CAPIS EU Close Recap – 1/24/2019
A mostly better finish to the session with London and the Swiss market slightly lower. The ECB meeting was in focus with rates left as-is as forward guidance was reiterated. They did highlight that risked were to the downside as opposed to a previously balanced view. With current discussions centered around more favorable trade parameters…
A mostly better finish to the session with London and the Swiss market slightly lower. The ECB meeting was in focus with rates left as-is as forward guidance was reiterated. They did highlight that risked were to the downside as opposed to a previously balanced view. With current discussions centered around more favorable trade parameters for the US Draghi was quick to highlight protectionism was the reason for the higher risk assessment. Rate views were retained with current levels seen through summer of this year. The central bank is encouraged on rising inflation with cost pressures on the upswing in the labor market. On the economic release front, EU PMI readings remained at expansionary levels but missed estimates and fell from prior levels. Specifically, Germany saw Manufacturing PMI move under the 50 level, well under the 51.5 expected/seen previously. Services PMI encouragingly moved higher.
The sector skew was to the upside with Tech and Auto up over 2% on the session. Insurers saw gains as well with the balance of sectors seeing subdued moves. Nearly 400 of the Stoxx 600 names saw gains with volumes up 16%.
Leading the tech space STMicro +10% rallied on inline 4Q revs with NI and gross margins ahead of estimates. The firm expressed concern iPhone sales will lead to a somewhat disappointing 1Q but their CEO sees sequential growth in the 2Q. With the stock down sharply from last year’s high several brokers view the name as having “issues” baked-in with a positive view going forward.
From jail, now former CEO Ghosn resigned his positive from Renault +1.6% allowing for the chairman position to be filled by Jean-Dominique Senard and the CEO by Thierry Bollore.
In the enzyme space Novozymes fell 5.7% with 4Q numbers missing. A DKK2B stock buyback is expected with better emerging market penetration expected to provide strength going forward.
Tonight, Japan consumer inflation readings are due with a slight slowing in the overall number expected. IFO readings are due in Germany along with CBI sales data in the UK.