- AstraZeneca (ZEG TH) +1.6%
- Hochtief (HOT TH) -1%
- Scout24 (G24 TH) -1.3%
- Prosus (1TY TH) -1.5%
-
RWE (RWE TH) -3.4%
- RWE Share Sale to Back Renewables Should Be Welcomed: Analysts
- Galapagos (GXE TH) -14%
- Gilead Gets Complete Response Letter for Filgotinib From FDA (1)
DAX:
- Wirecard (WDI TH) +2.7%
- RWE (RWE TH) -2.7%
- RWE Share Sale to Back Renewables Should Be Welcomed: Analysts
- RWE Offering Prices 61.5m Shares at EU32.55/Share
MDAX:
- Lufthansa (LHA TH) +1.2%
- Travel Rule Changes Create Chaos for Passengers Caught in Middle
- Scout24 (G24 TH) -1.3%
SDAX:
- Deutz (DEZ TH) +2.5%
- Steinhoff (SNH TH) +1.5%
- DIC Asset (DIC TH) +1.3%
- Leoni (LEO TH) -1.6%
The dollar steadied near a more than two-year low while Asian stocks were mixed despite a record close for their U.S. peers. The morning session for Hong Kong’s equity market was canceled due to a typhoon.
Shares rebounded in South Korea from Tuesday’s slide, were little changed in Japan and climbed in Australia. Chinese shares slipped amid a request from the Trump administration for U.S. colleges to divest them. S&P 500 futures were steady after the gauge eked out a gain to close above the previous Feb. 19 all-time high. European contracts pointed to modest gains. Traders in Hong Kong are expecting the equity market to reopen later Wednesday. Treasuries ticked higher.
US After Hours SRNE falls -9.7% as co terminates its CFO; AXDX +10.2% as it receives FDA EUA for COVID-19 testing system
Nikkei +0.32% Hang Seng +0.08% CSI -0.34% Shanghai -0.16% Shenzen -0.66%
Eur$ 1.1941 CNH 6.9129 CNY 6.9213 JPY 105.57 GBP 1.3248 CHF 0.9030 RUB 73.1665 WTI$ 42.64 -0.58%
S&P +0.07% Nasdaq +0.012% EuroStoxx +0.30% FTSE +0.17% Dax +0.20% SMI
Macro :
- Trump Cancels China Talks, Raising Questions About Trade Deal
- Big Banks Sit on $250 Billion of Murkiest Trades After Covid
- U.K. Ministers to Meet Monday on Testing of Arrivals: Telegraph
- California Declares Statewide Emergency Due to Fires, Weather
- Finland to Reintroduce Border Controls With Nordic Neighbors
- China’s Tahoe Is Said to Mull $300 Million Health Care Unit Sale
Keep an eye on :
- ADKO AV : Addiko Second Quarter Loss After Tax Narrower Than Estimates
- ALC SW : Alcon Second Quarter Core Loss Per Share Wider Than Estimates
- AMBEA SS : Ambea Second Quarter Net Sales 1.1% Below Estimates
- ARYN SW : Shareholder Veraison Welcomes Resignation of Aryzta Chairman
- BHG SS : BHG Group Holder to Offer 7.32m Shares via Carnegie, SEB
- CA FP : Carrefour to Fire 400 People in Poland, 3% of Workforce
- CTM SS : Catena Media Second Quarter Adjusted Ebitda EU14.8 Mln, +56% Y/y
- COFA FP : German Credit Insurers to Discuss Extending $36 Billion Backstop
- CWK LN : Meat Plants in Canada, U.K. Halt Exports to China: Customs
- DUFN SW : Dufry Proposes to Buy Remaining Equity Interests in Hudson
- ELK NO : Elkem Selects Site for Potential Norway Battery Materials Plant
- GN DC : GN 2Q Revenue Beats Highest Estimate; Introduces FY Guidance (2)
- ICA SS : ICA Gruppen 2Q Adjusted Operating Profit Meets Est.
- IMPN SW : Implenia First Half Ebitda CHF101.6 Mln, +39% Y/y
- KINVB DC : Omio Raises $100 Million With Eye on Travel Market Recovery
- MC FP : Tiffany Will Soon Reveal Everywhere Your Diamond Has Traveled
- MAERSKB DC : *MAERSK SEES FY EBITDA $6B TO $7B, EST. $5.83B
- MRW LN : Amazon and Morrisons Announce Same-Day Grocery Delivery in U.K.
