Closing Market Summary: Averages Rebound Ahead of OPEC MeetingThe stock market ended the Wednesday affair on a flat note as the major averages rebounded from opening weakness. Additional factors for today's trade included a reversal in crude oil, weakness in the dollar, mixed economic data, and the outperformance of the heavily-weighted financial (+0.3%) and health care (+0.4%) sectors. The Nasdaq Composite (+0.1%) ended its day in-line with the S&P 500 (+0.1%) and ahead of the Dow Jones Industrial Average (UNCH).
Today's session started on a lower note as equity futures responded to a negative bias in international bourses. Overnight, Japan's Nikkei (-1.6%) led the retreat after Prime Minister Shinzo Abe announced that he would delay the next sales tax hike until 2019. Prime Minister Abe also stated that he would unveil a new fiscal stimulus package in the fall. Meanwhile, tepid readings from China's May Caixin Manufacturing PMI (49.2; consensus 49.3) and German Manufacturing PMI for May (52.1; consensus 52.4) added to the shaky start.
Equity indices climbed off their opening lows as investors examined a strong reading of the ISM Service Index for May (51.3; consensus 50.4). However, April Construction Spending (-1.8%; consensus +0.5%) missed estimates, but contained a positive revision to the March reading (to 1.5% from 0.3%). The major averages climbed through the afternoon as a reversal in crude oil bolstered the move higher in equities. WTI crude ended its day lower by 0.1% at $49.06/bbl.
Seven sectors finished in the green as consumer staples (+0.7%), health care (+0.4%), financials (+0.3%), and materials (+0.3%) led the pack. Conversely, telecom services (-1.0%), technology (-0.3%), and consumer discretionary (-0.1%) rounded out the board.
In the consumer staples sector (+0.7%), household product names displayed relative strength with Colgate-Palmolive (CL 71.20, +0.79) and Estee Lauder (EL 92.99, +1.21) gaining 1.1% and 1.3%, respectively. Elsewhere, Costco (COST 152.52, +3.75) outperformed after receiving an upgraded to "Buy" from "Neutral" at Goldman Sachs.
Generic drug names sported the largest gains in the health care space (+0.4%). Mylan Labs (MYL 44.46, +1.12) led the group after it reported that it will launch generic versions of Cephalon's Nuvigil and Mayne's Doxteric medications. Elsewhere, Valeant Pharmaceuticals (VRX 29.79, +1.34) jumped 4.7% after announcing that it will release its quarterly report on June 7.
In the financial sector (+0.3%), money center banks demonstrated relative strength as the sub-group moved higher in sympathy with JPMorgan Chase (JPM 65.69, +0.42). The company gained 0.6% after it raised its second-quarter trading revenue guidance. Conversely, real estate investment trusts (REITs) with primary holdings in residential properties underperformed. Equity Residential (EQR 66.37, -2.84) fell 4.1% after lowering its second-quarter revenue growth estimates to 4.0-4.5% (from 4.5-5.0%).
Automotive names underperformed in the consumer discretionary space (-0.1%) as Ford (F 13.11, -0.38) and General Motors (GM 30.22, -1.06) fell 2.8% and 3.4%, respectively. The two companies reported disappointing May sales. AutoNation (AN 49.67, -0.77) and CarMax (KMX 52.09, -1.57) ticked lower in sympathy with the names. Separately, Demandware (DWRE 74.81, +26.82) rallied 55.9% after Salesforce.com (CRM 83.45, -0.26) announced that it would acquire the company for $75.00 per share in cash, or approximately $2.8 billion.
The U.S. Dollar Index (95.42, -0.47) ended near its session low as the euro and the yen extended their gains against the greenback. The euro/dollar pair finished higher by 0.5% (1.1190) while the dollar lost 1.1% against the yen (109.57).
The Treasury complex ended on a mixed note with the yield on the 10-yr note flat at 1.84%. Meanwhile, the yield on the 2-yr note rose two basis points to 0.89%.
Today's volume was above the recent average as more than 880 million shares changed hands on the NYSE floor.
Today's economic data included the MBA Mortgage Index, ISM Service Index for May, and Construction Spending for April:
- The weekly MBA Mortgage Index showed a seasonally adjusted decline of 4.1% in mortgage applications.
- The ISM Manufacturing Index for May checked in at 51.3. That was up from 50.8 in April and was ahead of the consensus estimate of 50.4.
- The dividing line between expansion and contraction is 50.0, so May marked the third straight month of expansion for the manufacturing sector
- The weakening dollar from earlier in the year and the spike in oil prices has offered some relief to the sector.
