US equities finished higher on Tuesday with the S&P 500 up for a fifth straight session. While the September employment report disappointed, it also reinforced the recent pickup in expectations that the Fed will have to delay an initial tapering move until sometime in early 2014. The monetary policy trade drove a rally in longer-dated Treasuries, with the price action in equities also influenced by another very busy day on the earnings calendar. The materials sector led the move higher, though the deeper cyclical plays put in a mixed performance overall (banks and semis lagged). In addition, a number of momentum names and big year-to-date gainers underperformed. Tech was the only sector to finish in negative territory for the session.
A sudden reversal has taken hold of equity markets around Asia-Pacific, reversing earlier gains. One explanation comes from a bloom article highlighting that top banks tripled their write offs.
European markets to open lower as well, following Asia and on fears that markets may be overbought.
New iPad air, new iPad mini retina, new and smaller macbook pros with retina screens and for free the new Mavericks OS. Not sure it will push Apple shares higher but definitely a negative for Microsoft as OS is now available for free thanks to Google and Apple, click this link to open the Mavericks preview page in your web browser.
I’ve been trying it for 2 weeks now and it’s definitely worth updating although the changes aren’t mind blowing.
Bank of Ireland Said to Near Pension Accord as Refinancing Looms
German SPD Said to Want Schaeuble’s Ministry to Lose Euro Remit
Orange Considering EE IPO in 1H 2014, CFO Says
STMicroelectronics Posts Loss as Profitability Delayed to 2015
GlaxoSmithKline to Say Probe Cuts China Sales by >1/3: Sky News
Faurecia Sticks to 2013 Profit Target After Quarterly Sales Gain
Rabobank to Face Libor Fine of Almost $1b, FT Reports
Marks & Spencer to Ramp Up Food Expansion in U.K. and France
Iberdrola Changes Dividend Policy to 65%-75% of Profit
Havas – Banque Federale du Credit sells 7.5m shs/2% stake at €6.15
Temenos 3Q Non-IFRS EPS $0.28 vs Est. Adj. EPS 26c
Co. “on track to deliver reaffirmed 2013 guidance,” Temenos says in e-mail.
• 3Q rev $109.6m vs $110m y/y
• Like-for-like software licencing growth of 4%
• Non-IFRS Ebit up 24% to $25.8m vs $20.8m y/y; Ebit margin
23.5% vs 18.9% y/y
• IFRS Ebit up 75%
• Operating 3Q cash inflow of $16.1m
• Non-IFRS EPS $0.28 vs $0.22 y/y
Faurecia – Q3 sales small miss,reits fy guidance +2%
Orange 3Q Sales, Ebitda in Line With Ests.; Reiterates Targets
Orange reports 3Q sales EU10.16b vs est EU10.20b, reiterates target for operating cashflow of >EU7b,
net debt/Ebitda ~2.2x in 2013.
• 3Q restated Ebitda EU3.37b vs est EU3.34b
• 3Q capex ex-licenses rises 6% y/y to EU1.29b; 4G service covered 32% of French population at end Sept.
• French mobile service revenue falls 9.4% y/y to EU2.08b in 3Q, ARPU falls 12%
• French fixed-line revenues fall 2.6% to EU2.65b in 3Q
• Conf call scheduled for 8:30am CET, +44(0)20-3427-1901, pin 1971839
Peugeot 3Q Rev. Falls 3.7%, Reiterates Plan to Cut Cash Burn
Peugeot 3Q rev. EU12.1b; est. EU12.2b (5 ests.). Yr-earlier EU12.6b.
• Auto unit sales fall 5.8% to EU8.0b
• Outlook: Reiterates plan to at least halve operational free cash flow consumption in 2013, with very significant reduction in 2014; aims to save EU1b/yr from GM alliance
• Call: 8am CET with CFO 44 203 367 9462
Asos FY13 Adj. Pretax Beats Estimate, Says FY14 Started Well
Asos FY adj. pretax GBP54.7m, est. GBP54.1m.
• FY gross margin 6bps to 51.8%
• New financial year started well
• Says GBP1b sales target “firmly in our sights”
• Says has stepped up investment
• FY total group rev. GBP769.4m, total retail sales GBP753.8m, co. reported on Sept. 19
• FY retail gross margin up ~100bps, co. said Sept. 19
Norsk Hydro 3Q Revenue Rises More Than Estimates to NK16.1B
3Q sales NK16.1b vs est. NK15.4b; Ebit NK597m vs est. NK275m; underlying Ebitda NK1.75b; net
income NK222m vs est. loss NK75.4m.