- MOR GY : Morphosys, Incyte Say Monjuvi Included in NCCN Guidelines
- NHY NO : Alumina Market Hit With Fresh Stumble at Giant Brazil Refinery
- NKT DC : NKT Keeps FY Outlook; Order Backlog More Than Doubled
- NRS NO : Norway Royal Salmon Buys for NOK199m in Farming License Auction
- ROG SW : Roche, Regeneron in Pact to Increase Supply of REGN-COV2
- RWE GY : RWE Offering Prices 61.5m Shares at EU32.55/Share
- SALM NO : Salmar Buys 8,057 Tons for NOK1.76b in Salmon License Auction
- SENS SW : Sensirion First Half Revenue CHF113.7 Mln, +36% Y/y
- SMT LN : A Huge Bet on Tesla Has Cemented U.K. Fund’s Blue-Chip Position
- SCT LN : Softcat Says Performance is Slightly Ahead of Expectations
- SUR LN : Sureserve Sees Earnings in Line With Expectations
- TSLA US : SpaceX Seeks $2.07B in New Funding, Filing Shows
- TOBII SS : Tobii Second Quarter Operating Loss SEK45 Mln, -4.3% Y/y
- WALWIL NO : Wallenius Wilhelmsen 2Q Total Income 2.0% Above Est.
- ROSE SW : Zur Rose Sees Full Year Sales At Least +10%, Saw About +10%
>>> Up
* AB Foods Raised to Outperform at RBC; PT 2,300 pence
* Covestro PT Raised to 50 euros from 45 euros at Deutsche Bank
* Mayr-Melnhof PT Raised to 151 euros at Deutsche Bank
>>> Down
* Aegon Cut to Underperform at BofA; PT 2.15 euros
* Aker Solutions Cut to Neutral at Exane; PT 14.50 kroner
* Ambu Cut to Hold at ABG; PT 228 kroner
* Clariant Cut to Equal-Weight at Barclays; PT 17 Swiss francs
* TCS Group GDRs Cut to Hold at Wood & Company; PT $27.80
>>> Initiation
* Babcock Reinstated Equal-Weight at Morgan Stanley; PT 290 pence
* CALT US Rated New Outperform at LifeSci Capital; PT $44
* Cie Financiere Rated New Buy at MainFirst; PT 153 Swiss francs
>>> Call
* AB Foods Raised at RBC on Undervalued Primark, Grocery Strength
* RWE Share Sale to Back Renewables Should Be Welcomed: Analysts
Trump Expresses Support for Oracle to Buy TikTok
Oracle co-founder Larry Ellison is Trump supporter, hosted fundraiser for the president
resident Trump voiced support on Tuesday for Oracle Corp. ORCL 2.20% to buy the U.S. operations of TikTok, adding a fresh wrinkle to the bidding for the Chinese-owned video-sharing app.
Oracle is a new entrant in the negotiations for TikTok, whose owner ByteDance Ltd. is facing a fall deadline from the Trump administration to divest itself of its U.S. operations.
Oracle, a giant in business software, has had preliminary discussions about teaming with some of ByteDance’s existing minority investors to buy TikTok’s U.S. operations but it isn’t clear how advanced the talks are, said people familiar with the matter.
Microsoft Corp. MSFT 0.58% said earlier this month it was in negotiations with ByteDance, and that it was coordinating with the White House. Twitter Inc. TWTR 0.11% is also exploring a bid, The Wall Street Journal previously reported.
The Financial Times earlier reported Oracle’s involvement.
Oracle has closer ties to the White House than most other parties involved in the bidding. Larry Ellison, the company’s co-founder, chairman and largest shareholder, earlier this year threw a fundraiser at his house for the president. Chief Executive Safra Catz also worked on the executive committee for the Trump transition team in 2016.
Asked Tuesday if Oracle would be a good buyer for TikTok, President Trump said, “Well I think Oracle is a great company and I think it’s owner is a tremendous guy, a tremendous person. I think that Oracle would be certainly somebody that could handle it.”
The Trump administration has said TikTok represents a threat to national security because it is owned by a Chinese company. ByteDance has repeatedly disputed U.S. claims that it would share information on U.S. users with the Chinese government.
Oracle, in many respects, would be a more unexpected buyer than Microsoft for the youthful video-sharing app. Like Microsoft, the database company is principally focused on corporate customers and has invested heavily in boosting its cloud-computing business. But Microsoft has some consumer-facing products such as its Xbox videogame business and Bing search engine that Oracle lacks. Microsoft has said it was looking to agree to a deal by mid-September.
