>>> What to look at today - 17th of October 2019

U.S. and European stock futures were mixed after a muted session in Asia. The pound dropped as doubts grew about a Brexit deal between the U.K. and European Union.
The pound tumbled after Prime Minister Boris Johnson’s political allies in Northern Ireland said they couldn’t support the current framework for an agreement. Stocks fell in Tokyo, Sydney and Seoul, rose in Hong Kong and were little changed in Shanghai. Treasury yields continued to tick lower after an unexpected drop in retail sales Wednesday boosted market pricing for an October rate cut by the Federal Reserve.
US After Hours LLNW +14%, NFLX +9% among earnings/guidance movers; IBM -5% following earnings

Nikkei -0.09% Hang Seng +0.41% CSI -0.14% Shanghai -0.22% Shenzen -0.17%

S&P -0.15% EuroStoxx -0.30% FTSE +0.18% Dax -0.36% SMI -0.15%

Macro :
- ECB’s Weidmann Takes Sideswipe at ‘Mistaken’ Trump Trade Policy

Keep an eye on :
- AZA SS : Avanza Third Quarter Operating Income Beats Highest Estimate
- CNE LN : Cairn Energy Reports Chimera Well in North Sea Is Dry
- CO FP : Casino To Sell Restaurants To Crescendo For About EU20M
- CEC GY : Germany’s Ceconomy Is Likely to Name Interim CEO, DJ Says
- CNA LN : Centrica Said to Pick Goldman for $2 Billion Spirit Energy Sale
- EDF FP : EDF Cuts French Reactor Output by 2.2GW Due to Strike
- EDP PL : EDP Says Jan.-Sept. Electricity Generation Falls 11% Y/y
- ELISA FH : Elisa Oyj Third Quarter Comparable Ebitda Meets Estimates
- ERICB SS : Ericsson Hikes Sales Target as Phone Carriers Spend on 5G
- ERICB SS : Ericsson CEO: No Major Change to Impact of Strategic Contracts
- EO FP : Faurecia 3Q Sales Rise 4.3% to EU4.19 Billion
- FRE GY : Fresenius Rebuffed in Agency Challenge to Amgen on Neupogen
- LUN DC : Otsuka, Lundbeck Sue Companies to Block Copies of Rexulti Drug
- MC FP : Dior Feels China Nationalism Heat After Map Excludes Taiwan (1)
- MAS SM : Masmovil Holders NS Servicios Files to Offer 5.1m Shrs
- MERY FP : Mercialys Nine Month Rental Rev. EU142.1 Mln
- NESN SW : Nestle 9M Organic Rev. Matches Estimates; Announces Buyback (2)
- PMO LN : Premier Oil Reports Positive Well Result at Tolmount East
- PUB FP : Publicis Downgraded to BBB by S&P After Profit Warning
- RAT LN : Rathbone Brothers 3Q Funds Under Management GBP49.4b (1)
- RTO LN : Rentokil Third Quarter Revenue GBP727.2 Mln
- RXL FP : Rexel 3Q Growth Slowed Vs. 2Q on German, U.S. Industry Demand
- SAN FP : Sanofi Is Said in Talks to Sell Seprafilm Products to Baxter
- SBMO NA : SBM Offshore Gets $1.14 Billion Project Loan for FPSO Liza Unity
- SLIGR NA : Sligro Sees Decline in Profit in 2H (1)
- TEF SM : Telefonica’s O2 Activates U.K. 5G Network in Six Locations
- TEL2B SS : Tele2 Cost-Cutting Message Strong, Morgan Stanley Says After 3Q
- TEMN SW : Temenos’ Weak Results ‘Somewhat of a Surprise,’ Jefferies Says
- UCB BB : UCB’s Bimekizumab Phase 3 Psoriasis Study Meets All Endpoints
- UBSG SW : UBS CEO Ermotti Joins Alliance of CEOs for Sustainable Investing
- UNA NA : Unilever Confirms FY Targets After 3Q Sales Growth Miss (1)
- VIE FP : Veolia Wins EU2.6B Grids Contract Through Unit In Germany
- VOLVB SS : Volvo Foots Bill for Battery Charges in Bid to Curb Emissions
- SMWH LN : WH Smith Buys Marshall Retail to Boost U.S. Growth Prospects
- WG/ LN : Schlumberger Loses North American Drilling Chief to Wood Group

