EUROPEAN EQUITY OPEN: Downbeat start for European stocks ahead of inflation data

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  EUROPEAN OPEN: Despite the positive performance on Wall Street on Friday, and APAC stocks mostly gaining on China stimulus hopes, European equities start the last trading session of the month on the back foot. Earnings have been in focus: Heineken (HEIA NA) cut its profit outlook; Banks are in focus amid reports that the European stress tests showed three of the 70 lenders failed to meet capital requirements (names of these banks were not disclosed); miners and China proxies have been in focus amid stimulus talk. This morning, data from Germany showed retail sales fell -0.8% M/M in June (prev. +0.4%), and the annual measure pared to -1.6% Y/Y (exp. -2.6%, prev. -3.6%). German import prices fell -1.6% M/M in June (exp. -0.7%, prev. -1.4%), and the annual rate worsened to -11.4% Y/Y (exp. -10.7%, prev. -9.1%). Also in the morning, traders will focus on flash European inflation data, which are expected to show the annual rates of HICP cooling.


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  CHINA PMI/STIMULUS: China's official manufacturing PMI stood at 49.3 in July (exp. 49.2, prev. 49.0), the non-manufacturing at 51.5 (exp. 53.0, prev. 53.2), leaving the composite at 51.1 (prev. 52.3). Analysts said policy support was needed to prevent China’s economy from slipping into a recession, not least because external headwinds look set to persist for a while longer. And in wake of the data, the government announced new steps to boost consumption and major cities pledged measures to support the property market. China will announce further details on stimulus packages over the course of the European morning.

EQUITY NEWS:

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  COMMUNICATIONS: Bollore (BOL FP) H1 2023 results show lower net and adj. EBITDA, revenue also decreased. Telia (TELIA SS) President/CEO will become BT (BT/A LN) CEO by end-January 2024. Cellnex Telecom (CLNX SM) CFO Jose Manuel Aisa Mancho resigns, effective October 31st. Pearson (PSON LN) H1 results show higher adjusted EPS, operating profit, and revenue.


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  CONSUMER CYCLICAL: Auto stocks will note French Finance Minister said he was not concerned about cheap China EVs' threat to European car industry. Frasers Group raises stake in Boohoo (BOO LN) from 6.78% to 7.8%. Toyota (7203 JT) plans 11% Y/Y global output increase in August-October quarter.


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  CONSUMER STAPLES: British American Tobacco (BATS LN) CEO rejects listing move from London to NY. Casino (CO FP) obtains waiver for early repayment on June 30th, not September 30th. Heineken (HEIA NA) H1 2023 results show higher revenue, lower net, and operating profit growth. Of note for Tobacco Names, companies are exploiting a legal loophole to promote flavoured Nicotine pouches, using influencers, raises concerns among health experts.


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  ENERGY: Acciona Energias (ANE SM) downgraded to Hold from Buy at Stifel Nicolaus. Energy Names UK's nuclear power generation lacks a clear plan to triple capacity by 2050. Eni (ENI IM) nearing a deal to sell around 10% of Plenitude to Switzerland's Energy Infrastructure Partners. Galp Energia (GALP PL) Q2 results meet expectations, maintains FY23 guidance. Rubis (RUI FP) names Nils Christian Bergene as Chairman. Of note for UK Oil Names, PM commits to North Sea oil and gas exploration and production.


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  FINANCIALS: AXA (CS FP) partners with Gogox to create new insurance model. Credit Agricole (ACA FP) and Worldline (WLN FP) sign agreement to create a major player in merchant service in France. Erste (EBS AT) Q2 results show higher net and revenue. UK Banks launch campaign to illustrate support for struggling borrowers. Wendel Investment (MF FP) signs agreement for sale of Constantia Flexibles to One Rock Capital Partners.


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  INDUSTRIALS: Air France (AF FP) provided details of reverse share split to commence from July 31st. Legrand (LR FP) H1 2023 results show higher net and adj. operating profit, raises FY23 guidance. Leonardo (LDO IM) H1 2023 results show higher EBITA and net, reaffirms FY23 guidance. Senior (SNR LN) H1 results show higher revenue and adjusted PBT, maintains outlook for strong growth. Stabilus (STM GY) Q3 revenue growth and higher FY23 revenue guidance.


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  MATERIALS: BASF (BAS GY) downgraded to Neutral from Outperform at Exane BNP. BHP (BHP AT) expects India's steel boom to boost coal business, sending 40% of its coal to India. Glencore (GLEN LN) in talks to acquire remaining stake in Mara copper project.


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  TECH: Chip Names will note China export controls on key chipmaking material effective from August 1st. Nemetschek (NEM GY) Q2 results show lower EBITDA and higher revenue, affirm FY23 guidance.

TODAY’S AGENDA:

• An interactive daily calendar can be accessed here; a pdf version can be accessed here.


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  EUROPEAN DAY: The ECB’s survey of monetary analysts will be released in the morning. Eurozone flash HICP metrics for July are expected to show a cooling in the annual rates of inflation. Eurozone GDP is expected to register growth in Q2, though the annual measure is seen paring.


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  NORTH AMERICAN DAY: Chicago PMI data, and the Dallas Fed manufacturing index are the only releases of note. In afternoon trade, the Federal Reserve’s Senior Loan Officer Opinion Survey on Bank Lending will be released, and later, the Treasury will publish its quarterly financing estimates ahead of Wednesday’s quarterly refunding announcement. On the speaker’s front, Fed’s Goolsbee (voter) will give an interview to Yahoo Finance.


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  US CORPORATE EARNINGS: Today's slate is quiet (see here); this week will see numbers published from CAT, MRK, PFE, UBER, SBUX, AMD on Tuesday; CVS, QCOM, PYPL on Wednesday; CI, COP, AMZN, AMGN, GILD, ABNB, SYK, AAPL, BKNG on Thursday; our weekly earnings estimate sheet is here.


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  WEEK AHEAD: Highlights include US jobs report, BoE, RBA and PMI data; our full weekly briefing can be accessed here.


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  CHINA EXPORT CONTROLS: Chinese export controls on key chipmaking material will come into effect on Tuesday 1st August. The desk has provided an analysis here. 

31 Jul 2023 - 08:10- EquitiesEU Research- Source: Newsquawk