rights
+5.8% SFER.IM (Salvatore Ferragamo €7.70, +0.43) -- prelim FY/Q4 revenue
+5.5% ALK.B.DC (ALK-Abello DKK162.80, +8.50) -- Jefferies upgrade
+5.2% WAVE.FP (Wavestone €49.00, +2.40) -- Q3 revenue; Kepler Cheuvreux upgrade
+2.9% LIFCO.B.SS (Lifco SEK365.00, +10.40) -- Q4 earnings
+2.6% STMPA.FP (STMicroelectronics €21.80, +0.56) -- STMicroelectronics eyes workforce cuts of up to 6% through early retirements and attrition -- Bloomberg, citing people familiar with the matter
+2.5% SAAB.B.SS (Saab SEK240.45, +5.85) -- appoints new SVP, COO
+2.4% EKT.GR (EnergieKontor €44.40, +1.05) -- receives building permits for four wind park projects in Scotland and Germany
+2.3% VETO.FP (Vetoquinol €70.90, +1.60) -- FY earnings
+2.1% NXT.LN (Next £99.82, +2.06) -- UBS upgrade
+1.9% NOVN.SW (Novartis CHF95.58, +1.78) -- Q4 earnings; Novartis and MSN Pharma settle, dismiss litigation over MSN's proposed generic Kisqali -- court filing
+1.7% WJG.LN (Watkin Jones £0.32, +0.01) -- development partnership for 260-unit Aparthotel in Southwark
+1.6% RBI.AV (Raiffeisen Bank International €21.90, +0.34) -- target increased Citi
+1.6% BST.GR (Bastei Lübbe €9.70, +0.15) -- raises FY guidance
Notable Decliners
-22.0% ALCAR.FP (Carmat €0.83, -0.23) -- completes €9.7M capital increase
-20.7% ELMRA.NO (Elmera Group NOK30.50, -7.95) -- statement regarding Norwegian Government's proposals for the power market
-16.5% ONC.LN (Oncimmune Holdings £0.10, -0.02) -- FY25 outlook
-14.4% CRAYN.NO (Crayon Group Holding NOK106.00, -17.90) -- prelim FY earnings
-11.5% NORION.SS (Norion Bank SEK33.55, -4.35) -- Swedish Financial Supervisory Authority requests statement from Norion Bank
-10.2% JM.SS (JM SEK164.80, -18.70) -- Q4 eanrings
-7.9% TUNE.LN (Focusrite £1.94, -0.17) -- H1 trading update
-4.9% ELISA.FH (Elisa Oyj €41.54, -2.12) -- Q4 earnings
-4.7% ATRLJ.B.SS (Atrium Ljungberg SEK196.40, -9.60) -- Q4 earnings
-3.8% UMI.BB (Umicore €9.76, -0.39) -- Kepler Cheuvreux upgrade
-3.3% BIOA.B.SS (BioArctic SEK220.60, -7.60) -- updates on regulatory review of lecanemab for treatment of early Alzheimer's disease in the EU
-3.1% SIX2.GR (Sixt €78.75, -2.50) -- Sixt shareholder places 600k shares via Deutsche Bank -- WiWo
-2.6% ELIS.FP (Elis €19.75, -0.53) -- FY/Q4 revenue
-2.6% OKEA.NO (Okea NOK19.90, -0.54) -- DnB Markets downgrade
-1.9% ANOT.SS (Anoto Group SEK0.08, -0.00) -- raises
-1.8% RTX.DC (RTX A/S DKK65.80, -1.20) -- Q1 earnings
-1.4% FARN.LN (Faron Pharmaceuticals £1.73, -0.02) -- study update
-1.3% SBRY.LN (J Sainsbury £2.55, -0.03) -- HSBC downgrade
-1.2% SCATC.NO (Scatec NOK79.35, -1.00) -- Q4 earnings
EU companies reporting on Monday:
Earnings:
DACHs: Julius Baer Group (BAER.SW), Zuger Kantonalbank AG (ZUGN.SW)
Nordics: Bulten (BULTEN.SS)
Trading Update: Galp Energia (GALP.PL)
Data:
Economics:
Germany
Dec Retail Sales +1.8% y/y vs consensus +2.5% and prior revised +2.9% from +2.5%
Jan Unemployment Change +11K vs consensus +14K and prior +10K
Jan Unemployment Rate 6.2% vs consensus 6.2% and prior 6.1%
France
Jan Preliminary CPI +1.4% y/y vs consensus +1.5% and prior +1.3%; (0.1%) m/m vs consensus 0.0% and prior +0.2%
Dec PPI (3.8%) y/y vs consensus (4.3%) and prior revised (4.7%) from (5.2%); +1.0% m/m vs consensus +0.5% and prior revised +3.7% from +3.2%
Spain Dec Retail Sales +4.0% y/y vs consensus +0.5% and prior revised +0.9% from +1.0%; +1.5% m/m vs consensus +0.6% and prior (0.6%)
UK Jan Nationwide House Price Index +4.1% y/y vs consensus +4.3% and prior +4.7%
Switzerland Dec Retail Sales +2.6% y/y vs consensus +0.6% and prior revised +1.4% from +0.8%
Markets:
WTI Crude (Mar 25): ($0.07) or (0.10%) to $72.66
€-$ +0.0005 or +0.05% to 1.0398
£-$ +0.0021 or +0.17% to 1.2440
€-£ (0.0011) to 0.8358
S&P 500 +0.67%
Performance year-to-date
FTSE 100: +6.13%
DAX: +9.16%
CAC: +7.72%
MIB: +6.69%
Stoxx 600: +6.29%
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