>>> Europe : Brokers Upgrades & Downgrades - 17th of October 201

>>> Up
* Asos Raised to Hold at Stifel; PT 3,200 pence
* Edgeware Raised to Hold at Handelsbanken; PT 7.30 kronor
* Euronav Raised to Buy at Stifel; PT 12.63 euros
* Iliad Raised to Overweight at JPMorgan; PT 102 euros
* Ossur HF Raised to Buy at SEB Equities; PT 52 kroner
* Tryg Raised to Overweight at Barclays; PT 225 kroner
* Zalando Raised to Neutral at MainFirst; PT 42 euros

>>> Down
* Bellway Cut to Hold at Jefferies; PT 3,743 pence
* Boliden Cut to Sell at Goldman; PT 210 kronor
* Eurazeo SE Cut to Neutral at Goldman; PT 76 euros
* Haulotte Cut to Neutral at MainFirst; PT 5.30 euros
* KAZ Minerals Cut to Neutral at Goldman; PT 475 pence
* Kuehne + Nagel Cut to Sell at Goldman; PT 138 Swiss francs
* Lyko Cut to Hold at ABG; PT 65 kronor
* Maersk Cut to Neutral at Goldman; PT 9,000 kroner
* Norsk Hydro Cut to Neutral at Goldman; PT 31 kroner
* Osram Cut to Hold at Bankhaus Lampe
* Sampo Cut to Equal-Weight at Barclays; PT 40 euros
* Telenor Cut to Hold at Berenberg
* Travis Perkins Cut to Hold at Canaccord
* Wacker Chemie Cut to Hold at Commerzbank; PT 61 euros

>>> Initiation
* Anima Rated New Buy at Berenberg; PT 4.50 euros
* Hipgnosis Songs Fund Rated New Buy at Liberum; PT 116 pence
* Synthomer Reinstated Neutral at Exane; PT 320 pence
* Swiss Re Rated New Neutral at Oddo BHF; PT 112 Swiss francs

>>> Call
* European Bank Earnings May Go From Bad to Worse as Economy Slows

>>> TradeGate PRe-Mkt

DAX:
  • EON (EOAN TH) +0.3%
  • Wirecard (WDI TH) +0.1%
    • Wirecard Raised to Neutral at Guggenheim
  • Allianz (ALV TH) flat
    • JPMorgan Veteran Refuses to Buy ‘Insane’ Negative-Yield Bonds
  • Deutsche Telekom (DTE TH) -0.1%
  • Infineon (IFX TH) -0.1%
    • Dreyfus Appreciation Adds Progressive, Exits Infineon
  • Lufthansa (LHA TH) -0.4%
  • SAP (SAP TH) -0.5%
    • ClearBridge Appreciation Adds Sherwin-Williams, Exits SAP
  • Bayer (BAYN TH) -0.5%
  • VW (VOW3 TH) -0.6%
  • Deutsche Bank (DBK TH) -1.1%
    • European Bank Earnings May Go From Bad to Worse as Economy Slows
MDAX:
  • Zalando (ZAL TH) +0.9%
    • Zalando Raised to Neutral at MainFirst; PT 42 euros
  • Evotec SE (EVT TH) +0.4%
  • ProSieben (PSM TH) +0.4%
  • Commerzbank (CBK TH) +0.3%
  • Telefonica Deutschland (O2D TH) +0.3%
  • ThyssenKrupp (TKA TH) -0.3%
    • Kone, Blackstone Court Partners for Thyssenkrupp Elevators (2)
  • Aroundtown (AT1 TH) -0.3%
  • 1&1 Drillisch (DRI TH) -0.4%
  • Lanxess (LXS TH) -0.7%
  • Siemens Healthineers (SHL TH) -1%
SDAX:
  • Corestate (CCAP TH) +4.2%
    • Corestate Keeps FY View After Muddy Waters Discloses Short (1)
  • SGL (SGL TH) +0.8%
  • Aixtron (AIXA TH) +0.8%
  • Deutz (DEZ TH) +0.5%
  • HelloFresh (HFG TH) +0.5%
  • Nordex (NDX1 TH) +0.2%
  • Steinhoff (SNH TH) -0.5%
  • Schaeffler (SHA TH) -0.6%

>>> Us After Hours Summary: LLNW +14%, NFLX +9% among earnings/gui

After Hours Summary: LLNW +14%, NFLX +9% among earnings/guidance movers; IBM -5% following earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LLNW +14.1%, NFLX +8.5%, TCBI +7.1%, CSX +3.8%, AA +3.1% (also announced intent to pursue non-core asset sales), CCI +1.7%

