Newsquawk Daily European Equity Opening News - 22nd July 2024

22nd July 2024

ASIA

APAC stocks mostly began the week on the back foot after last Friday's selling pressure on Wall St and despite China’s surprise cuts, while markets also reflected on President Biden's decision to bow out of the election race. ASX 200 was led lower by the commodity-related sectors with energy the worst hit after oil prices tumbled on Friday, while miners also suffered including South32 with its shares down by a double-digit percentage following its output update where it also flagged an impairment charge of USD 554mln for its Worsley Alumina operations. Nikkei 225 extended on its recent declines after gapping beneath the key 40,000 level. Hang Seng and Shanghai Comp. were mixed in which the former bucked the trend owing to the resilience in local tech-related stocks, while the mainland was pressured after President Xi noted China’s development entered a period of coexistence of strategic opportunities, risks and challenges, as well as increasing uncertainties and unpredictable factors. Furthermore, the PBoC’s surprise announcement to cut its 7-day reverse repo rate by 10bps, which Chinese banks followed through with similar cuts to the benchmark LPRs, failed to spur risk appetite as some viewed the cut to short-term funding rates as underwhelming and not the big measures needed to revive the economy and China’s slowing property industry.

South32 (S32 AT) - Co. quarterly alumina production 1.25mln tons (prev. 1.24mln tons Q/Q), aluminium output 285k tons (prev. 278k tons Q/Q), metallurgical coal output 1.27mln tons (prev. 1.24mln tons Q/Q), payable copper output 15.3k tons (prev. 13.9k tons Q/Q), Co. announced it will recognise an impairment charge of USD 554mln for its Worsley Alumina operations in fiscal 2024 results, while Singapore’s Golden Energy and Resources secures USD 850mln to buy South32’s Australian coking coal assets, Co. revised FY25 production guidance lower for alumina, Cannington payable zinc equivalent, and Sierra Gorda payable copper equivalent. (Newswires)

EUROPEAN CLOSES

CLOSES: DAX: -1.03% at 18,166, FTSE 100: -0.60% at 8,156, CAC 40: -0.69% at 7,535, Euro Stoxx 50: -0.91% at 4,826, AEX: -0.95% at 907, IBEX 35: -0.54% at 11,088, FTSE MIB: -0.91% at 34,216, SMI: -0.63% at 12,171, PSI: +0.20% at 6,803.

SECTORS: Healthcare 0.02%, Telecoms -0.19%, Consumer Stpl -0.57%, Industrials -0.59%, Utilities -0.67%, IT -0.78%, Financials -0.85%, Materials -1.28%, Consumer Disc -1.31%, Energy -1.38%

FTSE 100

Unilever (ULVR LN) - Benoit Potier has been appointed as a non-exec of Co. (Newswires)

OTHER UK COMPANIES

International Distribution Services (IDS LN) – Czech billionaire Kretinsky is to meet the head of the Communication Workers postal workers’ union on Tuesday after suggesting he would struggle to succeed with his bid for Royal Mail if the union opposes him. (Times)

BROKER MOVES

Antofagasta (ANTO LN) upgraded to Reduce from Sell at Peel Hunt

Travis Perkins (TPK LN) upgraded to Overweight from Underweight at JP Morgan

DAX

Porsche AG (P911 GY) - German battery maker Varta (VAR1 GY) is exploring two restructuring scenarios that could involve Porsche acquiring a stake in the company. One scenario includes potential new investors such as Austrian majority shareholder Michael Tojner and Porsche, while the other involves financial creditors, Varta said. (Newswires)

Volkswagen (VOW3 GY) – Co. and Xpeng (XPEV) will develop a new electrical and electronic solution for all battery-powered vehicles manufactured in China under the Volkswagen brand, with project houses established in Guangzhou and Hefei. (Bloomberg)

OTHER GERMAN COMPANIES

freenet (FNTN GY) - CEO Vilanek is not available for an extension of his term in office and intends to leave the management board at the end of his term. (Newswires)

