(CS) Casino Guichard : De-levered, de-risked, de-rated

De-levered, de-risked, de-rated
■ A more stable, localised business: After coming off restriction we revisit
the key pillars of our investment thesis and address current investor
concerns. We cut our FY1 to FY2 earnings forecasts by 20-30%, largely due
to reductions in subsidiary earnings' forecasts, but our pro forma SOTP
valuation falls by 10%; HOLT® fair value declines by ~€6/shr. Our target
price falls to €50/shr. from €55, but we reiterate our Outperform rating.
■ Casino's deleveraging plan is robust: We estimate Casino will get €4.0bn
from the sale of its Thai, Vietnamese and non-core French operations, all of
which will be used to de-lever the balance sheet. Our FY15e Adjusted Parent
Company Net Debt / EBITDA falls from 5.6x to 3.9x (pro forma), within S&P's
3.5x to 4.0x target range1. We also expect the ongoing deleveraging and
simplification processes to reduce concerns around its accounting practises
and emerging markets exposure.
■ The turning point in France has already occurred: After years of market
share losses, Casino has started to outperform competitors in France. This is
in line with improving brand resonance and price perception after three years
of significant (and necessary) price cuts. We expect operating leverage to
follow LfL improvements, which supports management's guidance for FY16e.
■ Potential risks outweighed by significant upside potential: LatAm
weakness, a potential debt downgrade and negative disclosure around real
estate transactions are the primary risks to our thesis, but are well
understood and, we believe, largely priced in. At a 28% FY1e P/E discount to
the sector vs. a 4% historical premium, we view the share price upside as
compelling.

Inmobiliaria Colonial owners QIA and Villar Mir mull capital increase for SFL co

Inmobiliaria Colonial owners QIA and Villar Mir mull capital increase for SFL control swap

Inmobiliaria Colonial large shareholders, Qatar Investment Authority (QIA) and Grupo Villar Mir are in advanced discussions to implement a change in ownership, El Confidencial reported, citing sources privy to the process.

The deal will be structured via a share swap between the Spanish property group Inmobiliaria Colonial and its French affiliate Société Foncière Lyonnaise (SFL), two listed companies of which QIA holds a 13% stake and a 22.2% stake respectively, the report said. Grupo Villar Mir owns a 15% stake in Colonial, the Spanish-language report noted.

Under the planned transaction, QIA will convert a majority of its shares in SFL into shares of Colonial though the deal could require a EUR 500m - EUR 600m capital increase for the Spanish property company, the report said. The operation will increase Colonial’s size by 20%. At present Colonial’s market capitalisation stands at c.EUR 1.9bn.

The deal would be subject to QIA maintaining a stake in Colonial below the compulsory takeover threshold of 30%, the report said.

Sources from Colonial declined to comment, the report said.

Colonial will increase above 70% its stake in SFL, currently at 53.1%, the report said. Therefore, the operation is subject to maintaining the French SIIC unit’s fiscal advantages, which put a threshold of 60% the stake a shareholder may have to benefit from these advantages, according to the report. The operation is subject to French authorities allowing SFL to maintain the same tax regime, El Confidencial said.

Other Colonial shareholders include Amura Capital, a vehicle linked to the Andorran bank Mora Banc (7%) and the Colombian Santo Domingo family (7%) via their vehicle Anguila.

SFL shareholders include the insurance company Predica (13.2%) and the Andorran financial group Reig Capital Group (4.4%).

Link to original source.


Source El Confidencial

>>> What to look at today - 1st of March 2016

Dow-0.74% S&P-0.81% Nasdaq-0.71% Russell-0.32%
US Market closed lower for the last day of the month. For the month, the S&P 500 shed 0.4% while the Nasdaq lost 1.1% and the Dow gained 0.3%. health care sector (-1.6%) underperformed throughout today's session as weakness from large-cap constituents as well as biotechnology dropped, IBB ended its session lower by 2.8%. VRX tumbled 18.4% after CNBC reported that the SEC is investigating the company. Additionally, the company postponed its earnings release and call. WTI crude ended its day higher by 3.3% at $33.82/bbl, finishing the month little changed. Volume were above average with 1.27bil shares traded. US After Hours CECO +23%, CRC +18.8%, APEI +13.5%, AXGN +13.5%, DPLO -26.6%, OPWR -21.4%, RMTI -20.7%, BCEI -13.4%, NLST -13.2% following earnings/guidance...VRX bounce back after hours after confirming subpoena. Asian equity markets are mixed and volatility is surprisingly light given some high-profile economic events and datapoints over the past 24 hours. Overnight, PBoC announced another 50bp RRR cut - the first since Oct 2015. PBoC Dep Gov Chen remarked that Yuan is basically stable against the basket of currencies, with no reason for continued depreciation. Chen added weaker CNY has had no impact on exporters, estimating January survey-based unemployment just above 5%. Japan jobless rate ticked lower, while manufacturing sector notched an 8-month low PMI.