- There was a nice headline surprise here then, with the improvement from April, yet a look under the hood didn't exactly reveal a manufacturing sector running on all cylinders.
- Notably, the improvement in May was not a function of an increase in new orders, production, inventories, or the backlog of orders. Those indexes all declined from April.
- In particular, the New Orders Index slipped from 55.8 to 55.7, the Production Index dropped from 54.2 to 52.6, the Inventories Index fell from 45.5 to 45.0, and the Backlog of Orders Index went from 50.5 to 47.0.
- The main drivers of the uptick in May were the Prices Index, which jumped from 59.0 to 63.5, and the Customers' Inventories Index, which rose from 46.0 to 50.0.
- The indexes for employment, new export orders, and imports were all unchanged.
- Construction spending declined 1.8% month-over-month in April, which created a jarring headline surprise given the understanding that the consensus estimate called for a 0.5% increase.
- Part of the headline disappointment, though, can be attributed to the large upward revision for March.
- Specifically, it was reported that construction spending in March increased 1.5% after it was previously reported to be up just 0.3%.
- That upward revision stemmed from positive revisions for both private (from 1.1% to 2.3%) and public (from -1.9% to -0.6%) spending.
- That should help somewhat when the third estimate for Q1 GDP is released, especially since February also saw an upward revision to 1.4% from 1.0%.
- Conversely, the decline in construction spending in April stands as a negative input for Q2 GDP forecasts.
- The spending activity for April featured a 1.5% decline in private construction and a 2.8% decline in public construction.
- The drop in private construction was accented by a 1.5% decline in residential construction and a 1.5% decline in nonresidential construction, which was weighed down by a 1.5% drop in manufacturing and a 3.6% decline in both commercial and health care.
- In terms of public construction, the biggest weights there were highway and street and educational, which declined 6.6% and 2.5%, respectively.
- On a year-over-year basis, total construction spending is up 4.5%, with private construction up 5.7% and public construction up 1.2%.
Tomorrow's economic data will include the Challenger Job Cuts for May and the May ADP Employment Change Report (consensus 180k), which will be released at 7:30 ET and 8:15 ET, respectively. Meanwhile, weekly initial claims (consensus 268k) will cross the wires at 8:30 ET.
- S&P 500 +2.7% YTD
- Russell 2000 +2.3% YTD
- Dow Jones +2.1% YTD
- Nasdaq Composite -1.1% YTD
Siemens, ABB seen as possible bidders for Kuka as alternative to Midea
German officials are seeking bidders for Augsburg-based Kuka as an alternative to Midea of China, and see ABB or Siemens as possible candidates, Handelsblatt reported, citing sources familiar with the matter. Midea, which holds a 13.5% share of Kuka, wants to purchase a 30% stake or more, valuing the maker of robots at nearly EUR 4.6bn, the article reported.
Although Germany-based Siemens and Switzerland-based ABB would not comment, sources told the English language edition of the German newspaper that Siemens feels it would be too costly to purchase Kuka.
Sigmar Gabriel, the German minister of the economy, has said he believes an alternative offer to Midea's - one that stems from Europe, particularly Germany - would be appropriate.
Link to original source.
Source Handelsblatt
Coca-Cola and Coca-Cola FEMSA to Acquire AdeS Soy-Based Beverage Business from Unilever for $575M
The Coca-Cola Company, together with Coca-Cola FEMSA, S.A.B. de C.V., announces that it has entered into an agreement to acquire Unilever's AdeS soy-based beverage business for an aggregate amount of $575 million. Founded in 1988 in Argentina, AdeS is the leading soy-based beverages brand in Latin America. As the first major brand launched in the category, AdeS pioneered the development of the second largest global market for soy-based beverages. The AdeS brand currently has a presence in Brazil, Mexico, Argentina, Uruguay, Paraguay, Bolivia, Chile, and Colombia. During 2015, AdeS sold 56.2 million unit cases of beverages and generated net revenues of US$ 284 million.
This transaction has been approved by the Boards of Directors of The Coca-Cola Company, Coca-Cola FEMSA, and Unilever, and is subject to regulatory approvals and customary closing conditions. Post completion, it is intended that the AdeS business will become part of the non-carbonated beverage platforms that Coca-Cola FEMSA shares with The Coca-Cola Company in its franchise territories. In all other territories, The Coca-Cola Company will work with its local bottling partners to develop AdeS in those markets through similar non-carbonated beverage partnership arrangements.
