EUROPEAN EQUITY OPEN: Europe opens with solid gains, building on Tuesday's upside

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  OPEN: European equities advanced after the open, building on Tuesday's gains. There doesn't appear to be a specific catalyst for the upside, although some analysts have become more constructive on global equities after the recent rout. The focus today will pivot onto central banks, with the FOMC meeting scheduled for later this evening, while the Canadian central bank will also provide an update. The Earnings slate also includes a number of globally significant companies, like Intel (INTC), Boeing (BA) and Tesla (TSLA).


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  INDICES: At 08:05GMT, Euro Stoxx 50 +1.2%, FTSE 100 +1.1%, DAX 40 +1.1%, CAC 40 +1.2%, FTSE MIB +1.0%, IBEX 35 +1.0%, SMI +1.1%.


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  SECTORS: Sectors are broadly green; gains are being led by Travel & Leisure (cyclical), Oil & Gas (larger than expected API draw, geopolitics), and Basic Resources (cyclical); the laggards, but still higher, include Telecoms, Food & Beverage, Personal & Household Goods (all defensives). Tech is towards the top of the pack (solid MSFT earnings after the US close).


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  NOTABLE MOVERS: Tod’s (TOD IM) +9.5% after earnings; Deutsche Lufthansa (LHA GY) +3.6% as it may buy ITA stake next year, as well as broker upgrades; Airbus (AIR FP) +2.6% after helicopter orders; Infineon (IFX GY) +2.4%, STMicroelectronics (STM FP) +2.3% after Texas Instruments (TXN) reported top- and bottom-line beats; Deutsche Boerse (DB1 GY) -0.4% after broker downgrade.

GEOPOLITICS:

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  Generali (G IM), UniCredit (UCG IM, Pirelli (PIRC IM), Eni (ENI IM) - Russia President Putin reportedly meeting with the companies on economic ties amid the threat of EU and US sanctions.

INDUSTRIALS:

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  Airbus (AIR FP) - Rival Boeing (BA) in advanced discussions with Qatar Airways to launch a new 777x freighter as early as next week. Separately, Airbus logged 419 gross helicopter orders, which the company said showed signs of a recovery.


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  Dassault Aviation (AM FP) - Indonesia reportedly moving ahead with plan to purchase 36 Rafale fighters.


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  AIRLINES: - Ryanair (RYA LN), other airlines note increased demand from UK travellers after alterations to travel rules.


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  Deutsche Lufthansa (LHA GY) - Could acquire ITA Airways stake in 2023/2024 if ITA Airways privatisation takes place and government approval is given. Separately, upgraded to buy from hold at Stifel Nicolaus.


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  Ferrovial (FER SM) - Aeropuertos attempting to attain new airport concessions in the US.


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  Wizz Air (WIZZ LN) - Interim Q3: revenue EUR 408mln (prev. EUR 149mln), EBITDA EUR 87.5mln (prev. EUR 43mln).


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  AUTOS - UK Law Commission says human drivers should classified as a "user in charge" in self-driving cars, meaning if something went wrong, the auto manufacturer would be held accountable.


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  Vestas Wind Systems (VWS DC) - FY21 revenue EUR 15.6bln (exp. EUR 16.1bln). FY adj. EBIT EUR 461mln (exp. EUR 574mln). Expects near future and at least 2022 to be impacted by cost inflation.


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  ADP (ADP FP) downgraded to sell from hold at Berenberg.


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  Aena (AENA SM) downgraded at Stifel Nicholaus, downgraded to hold from buy at Berenberg.


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  Atlas Copco (ATCOA SS) upgraded to buy from hold at Carnegie, upgraded to buy from hold at Kepler Cheuvreux, upgraded to buy from hold at Pareto Securities.


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  DSV (DSV DC) upgraded to outperform from market perform at Bernstein.


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  Easyjet (EZJ LN) upgraded to buy from hold at Stifel Nicolaus.

CONSUMER CYCLICAL:

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  Playtech (PTEC LN) - Preparing contingency plans including breakup/sale if proposed GBP 2.7bln Aristocrat takeover fails. Reiterates recommendation for shareholders to vote in favour of the offer.


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  Faurecia (EO FP) - EU Commission approved takeover of Hella (HLE GY), all conditions satisfied.


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  Somfy (SO FP) - Q4 revenue EUR 324.4mln (exp. EUR 301mln). Guides operating margin growth flat Y/Y.


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  Tod's (TOD IM) - FY21 revenue EUR 884mln (exp. EUR 842mln). E-commerce revenue saw triple-digit growth vs FY19.

CONSUMER STAPLES:

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  Essity (ESSITYB SS) - Q4 revenue SEK 34.2bln (exp. SEK 33.3bln). Adj. operating profit SEK 2.83bln (exp. SEK 3.40bln). Adj. EBITA margin 11.2% (prev. 14.5%). Organic revenue +8% Y/Y. Raised prices in all product categories to compensate for the higher raw material costs.


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  Bunzl (BNZL LN) downgraded to underperform from neutral at Davy Research.

UTILITIES:

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  RWE (RWE GY) - Urges government to alleviate gas supply bottlenecks.


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  EDF (EDF FP) - Reportedly seeing unplanned outages at its Dampierre 3 reactor.

FINANCIALS:

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  Aareal Bank (ARL GY) - Atlantic BidCo raised offer to EUR 31/shr (prev. EUR 29/shr).


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  HSBC (HSBA LN) - Mexico unit assessing a purchase of Citigroup's (C) retail unit in the region.