Nikkei +0.37% Hang Seng +0.86% Shanghai +1.77%

Eur$1.0891 CNH 6.5429 CNY 6.5413 GBP 1.3946 JPY 112.67 CHF 0.9973 RUB$ 74.765 WTI$ (Apr) 34.13 +1.13%

S&P unch EuroStoxx-0.35% Dax-0.24% SMI -0.30%

Macro :
- *THIRD POINT OFFSHORE DOWN 4% YTD THROUGH FEB.: CNBC
- China’s PMI Reports Show Slowdown Deepening as Services Slip
- Fed’s Dudley Says ’Somewhat Less Confident’ on Inflation Outlook
- The Rise and Fall of Commodities Hedge Fund King Willem Kooyker

Keep an eye on :
- ANA SM : Acciona 2015 Net EU207M, in Line With Analyst Estimates
- AIR FP : Airbus to Keep Delivering 20 A330s to Chinese Clients Each Year
- AIR FP : Airbus May Shift More Production Toward A321 Model: Reuters
- ALBA IM : Creditors Want Alba to Sell Service Unit Quickly: Handelsblatt
- ATL IM : Atlantia looks to sell 30% stake in Autostrade per l'Italia - Il sole 24
- BMW GY : BMW’s Robertson Says Mood Among China Dealers ‘Much More Stable’
- BRBY LN : +4% yest on renew rumors of potential bid
- COL SM : Inmobiliaria Colonial owners QIA and Villar Mir mull capital increase for SFL control swap - el confidencial
- DAI GY : Daimler CEO Reiterates That Company Fully Cooperating With EPA
- DB1 GY : Deutsche Boerse Well Placed With or Without LSE, UBS Says
- FI/N SW : Georg Fischer Beats Ests., Targets ’16 Sales Growth of 3%-5%
- OLE SM : Deoleo 2015 Loss EU61.3M Versus EU74.1M Loss Yr Earlier
- GPRO US : GoPro Expects to Record ‘Substantial Net Loss’ in 1Q
- HOME LN : According to CS, Amazon deal in the Uk will push to higher bid from Sainsburry
- HVM GR / UCG IM : HypoVereinsbank to Seek EU139m From Ex-CFO: Handelsblatt
- IPN FP : Ipsen Lifts 2020 Sales Target to More Than EU2B on Cabozantinib
- DEC FP : JCDecaux Blocks Bike Rental System Because of Technical Fault
- KCO GY : Kloeckner Scraps Dividend After Posting Loss
- MMB FP : Lagardere Active Plans to Cut Costs, Le Figaro Says
- LSE LN : ICE Said to Explore Bid for LSE to Thwart Deutsche Boerse (2)
- OR FP : L’Oreal Heirs Create Investment Fund, Les Echos Says http://bit.ly/1oUViod
- RWE GY : German Atomic Commission Said to Plan Another Meeting on Costs
- STRS IT : Strauss Group’s Max Brenner Intl Said to Explore Sale: Reuters
- UMI BB : Umicore Loses First Round in BASF Patent Fight Over Batteries
- VRX US : Ackman ‘Delighted’ Over Valeant CEO Mike Pearson Return: CNBC
- VIV FP : Vivendi Says It Owns 15.66% of Ubisoft
- VOW3 GY : VW CEO Says in ‘Very Constructive Talks’ With U.S.: ZDF TV