Oracle also doesn’t have Microsoft’s deep pockets. The Redmond, Wash.-based company has more than $136 billion in cash. Redwood City, Calif.-based Oracle ended the last fiscal year with around $37 billion in cash and equivalents.
TikTok has been looking for a potential acquirer who could bring the engineering expertise needed to keep the service up and running after splitting from ByteDance, said someone familiar with the deal. Oracle has been expanding its cloud-computing business and could shift TikTok’s U.S. service onto its own servers.
Oracle is working with Sequoia Capital and General Atlantic, investors that already have stakes in ByteDance, some of the people said.
Mr. Trump on Tuesday also reiterated his condition that any TikTok buyer must make a substantial payment to the U.S. government as part of the transaction.
“I guess Microsoft wants it and so does Oracle. And probably so do other people. But they have to make sure the United States is well compensated. Because we’re the ones making it possible. So our Treasury has to be very well compensated.”
“You have to put money into the Treasury,” he said.
Mr. Trump’s comments follow a series of executive orders from the president that set a 45-day deadline for an American company to purchase TikTok’s U.S. operations, as well as a 90-day deadline for the transaction to be completed.
Saudi Arabia the big target in US efforts to smooth Israel relations
Despite Kushner’s close ties, Riyadh unlikely to follow UAE in normalising relations with Jewish state
No sooner did the United Arab Emirates make a historic decision to normalise relations with Israel than the US spotlight turned to a more significant — and elusive — target: Saudi Arabia.
Jared Kushner, Donald Trump’s son-in-law and the man who helped broker last week’s deal, has set his sights on convincing America’s chief Arab ally to take the landmark step. Yet despite his close relations with Crown Prince Mohammed bin Salman, it remains a much tougher ask.
“Saudi Arabia is the game,” said Bruce Riedel, a former CIA officer who specialises in the Gulf kingdom. But with King Salman “a true believer in the Palestinian cause”, it is unlikely to happen any time soon.
Since Mr Trump entered the White House, his son-in-law has forged close relations with a new generation of Gulf leaders: the UAE’s Sheikh Mohammed bin Zayed, and Saudi Arabia’s crown prince. Mr Kushner has shared long late-night talking sessions with Prince Mohammed, and stood by him after intense personal criticism levelled at him in the wake of the 2018 killing of Saudi journalist Jamal Khashoggi.
“I’ve had many discussions now with MBS about . . . [the possible normalisation of relations], and also with King Salman,” Mr Kushner, the US president’s Middle East adviser, told reporters on Monday, and said it would be “very good” for Saudi business and defence. He argued it would also help the Palestinian people.
Prince Mohammed, who is pushing ahead with plans to reform the kingdom’s economy, was perceived to be willing to push the Palestinians to accept the US Middle East peace plan, as part of his efforts to cement his relationship with the Trump administration and with the wider US political establishment, western diplomats and analysts in the region have said.
But he is believed to have been overruled by his father, who is understood to have the final say on some key issues. The king told Palestinian leader Mahmoud Abbas in a phone call in January that the kingdom remained committed to the Palestinian cause and Palestinian rights, according to a readout published by the state news agency.
When Mr Trump in January rolled out his peace plan, which foresees Jerusalem as the Israeli capital and which was rejected by the Palestinians, it was publicly repudiated by King Salman. Even with the close relationship between Mr Kushner and Prince Mohammed, Saudi Arabia was a notable absentee from a flagship economic conference organised by Mr Kushner to support the peace deal.
Saudi leadership in the Islamic world also makes it much less likely the kingdom will follow in the UAE’s footsteps. The kingdom hosts Islam’s two holiest sites and portrays itself as the leader and defender of Sunni Islam. King Salman, whose official title is Custodian of the Two Holy Mosques, told the Organisation of Islamic Cooperation last year that the Palestinian cause remained a core issue and that the kingdom “refuses any measures that touch the historical and legal position of East Jerusalem”. Palestinians want East Jerusalem to be the capital of any future state.
“King Salman has a very strong place in his heart for the Palestinian people and for the cause, and MBS does as well,” Mr Kushner told reporters on Monday. “They do want to see the Palestinian people have a state.”
The Saudi government has yet to publicly express an official position on the UAE-Israel agreement.
