European stocks are expected to inch lower on Wednesday, with the market’s month-long rally taking a breather before U.S. Federal Reserve Chairman Ben Bernanke’s testimony before Congress. On Tuesday, two senior Federal Reserve officials played down the chances the Fed will soon signal a readiness to trim its bond buying programme, sparking gains on Wall Street.
Today the focus will be the Bernanke’s speech to congress. As you know, Bullard and Williams’ comments were rather dovish, but we won’t know until he speaks. Unless, as bond markets are now pricing he is not explicit on the end of QE, so we should remain in the same environment for a while. The other important focus will the
UK’s MPC minutes where most expect the QE to continue.
Today: Bank of England MPC minutes; Bernanke’s Congressional testimony; FOMC minutes published. FirstGroup, Cable&Wireless report full-year results. Hewlett-Packard Q2, first PC maker of season.
(it’s all about tax today).
MS is adding METRO to its Best Ideas list. Current list: IAG, IHG. KD8, METRO, METSO, RWE, SAP, SIEMENS.
Italy considers plan for older workers to ‘handoff’ to younger generations
France plans to cut VAT for Canal Plus to 5%, Le Figaro says (as long as they continue to finance French Cinema… WHY??).
Fiat Industrial aims to move its tax residency to the UK from Italy after a merger with US business CNH
KPN CEO Buys 333,406 Company Shares, Regulatory Filing Shows.
Technip, Samsung, China Huanqiu Win Canadian LNG Project Order
Credit Agricole to Challenge Emporiki Tax Liabilitity: Echos
German association demands Deutsche Bank board pay back bonuses
Roche’s Avastin not recommended in advanced Ovarian cancer.
EDF in talks with EPH over sales of SSE stake – valued at 400m (bought in 2002 at 160mio)
Armani 2012 Revenue Rises 16% to EU2.09b
Alliance Oil 1Q Rev Rises 8%; Pretax Profit Declines 64%
Sony shares jumped as much as 12% on a report that its board may discuss spinning off its entertainment division. (Bloomberg)
Bank of Japan maintains asset-buying programme: The May monetary policy statement made no mention of recent rises in JGB yields, and said its decision came amid signs of “positive movement” in the economy. (Financial Times)(Statement)
UPS & DOWNS
Metro (MS, Aubin) Risk solidly skewed to the upside. Upgrade to OW.
Given margins troughing at MMS, likely improvement in C&C and potentially material corporate activity, we believe risk on Metro shares is solidly skewed to the upside. Upgrade to OW.
Lagardère (JPM, Pietro Lo Franco) Too cheap. We upgrade to Neutral.
We upgrade Lagardère (LAG) from UW to N: i) following changes to our SoP valuation, our new June’14 SoP based, ex-special dividend, PT of €20.6 implies 9.6% upside to LAG current share price (ex spec. dividend of €9); ii) following the stock’s underperformance (relative to the Media and overall MSCI EU), we believe that LAG is too cheap and is now trading at undemanding multiples (EV/EBIT ‘13/’14E of 5.4x/5.5x).
SAP (Ordinary Share) (GS, Moawalla) Buy: Strategic position strengthening; product cycle risk transitory
We believe the structural investment case remains strong, with the shift to becoming a strategic platform provider.We lower our license estimates to reflect shift in trajectory of new Business Suite adoption. New PT of €80 (US$103 for ADR). CL Buy.
ANGLO AMERICAN PLATINUM RAISED TO BUY VS NEUTRAL AT CITI
BETFAIR REINSTATED AT OVERWEIGHT AT BARCLAYS; PT 950P
CHR HANSEN RAISED TO BUY VS HOLD AT SOCGEN
COMARCH CUT TO HOLD VS BUY AT ING
COMMERZBANK CUT TO REDUCE VS NEUTRAL AT NOMURA
DARTY CUT TO HOLD VS BUY AT SOCGEN
EVONIK RATED NEW NEUTRAL AT CREDIT SUISSE; PT EU31.5
FIRSTGROUP RAISED TO EQUALWEIGHT VS UNDERWEIGHT:MORGAN STANL…
HELLENIC PETROLEUM CUT TO HOLD VS BUY AT SOCGEN
HUFVUDSTADEN CUT TO NEUTRAL VS BUY AT SWEDBANK
ICA CUT TO HOLD VS BUY AT DEUTSCHE BANK
INTERXION CUT TO NEUTRAL VS BUY AT GOLDMAN
JULIUS BAER CUT TO UNDERPERFORM VS MARKET PERFORM AT KBW
KAZAKHMYS CUT TO NEUTRAL VS BUY AT UBS
LAGARDERE RAISED TO ’NEUTRAL’ AT JPMORGAN
MAERSK CUT TO HOLD VS BUY AT CANTOR
MAPFRE RAISED TO BUY VS REDUCE AT NOMURA
METRO RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
NORTHAM PLATINUM RAISED TO BUY VS NEUTRAL AT CITI
PIONEER FOODS CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
PIRELLI CUT TO HOLD VS BUY AT SOCGEN
ROCHE RAISED TO BUY VS NEUTRAL AT CITI
TUPRAS RATED NEW UNDERWEIGHT AT JPMORGAN; PT TRY48
UBS CUT TO UNDERPERFORM VS MARKET PERFORM AT KBW
VW RAISED TO ’OUTPERFORM’ AT MACQUARIE
WOLSELEY RATED NEW UNDERWEIGHT AT MORGAN STANLEY, PT 3,050P
ZURICH INSURANCE CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
ZURICH INSURANCE RAISED TO OUTPERFORM VS NEUTRAL AT EXANE
OVERNIGHT MARKETS: UP
Nikkei 225 up +178.96 (+1.16%) at 15,560
Topix up +8.25 (+0.65%) at 1,279
Hang Seng unchanged 0.00 (0.00%) at 23,366
S&P 500 up +2.87 (+0.17%) at 1,669
DJIA up +52.30 (+0.34%) at 15,388
Nasdaq up +5.69 (+0.16%) at 3,502
Eurofirst 300 up +1.13 (+0.09%) at 1,253
FTSE100 up +48.24 (+0.71%) at 6,804
CAC 40 up +13.33 (+0.33%) at 4,036
Dax up +16.37 (+0.19%) at 8,472
€/$ 1.29 (1.29)
$/¥ 102.47 (102.46)
£/$ 1.51 (1.52)
Brent Crude (ICE) down -0.33 at 103.58
Light Crude (Nymex) down -0.49 at 95.69
100 Oz Gold (Comex) unchanged 0.00 at 1,378
Copper (Comex) unchanged 0.00 at 333.90
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx SovX Western Europe -2.08bps at 80.56bp
Markit iTraxx Europe +1.55bps at 91.84bp
Markit iTraxx Xover +3.86bps at 384.09bp
Markit CDX IG -0.88bps at 70.12bp
Sources: FT, Bloomberg, Markit