European stocks are expected to rise on Wednesday after three straight sessions of falls, as investors balance the muted growth outlook against the chance of further monetary easing from global central banks. After LVMH yesterday, we’ll get Burberry and an old favourite ASML… Intel published inline number last night and guidance is ok. MS published a good note on MSFT (OW) yesterday as well. In terms of macro data, the only interesting event will be the MPC minutes.
SX5E Futures: Support at 2556 then 2524. Resistance still at 2578 then 2608/11. Looks like opening around the 2556 level
007 Declassified: James Bond Was Almost Named James Secretan
I’m sure you didn’t know that, did you?
BHP Billiton reaffirmed its full-year production guidance in spite of a lacklustre performance from its iron ore and petroleum assts in the past quarter.
EADS. Daimler selling USD 3bn of EADS stock, priced in a range of EUR 36.50-37
Edenred 1Q revenue in line, confirmed its target of between 6% and 14% growth in issue volume per year
ASML sees 2Q gross margin above estimates as 1Q sales beat, company to name Wennink (Great guy!) as CEO as of July 1st .
ArcelorMittal sues AK Steel over cold-rolled product patent
Bayer patent invalid on Yaz birth control pill, court says
Yahoo dropped 4.5% to $22.73 in heavy late trading after display-ad revenue proved to be a “disaster,” according to one analyst.
Intel Corp. fluctuated between slight gains and losses with heavy volume after hours, after the tech bellwether reported a 17% drop in first-quarter profit due to slumping PC sales. They were up 0.3% to $21.98 late in the after-hours session with Wall Street expectations, but the chip maker also cut its full-year capital spending plan by $1 billion. The firm also said it would name its new chief executive by May 16. (Marketwatch).
ASML. Numbers look good on margins, guidance (FY unchanged). EUV is progressing well. And it’s going for another share buyback. So, despite Intel’s capex cut, ASML could hold well today. And on the change of CEO, Peter Wennink is really liked by the investment community, so it should go smoothly.
The Chinese government warned the number of H7N9 infections could rise after two more deaths were confirmed, bringing the toll to 16. The two victims were in Shanghai, the site of most of the 77 confirmed cases so far. (Reuters)
Louis Vuitton Sports a Richer Price Tag
Louis Vuitton is hoping a little sticker shock will jolt its flatlining sales.
In an effort to restore an air of exclusivity, the world’s largest luxury-goods brand has boosted its prices by as much as 13% in recent months.
IMF Renews Push Against Austerity (WSJ)
The IMF called on nations that can afford it to slow the pace of their austerity measures as it trimmed its global growth forecast for 2013.
MS (Richardson) Metal Sparks: Gold: Crumbling Pillars
In our view, the dramatic sell-off in the gold market since 12 April has all the hallmarks of panic-driven, stale long liquidation, stop-loss and capitulation selling in the face of a concerted short sale that began in New York on Friday April 12. We have downgraded our gold price forecasts to US$1,487/oz in CY2013 (-16% from our previous forecast) and to US$1,563/oz in CY2014 (-15%).
JPM (Fenton) Commodities. ‘How To Manage The Commodity Correction’
“The commodity correction likely has more room to run.”. Seven reasons for the current weakness:
1) Global manufacturing growth appears to be stalling, demonstrated recently by the weak Chinese 1Q GDP print
2) Global disinflation may persist into the second half (US CPI today softer than expected, as was China March CPI, as was todays ex Germany Eurozone)
3) Japan’s economic reforms have not yet delivered on aspirations, deflation persists
4) India’s appetite for gold reserves appears to be satisfied for now, data shows gold holdings have been steady despite economic weakness
5) Fear of event risk seems low
6) Chinese manufacturing buyers strategy of stepping away from markets in April and returning with large orders in 4Q (the note gives details of this happening in 2011 with copper)
7) There is a general tendency for 3Q averages to be higher than 2Q lows: “Since 1994, the 3Q average price for spot gold has been higher than the 2Q low 18 out of of 19 times for an average price increase of 6.4%.
Panalpina (MS, Butcher) Turnaround not priced in, risk-reward appeal – moving OW
New management at Panalpina improves the timing of the company’s turnaround. Although the potential has always been evident, the market now appears to be missing the improved visibility new management brings. With one of the most attractive risk-reward profiles in the sector, we move OW.
EADS (JPM, Perry, CFA) Daimler placing brings stock overhang to a close; we see potential for shares to rise c25% by December 2013
After market close on 16 April, Daimler announced it would sell its final 7.4% stake in EADS on Wednesday 17 April. This essentially brings to a close the large stock overhang that has weighed on EADS’ share price in the last few weeks. Investors can now focus on the fundamentals of the investment case: (1) the ongoing strength of the civil aero cycle; (2) the potential for EADS to significantly improve its EBITA margin through improved execution; (3) the completion of the share buyback over next c18 months (post the acquisition of EADS shares from Lagardere, Daimler and the French state, we estimate EADS will still have c€2.25bn to spend on its buyback). We reiterate our Overweight rating and Dec-13 PT of €47, for 26% potential return.
BASF CUT TO NEUTRAL VS BUY AT NOMURA
BASF RAISED TO OVERWEIGHT VS EQUALWEIGHT AT BARCLAYS
BUREAU VERITAS RATED NEW EQUALWEIGHT AT MORGAN STANLEY
CONTINENTAL CUT TO NEUTRAL VS OUTPERFORM AT EXANE
INTERTEK RATED NEW OVERWEIGHT AT MORGAN STANLEY, PT 3,950P
KUONI CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
NORD GOLD CUT TO UNDERWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
Panalpina Raised to Overweight at Morgan Stanley
SGS RATED NEW EQUALWEIGHT AT MORGAN STANLEY, PT SF2,500
SYNGENTA RAISED TO BUY VS NEUTRAL AT NOMURA
UNITED INTERNET RATED NEW SELL AT H&A, PT EU17.30
OVERNIGHT MARKETS: MIXED
Nikkei 225 up +120.11 (+0.91%) at 13,342
Topix up +13.42 (+1.20%) at 1,133
Hang Seng down -10.95 (-0.05%) at 21,661
S&P 500 up +22.21 (+1.43%) at 1,575
DJIA up +157.58 (+1.08%) at 14,757
Nasdaq up +48.14 (+1.50%) at 3,265
Eurofirst 300 down -8.74 (-0.74%) at 1,166
FTSE100 down -39.02 (-0.62%) at 6,305
CAC 40 down -24.69 (-0.67%) at 3,686
Dax down -30.05 (-0.39%) at 7,683
€/$ 1.32 (1.32)
$/¥ 98.12 (97.52)
£/$ 1.54 (1.54)
Brent Crude (ICE) up +0.37 at 100.28
Light Crude (Nymex) up +0.01 at 88.73
100 Oz Gold (Comex) down -7.90 at 1,379
Copper (Comex) up +0.35 at 331.00
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.98bps at 100.76bp
Markit iTraxx Europe -0.23bps at 111.34bp
Markit iTraxx Xover -1.99bps at 445.97bp
Markit CDX IG -3.22bps at 82.12bp
Sources: FT, Bloomberg, Markit