>>> Russel vs SPX Worth mentioning that yest. Russell Outperform SPX breaking one way move since 24/12/2015
Dow-1.56% S&P-1.17% Nasdaq-0.12% Russell+0.45% VIX 27.59 (+5.91%)
US Market closed lower, but not on the lowest levels. reversal in equities was partly fueled by recovering oil prices, but more likely, a short-term oversold market invited participants to take on more risk. Oil was down more than 6.5% before recovering to a 3.7% decline at $28.35/bbl. health care (+0.2%), technology (-0.6%), materials (-0.7%), and consumer discretionary (-1.0%) outperformed while energy (-2.9%), utilities (-2.3%), financials (-2.1%), and telecom services (-1.6%) displayed the steepest declines. C-3.5%, JPM-2.6%, GS-2%. IBB +3.5% leaded the reversal. ABBV+3.9%, UNH+2%. Volume today were one of the highest volume of the year with 1.4bil shares. US After Hours BGG +7.4%, XLNX +6.1%, FEYE +5.3%, RJF -6.6% following earnings/guidance; OGXI -41.8% following Phase 2 trial data. Asian market rebound failed, with sell off pressure on the last hour. PBoC Vice Gov Chen Yulu mentioned the need for policy coordination to prevent risks amid ongoing reduction of overcapacity and deleveraging. China Securities regulator CSRC official also stated that Beijing will not allow the domestic economy to slow too much. And while PBoC chief economist Ma Jun backed up his remarks overnight with suggestion that overuse of RRR cut may be harmful for FX rate, Chinese central bank injected a multi-year high amount of liquidity through reverse repos in its open market operations. At the time of writing in the afternoon part of the Asia session, the risk-on rally has been dented by comments from China state economist forecasting GDP growth to slow to 6.5%. Volatility in Japan centered around commentary from an unnamed PB Abe advisor urging the central bank to announce more QE at its upcoming meeting later this month. Abe's aide noted conditions for more QE are in place, the risks of further Yen strength cannot be underestimated, and that the BOJ risks a credibility problem if it continues to push back expectations for reaching inflation target. Later in the day, BOJ Gov Kuroda merely reiterated that the timing of reaching 2% CPI target is determined by oil prices, though economic fundamentals remain firm.
Nikkei -2.43% Hang Seng -1.42% Shanghai -2.64%
Eur$ 1.0901 CNH 6.6107 CNY 6.5792 JPY 116.70 GBP 1.4176 CHF 1.0032 RUB $82.25 WTI $28.13 (-0.81%)
S&P -0.61% EuroStoxx +0.10% Dax +0.13% SMI +0.28%
Macro :
- Goldman Sachs Said to Have Donated to Pro-EU UK Group: Sky
- El-Erian Doesn’t Think There Will Be a Rate Hike at Next Fed Mtg
- Foxconn Said to Bid 600 Billion Yen for Japan’s Sharp
Keep an eye on :
- ABBN VX : ABB examining all options for Power Grids, could still restructure and keep division - Aargauer Zeitung
- ABG SM : Abengoa Seeks EU1B for Bioenergy Unit, El Economista Says
- ADEN VX : Adecco Completes Share Buyback Program of EU250m
- AH NA : Ahold 4Q Sales, Netherlands ID Sales Beat Ests.
- ATC NA : Altice Completes Sale of Cabovisao, ONI to Apax France
- BARC LN : Barclays Said to Prepare to Cut 1,000 More Jobs, FT Reports
- BP IM : Italy Temporarily Bans Short Selling on Banco Popolare: Consob
- BIM FP : BioMerieux Targets 2016 Organic Sales Growth of 6% to 8%
- DBK GY : Deutsche Bank 4Q Prelim Net Loss EUR2.1B; 4Q Prelim Rev. EUR6.6b
- DGE LN : Diageo, Pernod Ricard Whiskey Sales Slump in Russia: Kommersant
- FER SM : Ferrovial Bid for Broadspectrum ‘Opportunistic’: Allan Gray
- GALN VX : Galenica 2015 Sales Rise 11%, Confirms Plan to Split Up
- GET FP : Eurotunnel FY 2015 Revenue Ex-MyFerryLink EU1.22b; Est. EU1.26b
- GSK LN : Glaxo CEO Says Consumer Health Can Be Thought About on Its Own
- GSK LN : Glaxo Said to Be in Talks With Qualcomm to Form Joint Venture
- LOGN VX : Logitech 3Q Rev. Tops; Boosts FY16 Adj. Operating Income
- MHG NO : Marine Harvest 4Q Operational Ebit Falls to ~NOK850m
- ORA FP : Orange could sell up to EUR 5bn worth of assets as part of EUR 10bn merger with Bouygues Telecom - Figaro
- RI FP : Diageo, Pernod Ricard Whiskey Sales Slump in Russia: Kommersant
- RCO FP : Remy 3Q Organic Sales Growth Beats Ests., Confirms Outlook
- SIE GY : Siemens Rail Deal in Iran Could Be Worth EU1.5B to EU2B: CEO
- SLIGR NA : Sligro 2015 Ebitda Up 7.4%, Sees Gradual Eco. Recovery in 2016
- SONAE VX : Sonae 2015 Preliminary Sales Rise 0.7% to EU4.85b
- FP FP : Total CEO: Employee Numbers Won’t Be Adjusting Variable: Figaro
Orange could sell up to EUR 5bn worth of assets as part of EUR 10bn merger with Bouygues Telecom
Orange [EPA:ORA], the French telecoms company, is understood to be considering selling between EUR 4bn and EUR 5bn worth of assets as part of its potential merger with French mobile phone operator Bouygues Telecom, French daily Le Figaro reported.