A person familiar with Riyadh’s thinking said Saudi Arabia was “very different” to the UAE, despite their close ties.
“It’s smaller and doesn’t have that religious element. What the UAE has to lose is much less than us, and what they have to offer Israel is much less," the person said. “If you ask a 30-year-old Saudi, they may say ‘Why not have relations with Israel? They have great technology and academia.’ But they would care if we actually did because the whole Muslim world would lambast us.”
Two hashtags trending on Saudi Twitter shortly after the UAE announcement reflected polarisation around the decision: opponents of the deal used the hashtag “Gulf citizens against normalisation” while those who support it tweeted under the hashtag “Screw you and your cause”. The latter reflects Saudi nationalism and the perception that Palestinians, some of whom are critical of Saudi policy in the region, are ungrateful for the longstanding support from Riyadh.
Saudi Arabia, like the UAE, is believed to have increased its covert co-operation, particularly in security and intelligence, with Israel in recent years, as it shares the Jewish state’s concerns about Iran’s role in the region. Brian Hook, the US’s Iran envoy, told the Financial Times that “Iranian aggression” had helped unite some countries in the face of a common enemy.
A senior Trump administration official has tipped Bahrain and Oman as most likely to normalise relations with Israel next, with Morocco also on the cards. Israeli foreign minister Gabi Ashkenazi spoke with his Omani counterpart on Monday about the need to strengthen relations between the two countries.
Mike Singh, who led Middle East affairs at the US National Security Council under President George W Bush, said Bahrain, which is dependent on financial assistance from the UAE and Saudi Arabia, would want to negotiate their terms and first gauge regional reaction to the UAE initiative. He said Oman might also hesitate to antagonise Iran.
Other countries outside the region, such as Indonesia and Malaysia, might also consider initiating diplomatic relations with Israel, Mr Singh said. Israeli officials have also touted Sudan as a possible contender.
A senior administration official told the FT that “no one knows” if Saudi Arabia would take the breakthrough step. “Each step increases the confidence this is the direction the region needs to go,” said the official.
Most remain sceptical that the Saudis will follow the UAE’s lead. “There is no incentive to do it with annexation [of occupied territories] already off the table [as part of the UAE/Israel deal],” said Mr Riedel.
Three charts on the price of European equities
On Tuesday morning we examined whether it was fair to assert, as GMO’s Hawaiian-shirted James Montier has done, that US stocks are absurdly overvalued relative to their European counterparts.
FT Alphaville’s conclusion? In a word: no.
In fact, when we looked at European stocks on a sector basis, rather than as an aggregate, they seemed more expensive than their US equivalents.
After the post went online in Tuesday’s wee hours, a reader got in touch with a few more data-points that we thought were worth sharing. Put together by Ross Yarrow, Managing Director of US Equities at Baird, the numbers only serve to underline the point about sectoral composition.
First off, take a look at how the median price-to-earnings ratio for each European sector stacks up against its American counterpart. (Many thanks to Ross for updating these charts; the ones we received earlier were from May.)
And their respective weightings:
As you can see clearly, Europe’s equity market has a higher weighting towards the cheaper sectors — whether that be banking, utilities or industrials — than the US.
The question is though, what difference does this make on a quantitative level? Well, no need to ask because Ross also provided us with this excellent table which rebalances both equity markets — US and EU — so they have each other’s respective weightings:
They key numbers to look at here are the two at the bottom of the table on the far-right-hand side. As you can see, if the US had the EU’s sector weightings, its median price-to-earnings ratio would be 21.9 times, just one turn higher than Europe and a turn below its current level.
Yet, perhaps more surprisingly, if Europe had the US’s sector weightings it would trade at 20 times earnings, one turn higher than the US.
So no matter which way you spin it, whether on a company-by-company or on a sector-by-sector basis, it’s pretty difficult to argue that American stocks are particularly pricey at the moment.
Closing Stock Market SummaryThe S&P 500 increased 0.2% on Tuesday, setting new closing and intraday highs for the first time since February in the process. The Nasdaq Composite also set new highs with a 0.7% gain, but the Dow Jones Industrial Average (-0.2%) and Russell 2000 (-1.0%) finished in negative territory.
The new highs were reached shortly after the open on the heels of blowout earnings reports from Walmart (WMT 134.71, -0.89, -0.7%) and Home Depot (HD 285.00, -3.24, -1.1%), better-than-expected housing starts and building permits data for July, and continued upwards momentum in mega-cap stocks like Amazon (AMZN 3312.49, +130.08, +4.1%).