>>> Europe : Brokers Upgrades & Downgrades - 1st of March 2016

>>> Up
*ACCIONA RAISED TO HOLD VS REDUCE AT KEPLER CHEUVREUX
*ATOS REITERATE BUY AT GOLDMAN (Note Attached)
*BANCO SANTANDER RAISED TO BUY AT HSBC
*ENI RAISED TO EQUALWEIGHT VS UNDERWEIGHT AT BARCLAYS
*INDITEX RAISED TO BUY VS HOLD AT SOCIETE GENERALE
*INDRA RAISED TO HOLD VS SELL AT SOCGEN
*PANALPINA RAISED TO BUY VS NEUTRAL AT NOMURA
*PHILIPS RAISED TO HOLD AT HSBC
*REPSOL SA RAISED TO OVERWEIGHT AT BARCLAYS
*VALEO REITERATE BUY AT GOLDMAN (Note attached)

>>> Down
*CARLSBERG CUT TO SELL VS NEUTRAL AT UBS
*EIFFAGE CUT TO NEUTRAL AT GOLDMAN (Note attahced)
*ENGIE CUT TO REDUCE AT HSBC
*GENEL ENERGY CUT TO NEUTRAL VS OUTPERFORM AT MACQUARIE
*GENEL ENERGY CUT TO MARKET PERFORM VS OUTPERFORM AT BMO
*HISCOX CUT TO SELL VS HOLD AT CANACCORD
*LEGRAND CUT TO HOLD AT HSBC
*NESTE CUT TO UNDERWEIGHT VS EQUALWEIGHT AT BARCLAYS
*RANDGOLD CUT TO NEUTRAL AT BOFAML
*SALZGITTER CUT TO HOLD VS BUY AT BANKHAUS LAMPE
*SUNEDISON INC CUT TO MARKET PERFORM AT OPPENHEIMER

>>> PT Change


>>> Initiation

>>> Call
>>Stock
*WIRECARD ADDED TO BANKHAUS LAMPE ALPHA LIST

FT : Amazon aims for convenience with Morrisons’ tie-up

Amazon’s tie-up with WM Morrison marks the online store’s boldest step into any grocery market outside the US.
But its plan to sell Morrisons own-brand products is not the all-out assault that retail analysts had been preparing for. Its limitations suggest that — like traditional supermarkets — Amazon has wrestled with how to make money out of delivering groceries to customers’ doors for little more than they would pay for them in store.

Monday’s deal will add hundreds of products to two food delivery services that form part of Amazon’s £79-a-year Prime service.
Fresh and frozen items from Morrisons, such as ice-cream and orange juice, will be available via Prime Now, which dispatches couriers carrying insulated carrier bags to deliver orders within one or two hours.
Amazon Pantry will offer a broader range of non-perishable items, including Morrisons chocolate bars and smoked almonds.
But customers are unlikely to view either service as a substitute for a weekly shopping trip. The online services offered by major supermarkets charge as little as £1 or £2 to deliver an online grocery order of any size. Pantry charges more than that to deliver a single bag, which can hold about 12 boxes of cornflakes or 15 bottles of Bourbon whiskey.
Rather than competing head-to-head with existing services that are popular and cheap, analysts say Amazon is trying to carve out a niche of Britain’s lucrative convenience market.
“Convenience stores are pretty big in the UK and they are already more expensive than the bigger stores, with prices that are about 6 per cent higher,” says Richard Clarke of Sanford Bernstein.
“If you’re Amazon, that’s where you can charge extra and still come out with a reasonable-sounding number.”
At least for now, Amazon’s grocery ambitions appear narrower in Britain than in the US, where it has launched a fully-fledged delivery service in cities including Seattle, New York and Philadelphia.

The American service offers a full range of groceries, which can be delivered in one-hour slots, or before dawn to customers who are happy to have food left outside their front door in temperature-controlled “totes”.
But Amazon has been slow to expand its food delivery service, even in the US, and the price it charges there — an extra $200 a year on top of the regular $99 prime subscription — would be unlikely to attract many customers in the UK, where annual grocery delivery plans are available for £60 (about $84).
Supermarket executives express surprise at the prospect that Amazon would invest the considerable resources required to create an online-only grocery service in a market where prices are low and competition fierce.
Analysts say that like Ocado, an online supermarket that has no physical stores, Amazon would have to invest in new warehouses and computer systems if it wanted to expand AmazonFresh to the UK.

