Newsquawk Daily European Equity Opening News - 27th June 2024

27th June 2024

ASIA

APAC stocks were negative amid this week's choppy tech performance with headwinds from higher yields. ASX 200 was pressured with real estate leading the declines amid higher yields and firmer inflation expectations. Nikkei 225 failed to benefit from stronger-than-expected retail sales with the mood dampened amid rate hike bets for the BoJ's July meeting. Hang Seng and Shanghai Comp. traded lower with underperformance in Hong Kong amid pressure in tech and consumer stocks, while the mainland was also pressured as China’s financial industry elites face USD 400k pay caps and bonus clawbacks under President Xi’s “common prosperity” campaign.

EUROPEAN CLOSES

CLOSES: DAX: -0.08% at 18,163.87, FTSE 100: -0.27% at 8,225.33, CAC 40: -0.69% at 7,609.15, Euro Stoxx 50: -0.46% at 4,913.25, AEX: -0.38% at 923.13, IBEX 35: -0.80% at 11,030.50, FTSE MIB: -0.49% at 33,541.98, SMI: -0.49% at 12,018.20.

SECTORS: IT 0.37%, Industrials -0.39%, Materials -0.47%, Financials -0.52%, Telecoms -0.53%, Consumer Stpl -0.67%, Healthcare -0.78%, Utilities -0.79%, Energy -0.82%, Consumer Disc -0.94%

FTSE 100

Antofagasta (ANTO LN) - Has agreed on USD 23.25/T of midyear fees with major China smelters, via Reuters citing sources. (Reuters)

BP (BP/ LN) - Has imposed a hiring freeze, and paused new offshore wind projects amid a renewed focus on oil and gas, according to Reuters sources. (Reuters)

Ex-dividends - British American Tobacco (BATS LN), Burberry (BRBY LN), B&M European (BME LN), Berkeley (BKG LN), F&C Investment (FCIT LN) will trade without entitlement to their latest dividend payout. (Newswires)

DS Smith (SMDS LN) - Brazilian pulpmaker Suzano (SUZ) ended acquisition talks with International Paper (IP), citing the latter's lack of engagement with its offer of USD 15bln in an all-cash deal. (Newswires) Of note for DS Smith which has previously had takeover interest from International Paper.

OTHER UK COMPANIES

IDS (IDS LN) – Billionaire Kretinsky, who is looking to purchase the Co., is mulling giving staff a stake in the Co., according to City AM citing a letter. (City AM)

BROKER MOVES

Anglo American (AAL LN) downgraded to Sell from Hold at Berenberg

Rio Tinto (RIO LN) downgraded to Hold from Buy at Berenberg

DAX

BMW (BMW GY) - UAW said the bargaining committee told the Co. no to their "last, best and final offer". (Newswires)

Bayer (BAYN GY) - Co's pharma unit plans more managerial cuts in Europe and Asia as part of its internal reorganisation plans, via Reuters citing sources. (Reuters)

OTHER GERMAN COMPANIES

BROKER MOVES

CAC

Eiffage (FGR FP) - Spie Nucleaire and ABC secured as a consortium the contract for the main diesel backup generators for the projects of six EPR2-type nuclear reactors; contract is worth more than EUR 900mln (Newswires)

Sanofi (SAN FP) - Formation Bio, a Co. backed by Sanofi, raised USD 372mln in a late-stage funding round. (Newswires)

Saint Gobain (SGO FP) - Signed definitive agreement to acquire Fosroc for approx. EUR 960mln. Expect benefits from at least USD 15mln of growth synergies. (Newswires)

Technip Energies (TE FP) - Acquired tech from Shell (SHEL LN) to accelerate bio-polyester production. (Newswires)

OTHER FRENCH COMPANIES

BROKER MOVES

Safran (SAF FP) upgraded to Buy from Neutral at Citi

PAN EUROPE

ASR Nederland (ASRNL NA) - Outlook/targets for 2024-26: Solvency II ratio safely above 160. Op. return on equity exceeding 12%. Run-rate cost synergies of EUR 215mln in 2026. (Newswires)

Chip Names - Micron Technology (MU) - Earnings: Shares fell 8% in extended trading; profits and revenue topped expectations in the quarter, but FCF was lower than expected, guidance was in line with expectations. Details in the US section

Campari (CPR IM) - Milan prosecutors have opened an investigation into the holding company that controls the Co., according to Reuters citing sources. Prosecutors launched the probe after checks by tax police uncovered around EUR 1bln (USD 1.07bln) of unpaid taxes from 2018-2020, owed by the Luxembourg-based holding Lagfin, the sources said. (Reuters)

Enel (ENEL IM) - Finalised a partnership with Sosteneo and has purchased 49% of the share capital of Enel Libra Flexsys; Enterprise value on a 100% basis is equal to around EUR 2.5bln. (Newswires)

Eni (ENI IM) – Agreement to sell upstream assets in Alaska; value to be announced at closing. (Newswires)

Telefonica (TEF SM) - Telefonica Brasil approved an agreement re. the migration of fixed telephone services to an "authorisation" concession system. (Newswires)

BROKER MOVES

SMI

Holcim (HOLN SW) - Expanding AI-based machine intelligence to over 100 plants, to predict and prevent failures. (Holcim)

