European markets to open flat today. While earnings reports have so far has been mixed, they have driven healthy gains in European stocks. Some 49 percent of companies that have reported so far on the STOXX Europe 600 have missed expectations, compared to 28 percent on the S&P 500.
US markets finished lower on no specific reason as we’ve seen better economic data. One reason may be a 2y US treasuries adjudication priced at 1.41% and the US10y reached 2.85%. The Q2 S&P500 EPS growth ticked up to 1.5% from 1% the day before. Although tech earnings are downbeat, the sector finished up. Key tech earnings movers included VMW+16%, AAPL+5%, BRCM-15%.
Asia is down this morning despite some new (mini) stimulus measures and Korea’s GDP bettter than expected GDP.
EU 50 future resistance at 2751 and DAX future also struggling at the 8360 level still. S&P futures long stopped out overnight .. Support at 1679 short term… Resistance 1685.75 then 1695.5. Gold rally faltering yesterday at that 1338 resistance. Crude: Still short at the 106.43 resistance … Going nowhere short term.
Today: UK 2Q GDP. Growth is expected at 0.6% according to a Reuters survey. German Ifo business confidence index. US durable goods orders and jobless claims.
EARNINGS: TEF+, CSGN+, ROG+, GIVN+, TEC+, UL+, DSY+, WIN+, TOM2+, ATO=, ORA=, NUO=, RAND=, SGO=, ML=, SOW=ABB-, BASF-, LONN-, STL-, AIXA-
Wolverine. Went to see that last night. I know… Well it’s a bad movie however I look at it…
Commerzbank (CBK GR) lent bankrupt city of Detroit more than $400 million, FAZ says
Anglo Irish Creditors Said to Face More Losses After Liquidation
Zurich Insurance is among companies being questioned by New York’s insurance regulator in a widening probe into compliance with an Iran sanctions law
Facebook shares jumped 18% to $31.25 in heavy trading after the company reported Q2 Sales/EPS of $1.81bn/19c vs estimates of $1.62bn/14c.
Shares of Visa Inc. rose 2.1% to $190.63 in moderate volume after the firm reported quarterly results and approved a $1.5 billion share buyback program.
Qualcomm Inc. shares advanced 5.1% to $64.51 in heavy volume after the wireless chip maker’s fiscal third-quarter results topped Wall Street estimates.
ABB 2Q Net Income Misses Estimates, Maintains Full-Year Outlook
Aixtron 2Q Sales Below Est.; Unable to Give Precise Guidance
Areva 1H Sales EU4.76b, Up 11% LFL; Confirms 2013 Targets
AtoS reported 1H13 results that were broadly in line with company-compiled consensus. The company made no changes to 2013 guidance (slight organic growth, operating margins of 7.5%. FCF of €350 mn+). MS concerned that the upside from here is limited. But the carving out of Wordline should support the stock.
BASF posts 2q Ebit ex-items of EU1.83b, vs. analyst est. of EU1.99b, and scales back forecasts for global industry growth
Cap Gemini 1H Profit Rises; Rev. Drops; Sticks to Outlook
Credit Suisse 2Q Net CHF1.05b; Inv. Bank Pretax CHF754m. Strong numbers but the stock is indicated -1%
Dassault Systemes 2Q EPS In Line With Ests.
Faurecia 1H Oper Profit Beats Ests, Sees 2013 Oper Profit Boost
Givaudan 1H Ebitda, Rev. Beats Ests., Reaffirms Mid-Term Outlook
Logitech 1Q Sales Climb 2% to $478m; Exchanges Rates No Impact
Michelin Profit Falls as European Slump Weighs on Tire Sales (1)
Orange 2Q Sales, Ebitda in Line; Discloses ~EU2b Tax Charge
Roche 1H Core EPS Beats Est.; Confirms FY Outlook
Software AG reiterates full-year EPS forecast of EU1.70 to EU1.80 after posting 2q EPS of EU0.34 and Ebit of EU44.4m; click here to see analyst estimates
Statoil 2Q Refining Reference Margin Falls 17% Y/y to $5.1/bbl
Technip 2Q Net EU162.4m Beats Ests.; FY Targets Maintained
TF1 1H Rev. Drops Amid Challenging Mkt; Reiterates FY Forecast
Thales 1H Ebit Misses Estimates, Confirms 2013 Targets
Unibail-Rodamco 1H Recurring Earnings Rose 5.5% to EU5.21-Shr
Visa 3Q Rev., EPS Beat Ests.; Shares Rise 2.0% Post-Mkt
Wincor Nixdorf 3Q Rev. Beats Est.; Raises 2013 Targets
South Korea’s economy grew at the fastest rate in more than two years, as consumer spending rebounded and the new government boosted state expenditure. GDP rose 1.1% in sequential seasonally-adjusted terms, or 2.3% year-on-year. (Financial Times)
“The eurozone has delayed its decision on whether to approve its next aid payment for Greece until Friday after Athens failed to fulfill all the conditions it had set out earlier this month.” Jeroen Dijsselbloem said Greece needed to adopt promised measures regarding teachers by Thursday for the €4bn payment to be released. Greek officials said a vote on the matter would pass easily. (Wall Street Journal)
‘Fabulous Fab’ takes to witness stand: “Fabrice Tourre, the former Goldman Sachs banker accused of defrauding investors in a complex mortgage bond known as Abacus, on Wednesday took to the witness stand to defend himself for the first time in court. He pushed back against arguments from the US Securities and Exchange Commission’s lawyers that he helped Paulson & Co build a synthetic collateralised mortgage obligation that was designed to fail, and also hid from the deal’s investors that the hedge fund was betting against the bond.” (Financial Times)
Failed ETF trades surge: “Falling equity markets have resulted in the highest level of failed trades in the $2tn exchange-traded fund (ETF) market for nearly two years ” (Financial Times)
GS (Nielsen) GOAL: Global Opportunity Asset Allocator
Macro outlook: Improving global growth
We see the macro outlook as supportive for risky assets. We have revised our global growth outlook lower, but continue to expect a gradual reacceleration from here for the US, Europe and China. We expect monetary policy to remain very accommodative in developed markets and continue to believe that general uncertainty will remain lower than in the last couple of years. That said, risks are increasing. Higher bond yields have made structural pressures in emerging markets more urgent and more signs of austerity fatigue in the European periphery are emerging.
