The Dawn PAtrol – 04.03.13 – GS on REXEL, Exane on L’Oreal. No bid on Vodafone, China PMI.

Bonjour,

European stocks were set to open lower on Wednesday, following a denial of takeover interest in Vodafone, which had lifted shares in the previous session, and with investors looking to more U.S. data to provide clues about a key jobs figure on Friday.

SX5E Futures: 2614.00y 60.00. Support at 2578 then 2556. Resistance 2608/11 then 2633 & 2669. Looks like opening around 2600

ECONOMIC Data today
Euro zone area: HICP Flash
U.K: PMI Construction, Halifax House Prices, Bank of England Credit Conditions Survey
U.S: MBA Mortgage Application, ADP Employment, ISM Non-manufacturing

Reading strategy pieces, there are mixed sentiments towards the market currently. Nothing new really. Most expect the market to remain volatile/weak over Q2 as earnings revisions have come down and PMIs and other economic data are rather poor. Concerns over Cyprus and Italy remain but seem to have less impact. There is however some strong underlying support into equities as investors have little choice but seek yields in there. Finding some good companies at reasonable price is getting real difficult, so let’s stick to sustainable FCF generators, consumer staples, companies with high barrier to entry, EM exposure…

NEWS

US. Federal Reserve Bank of Chicago President Charles Evans said central bank has not yet reached point when it should wind down stimulus. BBG

Portugal, this story hit BBG after hours last night: Portugal’s budget for 2013 may fall apart, and with it the Portuguese government.

EADS board approves USD 4.8bn buyback, and appointed Denis Ranque.

Retailers +9.9% in Tokyo overnight (because of Uniqlo)

Fiat’s Italy March car sales rise 5.3%, first advance in three years.

CURRENT STUFF

On Twitter!
The SEC has given US companies permission to tweet their earnings and other financial data. The regulator said postings on services such as Facebook and Twitter are just as good as news releases and company websites — as long as the companies have told investors which outlets they intend to use. (Wall Street Journal)(Financial Times)

On Vodafone
Verizon Communications Inc. denied that it’s considering a bid for Vodafone disputing a story that appeared in the FT yesterday that said it was discussing a plan with AT&T Inc. to make a joint offer for the U.K. telecoms company. Shares in Vodafone were over 6% higher intraday on Tuesday although they came off in the last 90 minutes of trade and moved from just under 198p to close at 192p after dealReporter said, according to its contacts, Verizon were not in talks to buy Vodafone. While Verizon reiterated interest in buying Vodafone’s stake in the companies’ Verizon Wireless joint venture, it doesn’t currently plan to bid for the whole company, according to a filing which came in just before 22.00 last night. “As Verizon has said many times, it would be a willing purchaser of the 45 percent stake that Vodafone holds in Verizon Wireless,” the company said. “It does not, however, currently have any intention to merge with or make an offer for Vodafone, whether alone or in conjunction with others.”

On China
China Services PMIs for March came in higher than February official reading was 55.6 from 54.5, Markits was 54.3 versus 52.1 in February. The Markit reading was a six month high growth, suggesting that a broad-based gradual growth recovery is on its way. The ongoing recovery has translated into a continuous improvement of labour market conditions, which are supportive of consumer spending growth in the coming quarters. For now, inflation still stays muted.”

UPS & DOWNS

Rexel (GS, Woodman) Buy: US commercial pick-up and margin upside opportunity; up to Buy
We upgrade Rexel to Buy from Neutral with a 12M PT of €21. Although France remains weak there are signs of UK inflection and US commercial acceleration. RXL one of the cheapest stocks in Business Services on a 2014E P/E of 9x.

Astra Focus on Growth, JPMorgan Says; Raises 2014-2017 EPS Ests
BASF Raised to Outperform vs Market Perform at Bernstein
C&W COMMUNICATIONS RAISED TO BUY VS NEUTRAL AT UBS
DE MASTER BLENDERS RAISED TO HOLD VS REDUCE AT ABN AMRO
ERSTE GROUP RAISED TO BUY VS HOLD AT RAIFFEISEN
FRANCE TELECOM CUT TO SELL VS NEUTRAL AT UBS
GLOBAL MATERIALS CUT TO NEUTRAL VS OVERWEIGHT AT UBS
IMMOFINANZ RAISED TO BUY VS HOLD AT RAIFFEISEN
JUPITER FUND RAISED TO BUY VS ADD AT NUMIS
Neste Oil Raised to Outperform vs Underperform at Cheuvreux
REXEL RAISED TO BUY VS NEUTRAL AT GOLDMAN
SCHRODERS RAISED TO ADD VS HOLD AT NUMIS
STAGECOACH CUT TO HOLD AT LIBERUM
TELECOM ITALIA CUT TO SELL VS BUY AT UBS
TELECOM ITALIA, TELIASONERA ADDED TO UBS’S LEAST PREFERRED LIST
TELIASONERA CUT TO SELL VS NEUTRAL AT UBS
UNITED INTERNET CUT TO NEUTRAL VS BUY AT UBS
WOLSELEY PT RAISED TO 4,000P VS 3,202P AT CREDIT SUISSE
ZIGGO RAISED TO BUY VS NEUTRAL AT UBS

OVERNIGHT MARKETS: MIXED

Asian markets
Nikkei 225 up +257.14 (+2.14%) at 12,261
Topix up +14.53 (+1.47%) at 1,006
Hang Seng down -58.00 (-0.26%) at 22,310

US markets
S&P 500 up +8.08 (+0.52%) at 1,570
DJIA up +89.16 (+0.61%) at 14,662
Nasdaq up +15.69 (+0.48%) at 3,255

European markets
Eurofirst 300 up +14.87 (+1.25%) at 1,204
FTSE100 up +78.92 (+1.23%) at 6,491
CAC 40 up +73.95 (+1.98%) at 3,805
Dax up +148.56 (+1.91%) at 7,944

Currencies
€/$ 1.28 (1.28)
$/¥ 93.48 (93.42)
£/$ 1.51 (1.51)

Commodities ($)
Brent Crude (ICE) down -0.37 at 110.32
Light Crude (Nymex) down -0.50 at 96.69
100 Oz Gold (Comex) down -8.30 at 1,567
Copper (Comex) unchanged 0.00 at 337.20

10-year government bond yields (%)
US 1.86%
UK 1.79%
Germany 1.30%

CDS (closing levels)
Markit iTraxx SovX Western Europe -0.9bps at 104.32bp
Markit iTraxx Europe -4.81bps at 120.78bp
Markit iTraxx Xover -15.56bps at 470.04bp
Markit CDX IG -2.22bps at 87.79bp

Sources: FT, Bloomberg, Markit

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