BROKER MOVES

CAC

Airbus (AIR FP) - CEO said demand is very strong for wide-body jets. Scherer said it sees China's Comac as a serious competitor. China markets are large enough for all pretenders including Airbus. Aims to beat the new delivery target of 770 aircraft in 2024. Noted signs of declining airline yields, but said it has not yet impacted demand for new aircraft (Newswires)

OTHER FRENCH COMPANIES

Covivo (COV FP) - H1 (EUR): Adj. ERPA earnings 231mln, +3%, Net loss 9.4mln (prev. 689.7mln Y/Y). Improved 2024 outlook: 2024 recurring net result guidance of around 460mln (prev. guided 440mln). (Newswires)

BROKER MOVES

PAN EUROPE

ArcelorMittal's (MT NA) - Mexico unit says it has lost roughly 1mln T of steel output from 'illegal strike'. Co. said it will be difficult to recover market share after order cancellations and loss of clients. Michoacan Government said the protest has ended. (Newswires)

Ryanair (RYA ID) - Q1 (EUR): Profit after tax 360mln (exp. 538mln), Op. Costs 2.94bln (prev. 3.26bln Y/Y), Load Factor 95% (prev. 94% Y/Y), Customers 50.4mln (prev. 55.5mln Y/Y), Rev. per passenger -10% (prev. -15% Y/Y). Q2 pricing remains softer than expected, expect Q2 fares to be materially lower than the prior year. Expect to increase this to over 160 by the end of July (20 short of our contracted S.24 deliveries). CFO says seeing "a bit of pushback" from consumers on fares, they are a bit more "frugal" and cautious. CFO says Q2 fares are softer, and "trending towards materially lower". (Ryanair/Newswires)

Mining names - South32 shares -13.7% in Australian trade following its output update where it also flagged an impairment charge of USD 554mln for its Worsley Alumina operations. (details in the Asia section)

Stellantis (STLAM IM/ STLAP FP) - Paid USD 190.7mln in civil penalties for failing to meet US fuel economy requirements, owes an additional USD 459.7mln, according to Reuters citing US Agency and Stellantis. (Reuters)

BROKER MOVES

Buzzi (BZU IM) downgraded to Underweight from Neutral at JP Morgan

SMI

OTHER SWISS COMPANIES

Belimo (BEAN SW) - H1 (CHF): Revenue 473.5mln, +5.6% Y/Y, EBIT 93mln, +9.9% Y/Y. For FY24: Now expects sales rev. growth in local currencies to come above long-term growth rate of 9%. (Newswires)

BROKER MOVES

SCANDINAVIA

Assa Abloy (ASSAB SS) - To acquire Skidata; will have small dilutive effect to EPS. (Newswires)

Ericsson (ERICB SS) - Chunghwa Telecom (2412 TT) purchases broadband equipment for TWD 4.4bln from Ericsson (ERICB SS). (Newswires)

H&M (HMB SS) - JP Morgan placed the stock on its negative catalyst watch list. (Newswires)

Maersk (MAERSKB DC) - Confirmed that a fire was reported on Chartered Vessels, while it was sailing from Mundra to Colombo. Unable to confirm the extent of the fire. The vessel is in stable condition. (Newswires)

BROKER MOVES

US

CLOSES: SPX -0.71% at 5,505, NDX -0.93% at 19,523, DJIA -0.93% at 40,288, RUT -0.63% at 2,184

SECTORS: Energy -1.29%, Technology -1.27%, Financials -1.00%, Materials -0.87%, Consumer Discretionary -0.80%, Industrials -0.60%, Consumer Staples -0.38%, Communication Services -0.19%, Real Estate -0.12%, Utilities +0.11%, Health +0.5%

NVIDIA (NVDA) - Is working on a version of its new flagship AI chips for the China market that would be compatible with US export controls, according to sources cited by Reuters. (Reuters)

22 Jul 2024 - 07:02- Research Sheet- Source: Newsquawk