In contrast, most major British supermarkets have set up online operations with little capital outlay, by retrofitting stores with technology enabling them to serve as small distribution centres. When the stores are closed, staff use specially adapted trolleys to pick items and load them on to vans for delivery to internet shoppers.
Many supermarket executives view labour-intensive online orders as less profitable than serving customers who pick products off the shelves themselves and drive the shopping home in their own cars. But they are loath to see even lower-margin customers defect to another supermarket, and lose the contribution they make to covering the fixed cost of running stores.
In Amazon’s main business of selling items such as books and electronics, often for delivery within one or two days, it counts its highly efficient warehouses as one of its main advantages.

Ocado says its automated fulfilment centres lend it a similar advantage. For every hour that an employee works in its newest facility, the company says it can put more than 200 items in baskets for delivery to customers.
Such sophisticated technology helps save on labour costs, but the cost of installing it is equivalent to five weeks’ takings, a large cost to recoup from the grocery industry’s thin margins. Amazon would face a similar handicap, against competitors that have sunk money into physical stores.
Mr Clarke describes Amazon’s grocery services as “reasonably niche — aimed at the cash rich, the time poor, or early adopters of technology that just like to try things out for the sake of them”.
That is hardly enough to open a new front in the battle that has seen German discounters Aldi and Lidl claim 10 per cent of the UK grocery market.
But for an internet pioneer trying to capture a bigger part of what its customers spend, it may be enough, for now.

Les Echos : La famille Bettencourt crée un fonds pour réinvestir ses millions

La famille Bettencourt crée un fonds pour réinvestir ses millions

La holding familiale Téthys, présidée par Françoise Bettencourt Meyers, se dote d'une nouvelle filiale baptisée Téthys Invest. Ce fonds d'investissement s'appuiera sur la puissance financière de sa maison-mère.
Les conflits familiaux au sein de la famille Bettencourt semblent définitivement dépassés. La holding Téthys, présidée par Françoise Bettencourt Meyers mais dont sa mère Liliane Bettencourt conserve l'usufruit, a annoncé ce lundi 29 février la création d'une nouvelle filiale Téthys Invest.
Ce nouveau fonds d'investissement "entend réaliser des investissements de diversification dans différents secteurs économiques", selon un communiqué de Françoise Bettencourt Meyers et de Jean-Pierre Meyers, son époux et Directeur Général de Téthys.
Diversifier ses actifs
Ce lancement de Téthys Invest marque une nouvelle étape dans la stratégie des Bettencourt. La première génération incarnée par Eugène Scheuller a lancé l'Oréal, sa fille Liliane a ensuite développé l'entreprise avec son mari André Bettencourt, tandis que la troisième génération portée par Françoise Bettencourt Meyers, son mari et leurs deux enfants, souhaite diversifier ses actifs et prendre des participations financières dans plusieurs entreprises de différents secteurs et de taille variable.
Téthys Invest dispose de plusieurs avantages. Sa maison-mère, qui détient près d'un tiers de L'Oréal et plus de un milliard d'euros d'actifs, lui offrira une puissance de feu financière. Téthys obtient en effet chaque année près de 500 millions de dividendes provenant du groupe de cosmétiques. Par rapport à deux autres sociétés d'investissement Eurazeo et Wendel, ce nouveau fonds sera par ailleurs moins contraint d'obtenir un retour sur investissement rapide.
S’inscrire dans le temps long
Téthys Invest sera dirigé à partir du 15 mars prochain par Alexandre Benais, un banquier d'affaires de 40 ans qui était associé-gérant au sein de la banque Lazard depuis 2011. A ce titre, il a notamment travaillé pour le compte de L'Oréal, Danone et Sanofi. Il a par exemple participé à l'opération de clarification des comptes entre L'Oreal et Nestlé en février 2014.
La jeunesse du futur directeur général s'inscrit dans la volonté de la famille de s'inscrire sur le temps long. L'ancier banquier d'affaires devient également directeur général adjoint en charge des finances et des investissements de Téthys.
Gage de sérénité
L'union retrouvée au sein de la famille Bettencourt, déchirée par des conflits internes jusqu'à la signature en décembre 2010 d'un accord entre Liliane Bettencourt et sa fille Françoise, est un gage de sérénité pour l'avenir de L'Oréal et de Téthys. La holding familiale a longtemps été dirigée par Patrice de Maistre, l'ancien gestionnaire de fortune de Liliane Bettencourt remplacé à son poste de directeur général par Jean-Pierre Meyers en 2010. Liliane Bettencourt est aujourd'hui la personnalité la plus riche de France et la dixième dans le monde en 2015, avec une fortune personnelle estimée à plus de 40 milliards de dollars, selon Forbes