Gapping up
In reaction to strong earnings/guidance: KORS +7.8%, ZOES +3.6%, CBRL +3.0%, ATHM +2.9%, INNL +2.6%, NCS+1.2%, NX +0.9%, HBI +0.8%
M&A news: DWRE +56.4% (to be acquired by Salesforce (CRM) for $75.00/share in cash), PACB +3.7% (cont strength following yday's M&A rumors), PSEC +0.1% (sells its interests in Harbortouch Payments to Searchlight Capital Partners)
Select metals/mining stocks trading higher:AU +3.5%, GFI +2.8%, SWC +2.5%, ABX +2.2%, CLF +2.1%, AUY +1.9%,GDX +1.6%, GOLD +1.3%, NEM +1.3%.
Other news: PARN +17% (commences a Contract Manufacturing Agreement with Merial, the animal health division of Sanofi (SNY)), GALE +16.6% (FDA has designated NeuVax, combined with recombinant granulocyte macrophage-colony stimulating factor, as a Fast Track development program for the treatment of patients with early stage breast cancer), ATNM +11.4% (announces 'positive' results from its Phase 1 Actimab-A trial in patients newly diagnosed with acute myeloid leukemia), AVEO+8.8% (Growth Equity Opportunities discloses 29.6% active stake), CANF +8% (reaches agreement with EMA on Pivotal Phase III clinical trial with Piclidenoson (CF101) in Rheumatoid Arthritis), CJES +7.5% (enters into forbearance agreement in connection with previously announced covenant violation, lenders agree to forbear from exercising default remedies or accelerating any indebtedness through June 30), PRQR +1.9% (announces that its investigational drug QR-110 has received orphan drug designation from both the FDA and the EMA for the treatment of Leber's congenital amaurosis Type 10), RGLS+1.3% (expands clinical trial collaboration with GSK), SRPT +1.2% (after BioMarin (BMRN) withdraws its Kyndrisa Marketing Authorization Application from the European Medicines Agency), JCP +1.2% (to refinance & extend maturity date of its $2.25 bln senior secured term loan facility), .
Analyst comments: WFM +2.8% (upgraded to Outperform from Neutral at Credit Suisse), CCE +1.6% (initiated with a Buy at BofA/Merrill), COST +1.2% (upgraded to Buy from Neutral at Goldman), INXN +1% (upgraded to Outperform from Market Perform at Wells Fargo), FOXA +0.9% (added to US 1 List at BofA/Merrill), RLYP +0.5% (upgraded to Neutral from Underperform at Mizuho)
In reaction to strong earnings/guidance: KORS +7.8%, ZOES +3.6%, CBRL +3.0%, ATHM +2.9%, INNL +2.6%, NCS+1.2%, NX +0.9%, HBI +0.8%
M&A news: DWRE +56.4% (to be acquired by Salesforce (CRM) for $75.00/share in cash), PACB +3.7% (cont strength following yday's M&A rumors), PSEC +0.1% (sells its interests in Harbortouch Payments to Searchlight Capital Partners)
Select metals/mining stocks trading higher:AU +3.5%, GFI +2.8%, SWC +2.5%, ABX +2.2%, CLF +2.1%, AUY +1.9%,GDX +1.6%, GOLD +1.3%, NEM +1.3%.
Other news: PARN +17% (commences a Contract Manufacturing Agreement with Merial, the animal health division of Sanofi (SNY)), GALE +16.6% (FDA has designated NeuVax, combined with recombinant granulocyte macrophage-colony stimulating factor, as a Fast Track development program for the treatment of patients with early stage breast cancer), ATNM +11.4% (announces 'positive' results from its Phase 1 Actimab-A trial in patients newly diagnosed with acute myeloid leukemia), AVEO+8.8% (Growth Equity Opportunities discloses 29.6% active stake), CANF +8% (reaches agreement with EMA on Pivotal Phase III clinical trial with Piclidenoson (CF101) in Rheumatoid Arthritis), CJES +7.5% (enters into forbearance agreement in connection with previously announced covenant violation, lenders agree to forbear from exercising default remedies or accelerating any indebtedness through June 30), PRQR +1.9% (announces that its investigational drug QR-110 has received orphan drug designation from both the FDA and the EMA for the treatment of Leber's congenital amaurosis Type 10), RGLS+1.3% (expands clinical trial collaboration with GSK), SRPT +1.2% (after BioMarin (BMRN) withdraws its Kyndrisa Marketing Authorization Application from the European Medicines Agency), JCP +1.2% (to refinance & extend maturity date of its $2.25 bln senior secured term loan facility), .