Companies trading higher in after hours in reaction to news: TNDM +3.7% (announced publication of DCLP3 study data in the NEJM), GME +1.5% (announced Chief Accounting Officer transition), EGO +0.8% (lightly traded; reported preliminary Q3 gold production results)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: IBM -5.1%, URI -2.2%, KMI -0.3%

Companies trading lower in after hours in reaction to news: APA -0.2% (reported certain Q3 financial and operational results; reiterated Q3 production guidance), CGNX -0.2% (lightly traded; announced acquisition of SUALAB)

>>> US Close Dow -0.08% S&P -0.20% Nasdaq -0.30% Russell +0.12%

Closing Stock Market Summary

Wall Street finished little changed on Wednesday, as investors weighed negative macro news against another set of mostly positive earnings results. The S&P 500 (-0.2%), Dow Jones Industrial Average (-0.1%) and Nasdaq Composite (-0.3%) closed slightly lower, while the Russell 2000 (+0.1%) inched higher.  

The positive reaction to today's batch of earnings reports was limited to shares of companies that reported, namely Bank of America (BAC 30.18, +0.45, +1.5%), United Airlines (UAL 89.70, +1.82, +2.1%), and J.B. Hunt Transport Services (JBHT 115.65, +4.05, +3.6%), as opposed to Tuesday's earnings-driven rally. Eight of the 11 S&P 500 sectors closed near their flat lines.

The energy sector (-1.5%) was today's laggard despite an increase in oil prices ($53.42/bbl, +0.63, +1.2%), followed by the information technology sector (-0.7%) amid weakness in the software stocks. The consumer discretionary sector (+0.4%) outperformed despite an unexpected 0.3% m/m decline in retail sales for September (Briefing.com consensus +0.3%). 

The relatively conservative spending did follow an upwardly revised 0.6% increase (from +0.4%) in August, which presumably allayed an overreaction among sellers. Still, the headline figure could feed into the slowdown narrative for the U.S. economy, especially when uncertainty remains on the U.S.-China trade front. 

On Wednesday, China threatened unspecified countermeasures against the U.S. after the House of Representatives approved legislation to support pro-democracy protesters in Hong Kong. The Senate has yet to vote on the measures, but the situation could complicate the completion of the first phase of a trade deal with the U.S. 

In other potential deals, General Motors (GM 36.65, +0.39, +1.1%) and the UAW reached a tentative agreement that could end the monthlong strike at GM. McKesson (MCK 144.84, +6.67, +4.8%), Cardinal Health (CAH 49.07, +1.17, +2.4%) and AmerisourceBergen (ABC 86.05, +2.85, +3.4%) began talks to settle opioid litigation for $18 billion, according to The Wall Street Journal. 

U.S. Treasuries finished the session on a higher note, leaving yields slightly lower. The 2-yr yield and the 10-yr yield both declined two basis points each to 1.59% and 1.75%, respectively. The U.S. Dollar Index declined 0.3% to 98.02.

Reviewing Wednesday's batch of economic data, which featured Retail Sales for September:

  • Total retail sales declined 0.3% month-over-month in September( consensus +0.3%) following an upwardly revised 0.6% increase (from +0.4%) in August. Excluding autos, retail sales declined 0.1% (consensus +0.2%) after increasing an upwardly revised 0.2% (from 0.0%) in August.
    • The upward revisions for August cushioned some of the headline blow, yet the key takeaway from the report is that it highlights some relatively conservative consumer spending activity in September that will feed into the slowdown narrative building for the U.S. economy.
  • Total business inventories were unchanged month-over-month in August (consensus +0.2%) after a downwardly revised 0.3% increase (from 0.4%) in July. Total business sales were up 0.2% following a downwardly revised 0.2% increase (from 0.3%) in July.
    • The key takeaway from the report is that the gap between inventory growth on a yr/yr basis (+4.2%) and sales growth (+1.1%) remains, which should help keep prices in check.
  • The NAHB Housing Market Index for October increased to 71 from 68 in September.
  • The weekly MBA Mortgage Applications Index ticked up 0.5% following a 5.4% increase in the prior week.

Looking ahead, investors will receive Housing Starts and Building Permits for September, Industrial Production and Capacity Utilization for September, the Philadelphia Fed Index for October, and the weekly Initial and Continuing Claims on Thursday.

  • Nasdaq Composite +22.4% YTD
  • S&P 500 +19.3% YTD
  • Dow Jones Industrial Average +15.8% YTD
  • Russell 2000 +13.1% YTD