>>>> Asian Update

Asian Market Update: China official PMIs fall to 4-year lows; RBA stands pat, statement little changed


***Economic Data***
- (CN) CHINA FEB CAIXIN PMI MANUFACTURING: 48.0 V 48.4E; (11th month of contraction and a 5-month low)
- (CN) CHINA FEB MANUFACTURING PMI: 49.0 V 49.4E (7th month of contraction and a 4-year low); Non-Manufacturing PMI (services) 52.7 (4-year low) v 53.5 prior
- (JP) JAPAN FEB FINAL PMI MANUFACTURING: 50.1 V 50.2 PRELIM; 8-month low
- (JP) JAPAN Q4 CAPITAL SPENDING Y/Y: 8.5% V 8.7%E; CAPITAL SPENDING EX-SOFTWARE Y/Y: 8.9% V 8.7%E
- (JP) JAPAN JAN JOBLESS RATE: 3.2% V 3.3%E; 3-month low
- (IN) INDIA FEB PMI MANUFACTURING: 51.1 V 51.1 PRIOR
- (AU) AUSTRALIA JAN BUILDING APPROVALS M/M: -7.5% V -3.0%E; Y/Y: -15.5% V -8.5%E
- (AU) AUSTRALIA Q4 CURRENT ACCOUNT BALANCE (A$): -21.1B V -20.0BE; NET EXPORTS OF GDP: 0.0% V 0.3%E
- (AU) AUSTRALIA FEB CORELOGIC RPDATA HOUSE PRICES M/M: 0.5% V 0.9% PRIOR
- (AU) AUSTRALIA FEB AIG MANUFACTURING INDEX: 53.5 V 51.5 PRIOR; 8th straight month of expansion
- (KR) SOUTH KOREA FEB TRADE BALANCE: $7.4B V $6.0BE

***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.3%, S&P/ASX +0.9%, Kospi -0.2%, Shanghai Composite +0.1%, Hang Seng +0.5%, Mar S&P500 -0.1% at 1,928

***Commodities/Fixed Income***
- Apr gold +0.9% at $1,246/oz, Apr crude oil +0.4% at $33.88/brl, May copper -1.2% at $2.10/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 14.9 tonnes to 777.3 tonnes; Highest since Sept 2014
- JGB: (JP) Japan MoF sells ¥2.19T in 10-yr 0.1% JGBs; Avg yield: -0.024% (first ever negative yield for 10-yr auction) v 0.078% prior; bid to cover: 3.20x v 3.14x prior
- (CN) PBOC SETS YUAN MID POINT AT 6.5385 V 6.5452 PRIOR; First stronger setting in 6 sessions
- (CN) PBoC won't conduct open market operations (OMO) in today's session due to ample liquidity / weak demand

***Market Focal Points/FX***
- Asian equity markets are mixed and volatility is surprisingly light given some high-profile economic events and datapoints over the past 24 hours. Overnight, PBoC announced another 50bp RRR cut - the first since Oct 2015 - to 17%. Chinese central bank also shifted on FX settings and open market operations, while Beijing unveiled more disappointing PMI figures. Australian central bank decision was as anticipated, with a slightly less dovish outlook at first glance. Finally Japan jobless rate ticked lower, while manufacturing sector notched an 8-month low PMI. In FX majors, USD/JPY plunged to 112.10 at the start of the day but regained lost ground, AUD/USD rose about 30pips on RBA before consolidating gains, and NZD/USD was in a 30pip range around $0.66 handle ahead of tomorrow's GDT auction.

China:
- Economists with ICBC viewed the overnight RRR cut as a long-overdue necessity to counter ongoing capital flows, as investors seem to have shrugged this injection of liquidity. Note that PBoC also skipped today's open market operations for the first time in weeks, citing a glut in liquidity and low demand for its recently favored 7-day reverse repo instrument. Interestingly, after 5 days of weaker setting, PBoC also set its currency firmer, presumably to solidify FX policy as a two-way trade.
- Official PMIs hit 4-year low for both manufacturing and services. Key manufacturing components - New Export Orders and Input prices measuring external demand and inflation trends - were surprisingly resilient. Orders rose to 47.4 from 46.9 and input prices bounced to 50.2 v 45.1 m/m. Private Caixin survey was in contraction for the 12th straight month and also fell to a 5-month low. Researchers said firms recorded lower headcounts with downsizing policies as part of cost-cutting initiatives, along with the non-replacement of voluntary leavers. Here, cost deflation also slowed to the weakest level in 18 months.
- PBoC Dep Gov Chen remarked that Yuan is basically stable against the basket of currencies, with no reason for continued depreciation. Chen added weaker CNY has had no impact on exporters, estimating January survey-based unemployment just above 5%.

