EUROPEAN OPEN: ASM NA misses due to China weakness; STLAM IM issues cautious outlook; ABI BB tops expectations; BP/ LN to invest up to USD 25bln in Iraq; DTE GY misses profit expectations; NVDA earnings ahead

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  EUROPEAN OPEN: European equities are opening on the front foot, underpinned by developments that could see the US and Ukraine sign a key minerals deal today. That said, the Trump Administration has set its sights on the copper market, with the President ordering a new tariff investigation into US copper imports in an effort to protect US copper companies from competition from China. Additionally, Trump Tuesday reiterated that tariffs on Canada and Mexico were "on time" for March 4th, threatening volatility in global trade. Meanwhile, the domestic earnings slate in Europe has also been busy, with the likes of STLAM IM, DTE GY and ASM NA disappointing, while ABI BB and BN FP topped expectations (see below for recap). Data out of Germany showed GfK's gauge of consumer sentiment slipping to -24.7 in March (exp. -21.4, prev. -22.6), driven by rising prices, political uncertainty, and economic concerns; income expectations hit a 13-month low, and willingness to spend also fell. While trade policy and geopolitics will remain in focus today, traders are gearing up for the release of Nvidia's (NVDA) earnings report, which is due to be published after the US close.


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  STOCK SPECIFICS: In autos, Stellantis (STLAM IM) issued a cautious 2025 outlook, expecting a mid-single-digit operating margin (vs 5.5% in FY24), as it struggles with sales and production adjustments (reported net revenue of EUR 71.861bln in H2, with a EUR 6bln cash burn); it said its CEO appointment process is seen concluding in H1 2025. In other consumer sectors, AB InBev (ABI BB) exceeded earnings expectations in Q4, seeing organic EBITDA rise +10.1% (exp. 7.95%), driven by higher marketing spend and a recovery in the US market. Danone (BN FP) reported strong sales growth in Q4, driven by increased volumes in North America. LFL sales rose +4.7% (exp. 4.28%), boosted by the popularity of products like Volvic bottled water and Activia yogurt. In energy, BP (BP/ LN) and the Government of Iraq have reached an agreement to redevelop four major oil and gas fields in Northern Iraq; the project could see BP investing over USD 25bln throughout its duration, according to The Times. In tech, ASM International (ASM NA) Q4 orders missed expectations due to weak demand for chip-making equipment in China, impacted by US export restrictions. The Dutch company's orders rose +8% Y/Y to EUR 731.4mln (exp. 786.61mln); its board authorised a new repurchase programme of up to EUR 150mln. It guided Q1 revenue above expectations (sees EUR 810-850mln vs exp. 800.2mln), and backed its FY25 revenue target, but said it was too soon to provide more specific forecasts due to market uncertainty; China revenue seen down in FY25. Evotec SE (EVT GT) announced that Laetitia Rouxel will step down as CFO on February 28th to pursue other opportunities, with Paul Hitchin set to succeed her from March 1st. In communications, Deutsche Telekom (DTE GY) FY25 profit forecast missed analysts' expectations, driven by price wars in European markets that hit growth last year; DTE sees a 4.5% increase in adj. EBITDA to EUR 44.9bln (exp. 46.9bln). In healthcare, Emasan, an arm of the Sandoz Family Foundation, has launched a public offering Novartis (NOVN SW) shares, of approximately 26.5mln shares in an accelerated bookbuild, to raise up to USD 3bln, Reuters reports. In financials, Banco Santander (SAN SM) will pay a total dividend of EUR 0.21/shr for FY24, reflecting a nearly 20% increase following a record year. In materials, Covestro (1COV GY) expects FY25 core profit to be similar or slightly above 2024’s EUR 1.1bln, slightly topping estimates; it sees FY25 EBITDA between EUR 1-1.6bln (in line with exps), and also projects a challenging economic environment for the year. Linde (LIN GY) raised its quarterly dividend +8% to USD 1.50/shr. In notable broker updates, Kepler updated on the luxury sector; upgrading Kering (KER FP), LVMH (MC FP), and Burberry (BRBY LN), though downgraded Hermes (RMS FP).

TODAY'S AGENDA:

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  DAY AHEAD: US new home sales are expected to pare to 680k in January, from 698k in December; building permit revisions for January are also due. Weekly MBA mortgage applications data will be released. In energy, weekly inventory data from the API reportedly showed headline crude stocks posting a surprise draw of -0.6mln bbls (exp. +2.6mln), Cushing stocks building by +1.2mln bbls; distillate inventories drew down by -1.1mln bbls (exp. -1.5mln), while gasoline stocks posted a surprise build of +0.5mln bbls (exp. -0.9mln); the more widely followed DoE energy inventory data will be released later today. On the speaker's docket, French President Macron will speak about his Washington visit. Stateside, the Fed's Barkin (2027 voter) will speak on inflation; Fed's Bostic (2027 voter) will give remarks on the economic outlook. ECB President Lagarde and ECB's Cipollone participate in the G20 finance ministers and central bank leaders gathering; BoE's Dhingra (Dove) will speak on trade fragmentation and monetary policy. In supply, Germany will sell EUR 1.5bln of 2038, and EUR 0.5bln of 2036 debt; the UST will auction USD 44bln of 7yr notes. Notable earnings due today include Nvidia (NVDA), Snowflake (SNOW), Salesforce (CRM), Lowe's (LOW), TJX Companies (TJX), Advance Auto Parts (AAP), Synopsys (SNPS), Urban Outfitters (URBN).


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  PRIMER - NVIDIA (NVDA) EARNINGS (due AMC): The AI darling Nvidia will report its quarterly earnings on Wednesday, February 26th, at 21:20 GMT/16:20 EST. Ahead of the release, KeyBanc believes Nvidia's strong results should ease concerns that DeepSeek could hinder near-term AI capital expenditure. Despite previous worries over constraints related to the ramp-up of GB200 NVL servers, KeyBanc anticipates Nvidia will exceed expectations and offer guidance for Q1 that is conservatively and moderately higher than consensus. While KeyBanc acknowledges manufacturing constraints limiting shipments of GB200 NVL server racks, it believes this will be more than offset by several factors: 1) due to lower initial manufacturing yields of GB200 NVL, customers have been able to delay orders of GB200 and backfill with HGX-based B200 servers with x86 head nodes; 2) DeepSeek, coupled with a limited supply of Huawei's Ascend AI ASIC, has driven a surge in demand for H20 GPUs from Chinese cloud service providers (CSPs); 3) Nvidia’s customers, particularly CSPs, are financing its inventory through Electronic Manufacturing Services (EMS) providers, meaning shipments from Nvidia to EMS are effectively recognised as revenue. Separately, Susquehanna expects a beat/raise, though more in line with recent reports due to near-term concerns regarding GB200 delays and pushbacks. Nvidia's Q4 EPS is expected to be USD 0.83, with revenue forecast at USD 35.08 billion. The consensus breakdown shows Data Centre revenue at USD 30.77 billion, Gaming at USD 3.28 billion, Professional Visualisation at USD 486 million, and Automotive at USD 449 million. Gross profit margin is expected at 73.5%, with operating expenses at USD 3.4 billion. For Q1, forward guidance sees revenue at USD 55.93 billion and EPS at USD 1.25.

26 Feb 2025 - 08:10- Fixed IncomeData- Source: Newsquawk