Newsquawk Daily European Equity Opening News - 18th May 2023

18th May 2023

ASIA

APAC stocks were higher as the region took its cue from the momentum on Wall Street where stocks rallied amid optimism amongst regional banks and debt ceiling talks, although some of the gains were capped as participants digested soft data releases. ASX 200 was led by outperformance in tech and strength in the financial and commodity-related sectors but with advances contained after disappointing jobs data which showed a surprise contraction in Employment Change and an uptick in the Unemployment Rate. Nikkei 225 surged at the open amid reports of potential Japanese subsidies for chipmakers following PM Kishida’s meeting with foreign chip executives. However, the index then stalled just short of its best levels in over three decades and after weaker-than-expected trade data. Hang Seng and Shanghai Comp. were positive amid the broad risk appetite but with further upside somewhat limited by the disappointment from Tencent’s earnings which posted a 27% rise in net profit but missed against expectations, while it was also reported that Montana became the first US state to ban TikTok which will take effect from January next year.

Chip names - Japanese Industry Minister Nishimura said they spoke with TSMC (2330 TT) about possibly expanding investment in Japan and spoke with Samsung (005930 KS) about possible investment in an R&D centre, spoke with Intel (INTC) about possible cooperation expansion. Nishimura added Micron (MU) intends to start mass production of cutting-edge memory chips in Japan, and they spoke with Applied Materials (AMAT) about cooperating with Rapidus. (Newswires)

Nomura (8604 JT) - Co. lowered its annual pretax income target for three core businesses for the next financial year to JPY 288bln from between JPY 350bln-390bln range, while it aims to cut costs by JPY 50bln by March 2025. (Newswires)

Sony (6758 JT) - Co. is said to be considering listing its financial arm in the coming years, according to Bloomberg. CFO said it is producing PS5 at full capacity. (Newswires)

EUROPEAN CLOSES

CLOSES: Euro Stoxx 50 +0.18% at 4,323, FTSE 100 -0.36% at 7,723, DAX 40 +0.34% at 15,951, CAC 40 -0.09% at 7,399, FTSE MIB -0.01% at 27,196, IBEX 35 +0.22% at 9,211, SMI -0.67% at 11,442.

SECTORS: Industrials 0.61%, Energy 0.56%, IT 0.50%, Consumer Disc 0.30%, Financials -0.04%, Materials -0.19%, Telecoms -0.36%, Healthcare -0.59%, Consumer Stpl -1.08%, Utilities -1.10%

FTSE 100

Ex-Dividend - Pershing Square Holdings (PSH LN), Bunzl (BNZL LN), GSK (GSK LN), Unilever (ULVR LN) and Shell (SHEL LN) will be trading without entitlement to their latest dividend payouts. (dividenddata)

Severn Trent (SVT LN) - The water industry has pledged to spend an additional GBP 10bn over the next seven years to reduce sewage spills, following the widespread pumping of sewage into UK rivers. (Times)

OTHER UK COMPANIES

BROKER MOVES

Marks & Spencer (MKS LN) downgraded to Neutral from Buy at Citi

DAX

Auto Names - German VDA auto industry group said adjustments must urgently be made to the post-Brexit agreement as the European battery industry has not developed quickly enough and tariffs would be a significant disadvantage regarding competition. (FT)

Deutsche Bank (DBK GY) - Co. is to pay USD 75mln to settle Jeffrey Epstein accusers' suit, according to WSJ. (WSJ)

Volkswagen (VOW3 GY) - VW brand plans a EUR 3bln cost savings programme, according to Handelsblatt. (Handelsblatt)

OTHER GERMAN COMPANIES

Software AG (SOW GY) - Co. says Silver Lake published an offer document for its voluntary public tender offer that can be accepted as of today up until June 14th. (Newswires)

BROKER MOVES

Siemens Energy (ENR GY) upgraded to Buy from Neutral at Citi

CAC

Dassault Systemes (DSY FP) - French software firm ESI Group (ESI FP) is said to be mulling a sale amid takeover interest, including from larger rival Dassault Systemes, according to Bloomberg sources. ESI's current market value is over EUR 500mln. (Newswires)

OTHER FRENCH COMPANIES

ADP (ADP FP) - April passenger traffic +17.8% Y/Y to 8.2mln. (Newswires)

BROKER MOVES

PAN EUROPE

Ryanair (RYA ID) - S&P raises rating one notch to "BBB+" from "BBB"; outlook stable. (Newswires)

Saipem (SPM IM) - Co. won offshore contracts valued at about USD 850mln. (Newswires)

BROKER MOVES

Banco Santander (SAN SM) downgraded to Market Perform from Outperform at Keefe Bruyette

SMI (Markets closed for Ascension Day)

OTHER SWISS COMPANIES

BROKER MOVES

SCANDINAVIA (Markets closed for Ascension Day)

Ericsson (ERICB SS)/ Nokia (NOKIA FH) - Cisco Systems (CSCO) shares fell 3.9% despite the Co. raising its beating expectations and raising its guidance, with desks citing the fall to concerns about declining orders whilst some expected the FY revenue ceiling to be raised.

BROKER MOVES

US

CLOSES: SPX +1.19% at 4,159, NDX +1.22% at 13,589, DJI +1.24% at 33,420, RUT +2.21% at 1,774.

SECTORS: Financials +2.09%, Energy +2.07%, Consumer Discretionary +2.04%, Industrials +1.7%, Real Estate +1.29%, Technology +1.28%, Communication Svs. +1.18%, Materials +0.67%, Health Care +0.1%, Consumer Staples -0.1%, Utilities -0.36%

Cisco Systems Inc (CSCO) - Q3 2023 (USD): Adj. EPS 1.00 (exp. 0.97), Revenue 14.60bln (exp. 14.39bln). Sees Q4 adjusted EPS 1.05-1.07 (exp. 1.03), Q4 revenue growth of 14%-16% (exp. 14.1%), Q4 adj. GM 64.5%-65.5% (exp. 64.4%). Raises FY adj. EPS to between 3.80-3.82 from between 3.73-3.78 (exp. 3.75), revises FY revenue growth view to between 10-10.5% from between 9-10.5% (exp. 9.7%). Co. said its healthy backlog, recurring revenue streams and RPO, as well as the improving availability of supply, underpin confidence to increase FY guidance. (Cisco IR) Shares fell 3.9% after-market.

Micron (MU) - Co. is to receive USD 1.5bln from Japan to make next-generation chips. (Newswires)

18 May 2023 - 06:36- Research Sheet- Source: Newsquawk