Australia:
- RBA left rates on hold as forecast by unanimous consensus of analysts, although the statement was somewhat more neutral than anticipated given the recent uptick in unemployment and reduction in growth forecasts. RBA mainly pasted last month's statement with a notable exception being a warning that "low inflation would provide scope" for easier policy - RBA previously said "may" provide.
- Ahead of tomorrow's Q4 GDP data, Australia current account was weaker than expected, prompting a slight revision in consensus for quarterly growth to the downside.

Japan:
- Despite comments from Fin Min Aso to the contrary, PM Abe may announce that the govt is creating a panel to consider an extra stimulus budget for FY16/17 as soon as today.
- Japan PMI data - previously more impressive than the faltering manufacturing figures from China - have continued to deteriorate to reach an 8-month low. After today's release, Markit economist said both consumer and intermediate goods producers indicated softer rates of expansion, with the first contraction in new orders in 8 months.
- Negative rates have now bled over to Japan's benchmark 10-year JGB auction, where the avg yield has fallen below zero for the first time on record.

***Equities***
US equities / ADRs:
- HTZ: Reports Q4 $0.05 adj v $0.05e, R$2.41B v $2.52Be; +1.8% afterhours
- WDAY: Reports Q4 -$0.01 v -$0.04e, R$323.4M v $319Me; +0.6% afterhours
- CROX: Reports Q4 -$1.01 (gaap) v -$0.35e, R$208.7M v $203Me; -1.9% afterhours
- MRO: Announces Public Offering of 135 shares of Common Stock (20% of shares outstanding); -2.6% afterhours
- DPLO: Reports Q4 $0.21 v $0.21e, R$987M v $978Me; -21.8% afterhours

Notable movers by sector:
- Consumer discretionary: Park24 Co 4666.JP +2.1% (Q1 result)
- Financials: Cathay Financial 2882.TW -0.7% (H1 result); China Life -3.7% (to purchase shares of CGB)
- Technology: Hynix Semiconductor 0000660.KR -2.6% (expects to build new chip plant)
- Materials: Fortescue Metals Group FMG.AU +6.4% (to appeal decision on rail access); NEC Corp 6701.JP -11.5% (guidance)

>>> US After Hours Summary: CECO +23%, CRC +18.8%, APEI +13.5%,


After Hours Summary: CECO +23%, CRC +18.8%, APEI +13.5%, AXGN +13.5%, DPLO -26.6%, OPWR -21.4%, RMTI -20.7%, BCEI -13.4%, NLST -13.2% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance:  CECO +23%, CRC +18.8%, APEI +13.5%, AXGN +13.5%, EXEL +11.5% (also Co and Ipsen (IPSEY) jointly announced an exclusive licensing agreement), HALO +7%, APIC +6%, NVCR +4.8%, TUBE +4.8%, XON +3.4%, MBI +1.9%

Companies trading higher in after hours in reaction to news:  VRX +2.5% (rebounding after hours, confirmed it received a subpoena from the SEC in Q4), HSC +1.3% ( awarded $10 mln order from the Mexico City International Airport).

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: DPLO -26.6%, OPWR -21.4%, RMTI -20.7%, BCEI -13.4%, NLST -13.2%, ANAC -5.9%, ARNA -5.4%, CODI -5%, CROX -2.6%, ABY -2.2%, FSIC -1.8%

Companies trading lower in after hours in reaction to news:  MRO -3.9% (commenced 135 mln common stock offering), PRGN -1.3% (announced 1:38 reverse stock split, to trade split-adjusted on Mar. 1).