In sell-the-news fashion, the S&P 500, including WMT and HD, quickly descended into negative territory. An intraday rebound, however, did give the S&P 500 an incremental new high in the afternoon as investors gravitated toward mega-cap stocks within the consumer discretionary (+1.5%), communication services (+1.1%), and information technology (+0.4%) sectors.
Conversely, investors generally avoided small-caps and value-oriented stocks within the energy (-1.7%), financials (-0.7%), utilities (-0.5%), and industrials (-0.5%) sectors. Interestingly, the Dow (-0.2%) was a better representation of today's action, as declining issues did outnumber advancing issues at the NYSE and Nasdaq.
Separately, Politico reported that Senate Republicans are aiming to introduce a smaller stimulus package that will provide $300/week in enhanced unemployment, money for the USPS, and more money for small businesses. Additional fiscal support would provide investors some confidence in the large retailers sustaining their strong performances.
In other corporate news, Oracle (ORCL 55.18, +1.19, +2.2%) reportedly joined the list of companies trying to acquire TikTok US. Kohl's (KSS 20.01, -3.44, -14.7%) said it experienced a softer back-to-school selling season. Teva Pharma (TEVA 10.48, -1.11, -9.6%) is reportedly being sued by the U.S. government over alleged kickbacks violating the False Claims Act.
U.S. Treasuries finished the session slightly higher. The 2-yr yield declined one basis point to 0.14%, and the 10-yr yield declined one basis point to 0.67%. The U.S. Dollar Index fell another 0.6% to 92.30, which benefited gold futures ($2013.2/ozt, +14.50, +0.7%). WTI crude futures declined 0.2%, or $0.09, to $42.80/bbl.
Reviewing Tuesday's economic data:
- Total housing starts surged 22.6% m/m in July to a seasonally adjusted annual rate of 1.496 million units ( consensus 1.230 million) from an upwardly revised 1.220 million (from 1.186 million) in June. Building permits soared 18.8% m/m to 1.495 million (consensus 1.332 million) from an unrevised 1.258 million in June.
- Multi-unit starts and permits drove the positive surprises, yet the key takeaway is that there was also strength in single unit starts (+8.2% m/m) and permits (+17.0% m/m), which is a reflection of strong housing demand.
Looking ahead, investors will receive the FOMC Minutes from the July 28-29 meeting and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +25.0% YTD
- S&P 500 +4.9% YTD
- Dow Jones Industrial Average -2.7% YTD
- Russell 2000 -5.9% YTD
After Hours Summary: SRNE falls -9.7% as co terminates its CFO; AXDX +10.2% as it receives FDA EUA for COVID-19 testing systemAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: KE +2.5%, SUPN +0.8%
Companies trading higher in after hours in reaction to news: ONE +13.1% (extends momentum from +29% move during Tuesday's regular session), AXDX +10.2% (receives FDA EUA for COVID-19 antibody testing system), GS +0.6% (announces settlement with the Govt of Malaysia and 1Malaysia), TXN +0.2% (names new COO), T +0.2% (announces additional early repayment of debt), MYL +0.2% (FDA approves Mylan's generic version of BIIB's Tecfidera), PSN +0.2% (completes steps to begin treatment of radioactive waste at Dept of Energy facility), QGEN +0.1% (expands coronavirus NGS and software to accelerate research for COVID-19), ENIC +0.1% (S&P 'BBB+' ratings affirmed; outlook stable)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ATGE -9.7%, JKHY -9.2%, A -2.6%, CREE -0.8%, LZB -0.1% (also reinstates dividend)
Companies trading lower in after hours in reaction to news: SRNE -9.7% (terminates CFO immediately), SABR -8.9% (stock offering), PLYM -6.9% (to offer 5.75 mln shares), ALBO -3.2% (clinical trial results did not achieve proof-of-concept for other key NASH measures), ETSY -0.7% (announces $650 mln convertible notes offering; also says it will re-initiate stock repurchases in Q4), FISV -0.3% (prices 5 mln share offering at $100/sh), GFL -0.2% (responds to negative report from Spruce Point), IRTC -0.2% (stock offering), UAL -0.2% (will increase service to China from two to four weekly flights), EAT -0.1% (S&P 'B+' rating affirmed on improved liquidity; outlook negative on COVID-19 challenges)