Roche (ROG SW) - Expands access to cervical cancer screening tools with two new WHO prequalification designations, including HPV self-collection. The World Health Organization (WHO) has awarded Roche's human papillomavirus (HPV) test prequalification designations for use on the Cobas 5800 System and for self-collected samples on the Cobas 5800, 6800 and 8800 Systems. (Roche)

OTHER SWISS COMPANIES

BROKER MOVES

SCANDINAVIA

Genmab (GMAB DC) - AbbVie's (ABBV) Epkinly T-cell bispecific antibody for relapsed or refractory follicular lymphoma received FDA approval. Developed with Genmab, Epkinly showed deep, durable responses. Both companies will share US and Japan commercial duties, while AbbVie handles global commercialisation. (AbbVie)

Novo Nordisk (NOVOB DC) - Stops the ocedurenone clarion-CKD trial and recognises an impairment loss of around DKK 5.7 billion related to the intangible asset ocedurenone in the second quarter of 2024. (Novo Nordisk)

Tele2 (TEL2B SS) – Secures EUR 140mln loan from the EIB to support roll-out of 5G network in Sweden. (Newswires)

BROKER MOVES

US

CLOSES: SPX +0.16% at 5,478, NDX +0.25% at 19,751, DJI +0.04% at 39,128, RUT -0.21% at 2,018.

SECTORS: Consumer Discretionary +1.98%, Technology +0.37%, Communication Svs. +0.1%, Consumer Staples -0.04%, Materials -0.05%, Real Estate -0.13%, Industrials -0.24%, Health Care -0.36%, Utilities -0.38%, Financials -0.47%, Energy -0.86%

US Banks - Fed Bank Stress Tests: Large US banks are well positioned to weather a recession and stay above minimum capital requirements; banks pass stress tests, paving the way for higher payouts. (Newswires)

Jefferies (JEF) - Shares slipped 0.5% in afterhours trading, despite top- and bottom-line beats. Q2 EPS 0.64 (exp. 0.63), Q2 revenue USD 1.66bln (exp. 1.59bln). Raises dividend +17% to USD 0.35/shr. Investment Banking net revenues +8.6% Q/Q, and +59% Y/Y, at USD 803mln. Exec said Q2 revenues reflected continued positive momentum in Investment Banking and another solid quarter in Capital Markets, with a particularly strong performance in Equities. Execs said momentum continued to build across Investment Banking business, an it was optimistic about the H2 2024 and 2025 based on its backlogs and market trends. Capital Markets net revenues of were lower Q/Q, but up 24% Y/Y, with strength in Equities offsetting a moderation in Fixed Income after its strong Q1. Execs said Asset Management had a reasonable performance, as market conditions for trading in certain strategies normalised after a strong Q1. Execs also noted an improvement in operating margins Y/Y, and sees margins continuing to improve. (Newswires)

Micron Technology (MU) - Earnings: Shares fell 8% in extended trading; profits and revenue topped expectations in the quarter, but FCF was lower than expected, guidance was in line with expectations (which may have caused some disappointment given lofty expectations around the name), and it sees higher capex ahead. It reported Q3 adj. EPS of USD 0.62 (exp. 0.51), Q3 revenue USD 6.81bln (exp. 6.67bln); Q3 FCF USD 425mln (exp. 1.25bln). Sees Q4 adj. EPS between USD 1.00-1.16 (exp. 1.05), and sees Q4 adj. sales between USD 7.4bln-7.8bln (exp. 7.58bln). MU sees FY25 capex of around USD 13bln (vs around USD 8bln in FY24). MU sees FY25 capex increasing materially, with capex around the mid-30s percentage range of revenue (analysts noted that this implies capex of around USD 13bln in FY25 vs around USD 8bln in FY24). (Newswires)

Micron Technology (MU) - Call: Execs noted robust AI-driven demand for data centre products was causing tightness on its leading-edge nodes, and it therefore expects continued price increases throughout 2024 despite the only steady near-term demand in PCs and smartphones, and accordingly, it is seeing increased interest to secure 2025 long-term agreements ahead of their typical schedule. Continued growth of AI in data centres was creating a favourable setup that, giving it confidence that it can deliver record sales in FY25, and significantly improved profitability. Management said customers continue to provide feedback that the HBM3E solution had 30% lower power consumption vs competitors’ solutions, and MU generated over USD 100mln in HBM3E revenue in the quarter; expects to generate several hundred million dollars of revenue from HBM in FY24, and multiple billions of dollars of revenue from HBM in FY25. It sees FY24 DRAM and NAND industry supply below demand. Is optimistic that the launch of Windows 12 and the introduction of a new generation of AI PCs will accelerate the PC replacement cycle starting in late 2024, and the PC replacement cycle should gather momentum through FY25. On smartphones, execs said FY24 unit volumes remain on track to grow in the low- to mid-single-digits, and after smartphone OEMs recently announced new AI capabilities, it is optimistic that delivering high-quality AI experiences can accelerate the smartphone refresh cycle. (Newswires)

27 Jun 2024 - 06:56- EquitiesResearch Sheet- Source: Newsquawk