Analyst comments: WFM +2.8% (upgraded to Outperform from Neutral at Credit Suisse), CCE +1.6% (initiated with a Buy at BofA/Merrill), COST +1.2% (upgraded to Buy from Neutral at Goldman), INXN +1% (upgraded to Outperform from Market Perform at Wells Fargo), FOXA +0.9% (added to US 1 List at BofA/Merrill), RLYP +0.5% (upgraded to Neutral from Underperform at Mizuho)
Gapping down
In reaction to disappointing earnings/guidance: DAKT -12.2%, LE -7.3%, ADPT -4.9%, ASNA -4.8%, WDAY -2.4%, TIVO-1.3%
Select EU financial related names showing weakness: RBS -4.2%, BCS -2.4%, DB -2.1%, LYG -1.9%, SAN -1.7%, CS-1.7%, HSBC -1.1%
Select copper mining stocks trading lower: RIO -2.8%, BBL -2.2%, BHP -2.1%, FCX -1.7%
Other news: APHB -24.6% (prices offering of 2,127,660 shares of common stock and warrants to purchase up to an aggregate of 1,063,830 shares of common stock), BABA -3.5% (SoftBank (SFTBY) to reduce its stake in Alibab to ~28%; BABA to purchase from SoftBank $2 bln BABA shares), BMRN -3% (BioMarin withdraws its Kyndrisa Marketing Authorization Application from the European Medicines Agency), FRC -2.4% (to sell 2.5 mln shares of its common stock in an underwritten public offering)
Analyst comments: NKE -2.9% (downgraded to Equal-Weight from Overweight at Morgan Stanley), EMC -1% (downgraded to Neutral from Buy at UBS), CELG -1% (downgraded to Neutral from Buy at BTIG Research).
In reaction to disappointing earnings/guidance: DAKT -12.2%, LE -7.3%, ADPT -4.9%, ASNA -4.8%, WDAY -2.4%, TIVO-1.3%
Select EU financial related names showing weakness: RBS -4.2%, BCS -2.4%, DB -2.1%, LYG -1.9%, SAN -1.7%, CS-1.7%, HSBC -1.1%
Select copper mining stocks trading lower: RIO -2.8%, BBL -2.2%, BHP -2.1%, FCX -1.7%
Other news: APHB -24.6% (prices offering of 2,127,660 shares of common stock and warrants to purchase up to an aggregate of 1,063,830 shares of common stock), BABA -3.5% (SoftBank (SFTBY) to reduce its stake in Alibab to ~28%; BABA to purchase from SoftBank $2 bln BABA shares), BMRN -3% (BioMarin withdraws its Kyndrisa Marketing Authorization Application from the European Medicines Agency), FRC -2.4% (to sell 2.5 mln shares of its common stock in an underwritten public offering)
Analyst comments: NKE -2.9% (downgraded to Equal-Weight from Overweight at Morgan Stanley), EMC -1% (downgraded to Neutral from Buy at UBS), CELG -1% (downgraded to Neutral from Buy at BTIG Research).
Japan PM Abe: Reiterates viewpoint that global economy is facing a large risk and lead Japan back into deflation (in line with his G7 view) - press conference
- Needed to delay sales tax increase because they can't risk hurting spending
- Will increase speed of Abenomics over the next 2.5 years
- Must take broad and bold economic measures; to implement large-scale stimulus in the autumn
- To take economic measures to support domestic demand
- To create an environment for the sales tax increase
- Must act in timely fashion to avert risk of crisis
From: LAURENT CHEKROUN (MAKOR SECURITIES LO) At: Jun 1 2016 10:16:43
Subject: >>> Makor Dividend Weekly Report 01-06-16.pdf
The spreads long term against short term are close to historical peaks with a 37% decrease between 2017 and 2023 to 28% between 2019 and 2025.In our view, we estimate the market is worried about i) sustainability of the dividends in the future, ii) beginning of 2016 market fall which increased the stress on the dividend outlook.Historically, spreads between long term and shorter term future dividends tend to widen in difficult times (market fall, difficult economic outlook) and gradually recover over time as shown in the graph below.Between March and June 2012, all 2013 / 2018, 2014 / 2019 and 2015 / 2020 widened by respectively 22%, 19% and 14%.We see here a 16% upside for the first pair, 10% on the second and 5% on the third in a 6 month period.
