European shares were expected to edge higher on Thursday, with a sharp sell-off of nearly 4 percent in the previous four sessions prompting some investors to hunt for value, although sentiment remained fragile. There were some more upbeat news last night with the Fed’s beige bookl (see below) and with positive property price data in China. Also the China FDI for March came in at +5.7% vs +1.9% expected.
Today, the main events will be the Italian elections, the German vote on the Cyprus bailout (11:30?). On the economic front, we’ll monitor the UK retail sales, the US jobless claims and the Philly Fed.
• American Express 1Q EPS Beats; Sees Boosting Div.
• EBAY 2Q Adj. EPS, Rev. Views Miss Ests.
Earnings: (call for more)
Syngenta 1Q sales in line with estimates, confirms sales outlook
Akzo Nobel 1Q quick look in line , co doesn’t expect any early improvement in trading conditions.
Accor 1Q like-for-like down 0.1%, says revenue dropped on asset sales, euro’s strength
Sodexo 1H net profit and revenue miss estimates, profit outlook cut to ‘stable’
Remy 4Q Organic Sales Growth Beat Est., FY Rev. In-Line
Carrefour 1Q Rev. In-Line With Est.
Tele2 1Q Net Beats Ests.; Says Well on Track to Meet FY Guidance
MAN minority shareholder rejects domination agreement as too low.
EADS. China may place an order for Airbus A380 and A350 plane. Echos
Apple shares dropped below $400 for the first time since December 2011 after one of its audio-chip suppliers, Cirrus Logic, reported an inventory glut that suggests iPhone sales may fall short of analysts’ expectations. The company’s shares are down 43% from their record high in September. On Tuesday the company is expected to report its first year-on-year decline in quarterly earnings for almost a decade, and sentiment was also weighed down by news that Apple was ordered by Chinese authorities to remove some content it hosted. (Bloomberg)(Financial Times)
On the Fed
(by GS, Jan Hatzius): The Beige Book described activity expanding at a "moderate pace," just a touch better than March’s characterization of “modest to moderate pace.” Anecdotes suggest that consumer spending grew modestly, manufacturing activity increased, and housing sector activity continued to strengthen.
G20 talks in Washington begin today and central bank easing is expected to be in focus. The merits and risks of low interest rates and unconventional monetary policy were also debated at the IMF spring meetings yesterday. Currency valuations and debt reductions goals are also likely to be topics of debate. (Reuters)
PBoC says China will press on with widening the Rmb trading band, despite slower than expected growth in Q1. “I think in the near future we are going to increase the floating band even further,” PBoC vice governor Yi Gang said in Washington. (Wall Street Journal)
UPS & DOWNS
ARM Holdings plc (GS, Schafer) Buy: Adding to the Conviction Buy List following pullback
We add ARM to the Conviction Buy List following a recent pullback. Our estimates are above consensus and we expect the 1Q13 results to be a near-term catalyst. Our investment thesis and price target are unchanged.
Sky Deutschland AG (MS, Wellington) Bayern opportunity
Recent share price weakness in the midst of solid trading is a buying opportunity. We raise our base case target to €5.4 (30% upside). Our bull case of €7.0 (70% upside) still implies SkyD penetrates just 14% of homes by 2018 (BSkyB is at 40% in the UK).
Lundin Petroleum (JPM, Thompson) Initiating at OW – giants in my backyard – the value & advantages of incumbency in a low risk, under-explored province.
We initiate coverage at OW with a YE 2013 price target of SEK185, giving upside of 26% and 14% above our core NAV of SEK162. The Lundin family, a highly respected name in the resources space, remains an integral part of the story. The discovery of the giant Johan Sverdrup, brought about by an unyielding hunt for ’elephants’ and robust capital discipline, has transformed Lundin. We believe the market is undervaluing the uncertainty as Johan Sverdrup is appraised – we look favorably on a license position, second only to Statoil in Norway, as the hunting ground for more giants in its backyard.
ALFA LAVAL CUT TO NEUTRAL VS BUY AT UBS
ASML RAISED TO BUY VS HOLD AT DEUTSCHE BANK
BIG YELLOW RAISED TO EQUALWEIGHT VS UNDERWEIGHT: MORGAN STANL
BinckBank Cut to Hold From Buy at ING, PT EU8.40
CSR CUT TO HOLD AT LIBERUM
GJENSIDIGE RATED NEW NEUTRAL AT JPMORGAN, PT NK87.60
HANDELSBANKEN CUT TO UNDERWEIGHT VS EQUALWEIGHT: MORGAN STA..
HANNOVER RE CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
INFINEON RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT MORGAN STANL
LADBROKES CUT TO UNDERPERFORM VS NEUTRAL AT EXANE
LOTTOMATICA RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
LUNDIN PETROLEUM RATED NEW OVERWEIGHT AT JPMORGAN, PT SK185
PADDY POWER CUT TO UNDERPERFORM VS NEUTRAL AT EXANE
PHOSAGRO RAISED TO OVERWEIGHT VS NEUTRAL AT HSBC
SONOVA CUT TO SELL VS HOLD AT DEUTSCHE BANK
TULLOW OIL RAISED TO BUY VS HOLD AT SOCGEN
VOSSLOH CUT TO NEUTRAL VS OVERWEIGHT AT HSBC
WACKER CHEMIE CUT TO ’SELL’ AT DZ BANK
WILLIAM HILL RAISED TO NEUTRAL VS UNDERPERFORM AT EXANE
OVERNIGHT MARKETS: DOWN
Nikkei 225 down -36.67 (-0.27%) at 13,346
Topix down -2.50 (-0.22%) at 1,134
Hang Seng down -10.08 (-0.05%) at 21,560
S&P 500 down -22.56 (-1.43%) at 1,552
DJIA down -138.19 (-0.94%) at 14,619
Nasdaq down -59.96 (-1.84%) at 3,205
Eurofirst 300 down -18.10 (-1.55%) at 1,148
FTSE100 down -60.37 (-0.96%) at 6,244
CAC 40 down -86.56 (-2.35%) at 3,599
Dax down -179.55 (-2.34%) at 7,503
€/$ 1.31 (1.30)
$/¥ 98.25 (98.09)
£/$ 1.53 (1.52)
Brent Crude (ICE) down -0.02 at 97.67
Light Crude (Nymex) up +0.11 at 86.79
100 Oz Gold (Comex) down -18.60 at 1,364
Copper (Comex) down -1.80 at 317.00
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.18bps at 100.58bp
Markit iTraxx Europe +1.84bps at 113.18bp
Markit iTraxx Xover +7.72bps at 453.69bp
Markit CDX IG +1.99bps at 84.11bp
Sources: FT, Bloomberg, Markit