MTU Aero Engines (JPM, Perry, CFA) Downgrade to Neutral; long-term value remains but company needs to rebuild bridges with investors
We downgrade MTU to Neutral from OW and reduce our Dec-14 price target to €80 from €99. We cut our 2013-2016E EPS by 9-11% pa. This reflects MTU’s reduced guidance for 2013 and a broadly unchanged growth profile off a lower base.
ARM Holdings plc (GS, Schafer) Buy: Strong licensing & royalty rates underpin our thesis; CL-Buy
We reiterate our Conviction List Buy following another quarterly beat driven by strong licensing and royalty rate inflation, which is supportive of our thesis of increasing market share aspiration and pricing power for ARM.
Atos (MS, Wood) Looking for the next leg
Worldline the key: In a tough Tech environment, in-line is a solid result, with FCF slightly ahead. The key debate for investors is what comes next. We believe the SIS synergies are broadly priced in and that margin expansion will be more difficult from here (restructuring was a touch higher in 1H). Atos has worked hard on the Worldline carve-out, but aside from more financial disclosure, there was no news on the company’s efforts to realise value from Worldline. We believe there is clearly option value in Worldline, but the timeline is key. The next catalyst looks to be an analyst day in 4Q, and excluding a Worldline announcement before then (unlikely in our view), we think the shares remain range-bound.
Atos (GS, Borra)): In-line 1H13; payments carve out lays steps for value creation; Buy
We remain Buy rated. While weak 3Q and deal slippages raises NT concerns, value creation opportunity related to the payments business is unchanged. We make modest changes to our estimates.
ANGLO AMERICAN PLATINUM RAISED TO NEUTRAL AT BOFAML
AZ ELECTRONIC MATERIALS CUT TO HOLD VS BUY AT DEUTSCHE BANK
COMMERZBANK RATED NEW NEUTRAL AT UBS, PT EU6.9
DEVRO RATED NEW OVERWEIGHT AT JPMORGAN; PT 354P
GAGFAH RAISED TO BUY VS NEUTRAL AT GOLDMAN
GEMDALE RATED NEW BUY AT UBS, PT $1.43
INTERNATIONAL FERRO METALS CUT TO UNDERPERFORM AT BOFAML
MOBISTAR CUT TO SELL FROM HOLD AT ING
MOBISTAR CUT TO SELL VS NEUTRAL AT GOLDMAN
MOBISTAR PT CUT TO EU10 FROM EU16 AT ING
MORGAN ADVANCED MATERIALS RAISED TO BUY VS HOLD AT JEFFERIES
MTU AERO ENGINES CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
URALKALI CUT TO NEUTRAL VS BUY AT BOFAML
VOLVO CUT TO NEUTRAL VS BUY AT UBS
OVERNIGHT MARKETS: DOWN
Nikkei 225 down -78.80 (-0.53%) at 14,652
Topix down -11.86 (-0.97%) at 1,208
Hang Seng down -63.48 (-0.29%) at 21,905
S&P 500 down -6.45 (-0.38%) at 1,686
DJIA down -25.50 (-0.16%) at 15,542
Nasdaq up +0.33 (+0.01%) at 3,580
Eurofirst 300 up +7.47 (+0.62%) at 1,215
FTSE100 up +22.99 (+0.35%) at 6,620
CAC 40 up +39.66 (+1.01%) at 3,963
Dax up +64.88 (+0.78%) at 8,379
€/$ 1.32 (1.32)
$/¥ 100.12 (100.24)
£/$ 1.53 (1.53)
Brent Crude (ICE) down -0.29 at 106.90
Light Crude (Nymex) down -0.48 at 104.91
100 Oz Gold (Comex) unchanged 0.00 at 1,320
Copper (Comex) down -0.01 at 3.18
10-year government bond yields (%)
Sources: FT, Bloomberg, Markit