Please find attached new report on Dividend. Hope you will find it interesting.Laurent
JPM:
AHOLD 5% beat at op profit level driven by beats in US & NL. Guid unch+1%
AHOLD 5% beat at op profit level driven by beats in US & NL. Guid unch+1%
ATCOA Appeal against EU tax ruling,acquires Korean vac co for 1x sales+1%
ELEKTA Adj EBITDA -13% miss, due to 1 offs. H1 to be soft on destocking-5%
HALFORDS FY16 results a small beat but no capital return announced -1%
JUST EAT Pizza Express is joining Deliveroo with c240 restaurants unch
NN the share buy back starts today. unch
PEUGEOT Le Figaro - France is considering sale of ~half its stake unch
WOLSELEY Q3 ahead on US margin, FY guidunch. LFL exit rate into Q4 weak -2%
Mainfirst:
*BAYER-Streetinsider says Bayer to bid $135 for Monsanto............+0.5%
Mainfirst:
*BAYER-Streetinsider says Bayer to bid $135 for Monsanto............+0.5%
*POSTE ITALIANE-Italy approves decree to sell 30% stake,keep 35%....-0.5%
*AHOLD-Sales 11.8b(11.7),Op Inc 449m(434),Op Margin 4%(3.8).........+1%
*ELEKTA-Net Sales 3.61b(3.81),Adj Ebitda 785m(913),Divi 50c.........-4$
*LANXESS-Has leeway for takeovers, will not buy Versalis............+0.5%
*THYSSEN-DCNS open to merger with Thyssenkrupp subs unit-Press......+1%
*PEUGEOT-Considers selling half of stake,could raise €750m-Press....-1%
*KONE-Wins order for 87 elevators in China,order booked in Q1.......+1%
*ATLAS COPCO-To acquire CSK Inc for SEK480m,deal complete in Q3.....-0.5%
*SGL-Apollo,Triton interested in SGL Graphite Unit says Platow......-1%
*ASCOM-Wins contract from Network Testing worth $4m,post warning....+0.5%
*ADIDAS-Under Armour cutting guidance,stk -3.5% after hrs...........-0.25%
*KUKA-German Eco Minister looking for consortium to buy Kuka........+0.5%
ShoreCap:
ACAL - revs +6% £287.7m,oper.pft +22%,divi +6%,challenging conditons to cont.-1%
ShoreCap:
ACAL - revs +6% £287.7m,oper.pft +22%,divi +6%,challenging conditons to cont.-1%
HALFORDS - grp revs +1.7%,LfL +1.5%,PBT +0.5%,good progress on strategy......+1%
TELFORD - Revs 245.6.Ptp 32.2m.Divi 7.7p.Confident statement.Tempus tip......+2%
WOLSELEY - Sees fy trading in line.Restructuring costs about 20m............UNCH
LONDON METRIC - 3.1% LfL income growth,continues to see strong demand.......UNCH
MOTORPOINT - completes acquisition of site at Oldbury,operational in July...UNCH
LAMPRELL - signs development agreement with Saudi Aramco.....................+1%
COBHAM - to raise £506.7m in 1 for 2 rights issue at 89p.....................MKT
AUREUS MINING - gets 1 month debt payment deferral..........................UNCH
CS:
Adidas -1% Peer Under Armour traded down 3.5% after-hrs, cut forecasts
CS:
Adidas -1% Peer Under Armour traded down 3.5% after-hrs, cut forecasts
Ahold +1-2% Q1 Rev EU 11.8b est EU 11.7b, merger with Delhaize on track
Atlas Copco +1% To acquire S Korea's CSK for SEK840m
Bayer R Streetinsider says Bayer to offer $135/Share
Elekta -10% Q4 Sales 5% light, EBITA 14% light, outlook poor
Forterra +1% CS initiate with OUTPERFORM (Attractive valuation)
Halfords M/P FY inline with company guidance
Kuka -2% Eco Minister would welcome alternative to Midea €115/sh bid
Lanxess M/P Has Leeway for Takeovers, CEO Tells Handelsblatt
Meggitt +0.5% Refinancing 2015 credit facilities
Miners -1% Copper -1.45%, Brent -2.40%, Iron Ore +0.90%, China +0.22%
Oils -1-2% EIA report showing higher storage use in Cushing
Peugeot +1% French new car registrations rose 22% in May
Post Italiane M/P Govt approved decree to sell remaining 30% stake on market
Remy +1-2% CS initiate with OUTPERFORM (Top line growth)
Renault +1% French new car registrations rose 22% in May
Santhera +2-3% Published positive data analyses from its phase 3 trial
SGL Carbon M/P Apollo, Triton Interested in SGL Graphite Unit
SGL Carbon M/P Apollo, Triton Interested in SGL Graphite Unit
Thyssen M/P DCNS Open to Merger With Thyssen Subs Unit: Sueddeutsche
Wolseley -3-5% Trading profit ahead but LFL +1% vs previous of +2.8%