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  Group SEB (SK FP) - FY21 revenue EUR 8.06bln (prev. EUR 6.94bln). Operating profit EUR 800mln (prev. EUR 503mln). Growth driven by consumer dynamics.


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  ABRDN (ABDN LN) downgraded to hold from buy at Berenberg.


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  Deutsche Boerse (DB1 GY) downgraded to neutral from buy at Citigroup.

MATERIALS:

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  Fresnillo (FRES LN) - Quarterly gold production -12.9% vs Q3, silver production +2.1% vs Q3. 2022 gold production expected 600-650koz.


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  Wacker Chemie (WCH GY) - FY21 revenue EUR 6.20bln (prev. EUR 4.9bln). EBIT EUR 1.09bln (prev. EUR 263mln). Net EUR 780mln (prev. EUR 202mln). Said demand remained high into 2022.


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  BASF (BAS GY) reiterated with overweight at Jpmorgan Chase.

TECH:

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  Microsoft (MSFT) - Initially declined 5% after publishing Q2 earnings, despite posting top- and bottom-line beats; but losses were wiped after the company later issued guidance on call. Q2 EPS 2.48 (exp. 2.31), Revenue 51.73bln (exp. 50.88bln). Revenues from its Intelligent Cloud, More Personal Computing, and its Productivity And Business Processes segments all topped expectations. Guides Q3 revenues a little above the street's forecasts. Finished extended trade +1.2%.


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  Texas Instruments (TXN) - Top- and bottom line beats in Q4. EPS 2.27 (exp. 1.94), Revenue 4.83bln (exp. 4.43bln). Guides Q1 EPS between USD 2.01-2.29 (exp. 1.90), and sees revenue between USD 4.5bln-4.9bln (exp. 4.37bln). Said lead times were stable, while inventories remained below desired levels.


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  F5 Networks (FFIV) - Q1 EPS 2.89 (exp. 2.78), revenue 687mln (exp. 676mln). Despite strong demand for software solutions (+47% Y/Y), FFIV said its ability to meet customer demand will be restricted by supply chain constraints for the remainder of FY22. Cut guidance, now sees FY22 revenue +4.5-8% (prev. +8-9%).


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  Toshiba (6502 JT) - The suspended operations at a semiconductor plant located in Japan have now partially restarted.


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  Sage Group (SGE LN) - Q1 trading update: total revenue GBP 458mln (prev. 435mln).


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  Logitech (LOGN SW) reiterated with overweight at Jpmorgan Chase.

ENERGY: 

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  Tullow Oil (TLW LN) - FY revenue seen around USD 1.3bln with realised oil price of USD 63/bbl.

COMMUNICATIONS: 

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  Telecom Italia (TIT IM) - To assess a plan to revamp during meeting on Wednesday; final approval expected early-March. Not expected to take a stance on KKR.

HEALTH CARE:

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  Lonza (LONN SW) - FY21 revenue CHF 5.41bln (prev. CHF 4.51bln). Core EBITDA CHF 1.67bln (prev. CHF 1.38bln). Core EBITDA margin 30.8% (prev. 30.6% Y/Y).


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  Elekta (EKTAB SS) reiterated with underweight at Jpmorgan Chase.


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  Novozymes (NOVOB DC) upgraded to buy from hold at Carnegie.

DAY AHEAD 25TH JAN:

• 10:30GMT/05:30EST: Germany 10-Year Bund Auction (preview)


• 11:00GMT/06:00EST: Anthem Inc (ANTM) earnings (preview)


• 11:00GMT/06:00EST: France Benefit Claims, Jobseekers (DEC)


• 11:30GMT/06:30EST: AT&T Inc (T) earnings (preview)


• 12:00GMT/07:00EST: Brazil IPCA mid-month CPI (JAN)


• 12:00GMT/07:00EST: Mexico Retail Sales (NOV)


• 12:30GMT/07:30EST: Boeing Co (BA) earnings (preview)


• 12:00GMT/07:00EST: US MBA Mortgage Applications (21/JAN)


• 12:30GMT/07:30EST: Abbott Laboratories (ABT) earnings (preview)


• 12:30GMT/07:30EST: Brazil Current Account (DEC)


• 12:30GMT/07:30EST: Brazil Foreign Direct Investment (DEC)


• 13:30GMT/08:30EST: CA Wholesale Sales (DEC)


• 13:30GMT/08:30EST: US Retail Inventories Ex Autos Adv (DEC)


• 13:30GMT/08:30EST: US Goods Trade Balance Adv (DEC)


• 13:30GMT/08:30EST: US Wholesale Inventories Adv (DEC)


• 15:00GMT/10:00EST: CA BoC Rate Decision (preview)


• 15:00GMT/10:00EST: US New Home Sales (DEC)


• 15:30GMT/10:30EST: US EIA Energy Inventories (21/JAN)


• 16:00GMT/11:00EST: Russia PPI (DEC)


• 16:30GMT/11:30EST: US 2-Year FRN Auction


• 19:00GMT/14:00EST: US FOMC Rate Decision (preview)


• 19:30GMT/14:30EST: US Fed Chair Powell Press Conference (preview)


• 21:00GMT/16:00EST: Intel Corp (INTC) earnings (preview)


• 21:00GMT/16:00EST: South Korea Business Confidence (JAN)


• 21:10GMT/16:10EST: Tesla Inc (TSLA) earnings (preview)


• 21:10GMT/16:10EST: ServiceNow Inc (NOW) earnings (preview)

26 Jan 2022 - 08:10- Fixed Income- Source: Newsquawk