• Says lower cost offsets weaker alumina, aluminium prices; low Alunorte alumina output weighed on results
• Sees 2013 aluminum demand growth of about 2% ex-China
• 3Q realized aluminum price LME $1,822/mt vs $1,926/mt qtr ago
• Says sold fwd about 50% expected primary aluminium output for 4Q at about $1,800/mt
• Says Alunorte alumina refinery, Albras aluminium smelter entered additional USD currency fwd contracts in Brazil for 2H ’13, 2014
• Says ‘on track’ to reach $300/mt cost improvements for fully-owned smelters by end 2013
The Children’s Investment Fund, run by Chris Hohn, disclosed a holding of just over 58m Royal Mail shares, worth £280m. The hedge fund is the recently privatised company’s largest shareholder after the government, giving it clout in determining the future of the business. Mr Hohn’s investment comes as a blow to Vince Cable’s aim of ensuring Royal Mail remained in the hands of blue-chip long-term investors such as pension funds and intensifies pressure over the sale of a prime state asset for £3.3bn or 330p a share last week. (Financial Times)
Bill Gates has made a big bet on the recovery of Spain’s construction sector by becoming the second-largest shareholder in FCC, a Spanish builder hit hard by the collapse of a decade-long property bubble five years ago — the company said it had sold 6 per cent of its treasury shares to funds connected to Mr Gates for €113.5m. (Financial Times) (WSJ)
SAC to shut London office as it cuts staff: “SAC Capital, the US-based hedge fund negotiating a $1bn-plus settlement to insider trading charges, will close its London office by the end of this year, executives told staff on Tuesday.” (Financial Times)
Metro (MS, Aubin) Raising our price target further
We are raising our price target on Metro to €36 on the back of solid 3Q trading, improving consumer in Europe and lower financing costs. Metro remains our top pick in the European food retail sector going into the year end and we see the group as a key beneficiary of a pick up in M&A activity.
ARM Holdings Plc (MS, Meunier) Royalties or licenses?
Although licensing has been strong, royalties are the main driver of our DCF-based valuation and grew only <15% in H2. Unless royalties reaccelerate, driven by the royalty rate, it may be difficult to find good value in the ARM shares at this level.
ALLIANZ CUT TO SECTOR PERFORM VS OUTPERFORM AT RBC
ARM CUT TO NEUTRAL VS BUY AT UBS
AXA RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
BANKINTER CUT TO NEUTRAL VS BUY AT CITI
BEZEQ CUT TO SELL VS NEUTRAL AT CITI
BIM RAISED TO NEUTRAL VS SELL AT UBS
BT CUT TO SELL VS NEUTRAL AT UBS
GJENSIDIGE RAISED TO NEUTRAL VS UNDERPERFORM AT BOFAML
GROUPE EUROTUNNEL CUT TO MARKET PERFORM AT RAYMOND JAMES
INMARSAT RATED NEW HOLD AT BERENBERG; PT 775P
MILLICOM CUT TO NEUTRAL VS BUY AT UBS
OCADO CUT TO UNDERPERFORM VS NEUTRAL AT EXANE, PT 300P
OCI RATED NEW OVERWEIGHT AT HSBC; PT EU32
RAIFFEISEN RAISED TO BUY VS REDUCE AT NOMURA
REMY COINTREAU CUT TO UNDERPERFORM AT BERNSTEIN
SNAM CUT TO EQUALWEIGHT VS OVERWEIGHT AT MORGAN STANLEY
SYNGENTA RAISED TO OVERWEIGHT VS NEUTRAL AT HSBC
TALKTALK CUT TO SELL VS NEUTRAL AT UBS
TELE2 RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT MORGAN STANLEY
VACON CUT TO HOLD VS BUY AT SEB
Nikkei 225 down -167.80 (-1.14%) at 14,545
Topix down -15.71 (-1.29%) at 1,199
Hang Seng down -16.05 (-0.07%) at 23,300
S&P 500 up +0.16 (+0.01%) at 1,745
DJIA up +75.46 (+0.49%) at 15,468
Nasdaq unchanged 0.00 (0.00%) at 3,930
Eurofirst 300 up +6.97 (+0.54%) at 1,288
FTSE100 up +41.46 (+0.62%) at 6,696
CAC 40 unchanged 0.00 (0.00%) at 4,295
Dax unchanged 0.00 (0.00%) at 8,947
€/$ 1.38 (1.38)
$/¥ 97.53 (98.13)
£/$ 1.62 (1.62)
Brent Crude (ICE) down -0.17 at 109.80
Light Crude (Nymex) down -0.47 at 97.83
100 Oz Gold (Comex) unchanged 0.00 at 1,343
Copper (Comex) down -0.01 at 3.32
10-year government bond yields (%)
CDS (closing levels)
Markit iTraxx SovX Western Europe -0.23bps at 72.09bp
Markit iTraxx Europe -2.48bps at 83.7bp
Markit iTraxx Xover -8.94bps at 337.36bp
Sources: FT, Bloomberg, Markit