>>> US Close Dow-0.74% S&P-0.81% Nasdaq-0.71% Russell-0.32%

Closing Market Summary: Health Care Weighs to Begin Week

The stock market ended its first session of the week and the last session of February under selling pressure as the heavyweight health care (-1.6%) and financial (-1.1%) spaces weighed on the broader market. Today's trade saw a brief departure from equities trading in tandem with oil, along with investors eyeing weaker than expected economic data at home and overseas. Meanwhile, a safe haven bid in the last hour of trade highlighted concerns ahead of a data-heavy week. The S&P 500 (-0.8%) ended its day behind both the Dow Jones Industrial Average (-0.7%) and the Nasdaq Composite (-0.7%). For the month, the S&P 500 shed 0.4% while the Nasdaq lost 1.1% and the Dow gained 0.3%. 

The influential health care sector (-1.6%) underperformed throughout today's session as weakness from large-cap constituents as well as biotechnology dropped the group to the bottom of the leaderboard. The iShares Nasdaq Biotechnology ETF (IBB 254.09, -7.40) ended its session lower by 2.8%. For the month of February, the sub-group plummeted 4.9% while the broader sector ended lower by 0.7% over the same period. Elsewhere in the space, Valeant Pharmaceuticals (VRX 65.80, -14.85) tumbled 18.4% after CNBC reported that the SEC is investigating the company. Additionally, the company postponed its earnings release and call.

The economically-sensitive financial group (-1.1%) recovered from some early weakness and managed to trade in-line with the broader market for part of the afternoon, but lost traction as money center banks and investment brokerages weighed. On that note, Wells Fargo (WFC 46.92, -1.15) tumbled 2.4%. Conversely, Berkshire Hathaway (BRK.B 134.17, +2.25) climbed 1.7% after reporting better than expected operating earnings in Q4. The financial sector ended February lower by 3.2%, bringing its year-to-date decline to 11.9%.

The broader market received an early boost from a rally in crude oil, but was unable to maintain that momentum once the commodity's pit session ended. Even the commodity-sensitive energy (-1.2%) and materials (-0.6%) were unable to finish in the green after being up by as much as 0.6% and 1.2%, respectively. For its part, WTI crude ended its day higher by 3.3% at $33.82/bbl, finishing the month little changed.

In the energy group (-1.2%), independent oil and gas names posted some of the largest declines of the day with EOG Resources (EOG 64.74, -2.76) falling 3.8%. Separately, the space was hurt by a 4.5% decline in natural gas, which ended at $1.71/mmbtu.

Countercyclical utilities (+0.2%) outperformed today and consumer staples (-0.4%) followed on the leaderboard.

The Treasury complex was bid higher as equities slipped to their worst levels of the day. For its part, the yield on 10-yr note ended its session lower by three basis points at 1.74%.

On the currency front, the U.S. Dollar Index (98.16, +0.01) surrendered most of its gain as the greenback weakened against the yen. The dollar/yen pair ended lower by 1.1% at 112.80.

Today's participation was within the recent average with more than 1.266 billion shares changing hands at the NYSE floor.

Today's economic data included Chicago PMI for February and Pending Home Sales for January:

  • The Chicago Purchasing Managers Index registered a 47.6 reading for February. That was below the consensus estimate of 52.0 and well below the prior month's reading of 55.6. A number below 50 denotes contraction.
    • The last six readings for this index dating back to September have been 47.8, 52.6, 47.7, 42.9, 55.6, and 47.6, respectively, so what the February report reveals is that the strength in January was likely little more than a brief snapback in activity from a depressed base of readings in more recent months.
    • The downturn in February saw four of the five barometer components decline versus January: New Orders (from 58.8 to 51.7), Production (from 62.5 from 44.0), Employment (from 48.9 to 45.2) and Prices Paid (from 43.7 to 41.1).
    • The employment index, which saw its fifth straight monthly reading below 50.0, is at its lowest level since November 2009.
    • The Prices Paid Index, meanwhile, is at its lowest level since July 2009 with falling oil and commodity prices playing a part there.
  • Pending home sales for January ticked lower by 2.5% while the consensus expected an increase of 0.7%. Meanwhile the December reading was revised to 0.9% from 0.1%

Separately, New York Fed President and FOMC voting member William Dudley will speak at 23:30 ET. 

Tomorrow's economic data will include Construction Spending for January (consensus +0.5%) and the ISM Index for February (consensus 49.0), which will both cross the wires at 10:00 ET. 

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