The unsourced report said that the asset sale would not only reduce the cash that Orange would have to pay but also answer the expected concessions that will likely be required by the relevant competition authorities for the deal to go through. Discussions with potential buyers have already been launched.
The report claimed that Orange could pay around EUR 10bn for Bouygues Telecom, giving vendor Bouygues [EPA:SN] the French conglomerate, between 15% and 20% in Orange. The report added that 15% of Orange is valued at about EUR 8bn, leaving a cash payment of EUR 2bn. According to the report, the French government, which owns a 25% stake in Orange, does not want to see Bouygues owning more than 15% in the company.
Analysts estimated that the assets up for include the mobile network and frequencies of Bouygues Telecom, the entire network of outlets operated by Bouygues Telecom, the enterprise division of Bouygues Telecom, part of the mobile clients of Bouygues Telecom such as low-cost brand B&You, and customers of the Bouygues Telecom’s fixed network.
The fixed customers’ division, which boasts 2.6m clients, is valued at EUR 500m, according to an analyst at Bryan, Garnier & Co.
The low cost brand B&You has 3m customers and is valued at EUR 1bn, another analyst claimed. Numericable SFR and Iliad/Free could be interested in acquiring the asset, the report added.
The entire network of outlets operated by Bouygues Telecom, about 550 shops throughout France, is worth about EUR 100m. The report said that Free and SFR dot not appear to be the best buyers for the business in its entirety.
Parts of the mobile network and frequencies operates by Bouygues Telecom could attract interest from Numericable SFR and Iliad/Free. The report noted that Iliad/Free was willing to pay EUR 1.8bn six months ago for the assets, but an analyst at Bryan, Garnier & Co claimed that, as time goes by, Iliad/free will have less need of the frequencies and network, and the price will therefore go down. The report added that Bouygues Telecom has also signed a mutualisation contract with Numericable SFR about sharing part of their network, a contract that could still remain valid after the merger with Orange.
Finally, the enterprise division of Bouygues Telecom, with 1m clients, is estimated at EUR 1bn, Alternative operator Coriolis has already publicly stated its interest in the business, while the report described Numericable SFR as a “natural” candidate for the unit. The report noted that Orange already has a 55% share of the enterprise market in France.
Le Figaro
ABB, the Swiss industrial giant, is examining all options for its Power Grids division, Aargauer Zeitung reported. The Swiss daily cited an ABB spokesperson who when asked to comment on speculation carried yesterday in the Swedish press that a sale could be initiated later this year, stated the company is examining all options, but should the company decide restructuring would pay off it would keep the division, and would sell it if it was clear a new owner would be better.
Aargauer Zeitung
>>> Up
*ASML RAISED TO BUY VS NEUTRAL AT UBS
*ASML RAISED TO BUY AT BANK DEGROOF PETERCAM
*CAP GEMINI ADDED TO CONVICTION LIST AT GOLDMAN; STAYS BUY
*GAM HOLDING RAISED TO OUTPERFORM AT RBC CAPITAL
*INDITEX RAISED TO OUTPERFORM VS NEUTRAL AT EXANE, PT EU32
*INDRA RAISED TO BUY VS NEUTRAL AT GOLDMAN
*SCHRODERS RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
*TECNICAS REUNIDAS RAISED TO OVERWEIGHT VS NEUTRAL AT JPMORGAN
*WH SMITH RAISED TO BUY VS HOLD AT STIFEL
*WORLDPAY RAISED TO BUY VS NEUTRAL AT GOLDMAN
>>> Down
*ACCOR CUT TO UNDERWEIGHT VS OVERWEIGHT AT BARCLAYS
*ANGLO AMERICAN CUT TO SELL VS NEUTRAL AT CITI
*BG GROUP CUT TO SELL VS REDUCE AT ALPHAVALUE
*BP CUT TO ADD VS BUY AT ALPHAVALUE
*AVEVA CUT TO SELL VS NEUTRAL AT GOLDMAN
*EDENRED CUT TO UNDERPERFORM VS NEUTRAL AT CREDIT SUISSE
*ERICSSON CUT TO SELL VS NEUTRAL AT GOLDMAN
*ROLLS-ROYCE CUT TO UNDERWEIGHT AT MORGAN STANLEY
*SAMPO CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*TECHNIP CUT TO NEUTRAL VS OVERWEIGHT AT JPMORGAN
*TOTAL CUT TO REDUCE VS ADD AT ALPHAVALUE
*VISCOFAN CUT TO SELL VS NEUTRAL AT UBS
*ZURICH INSURANCE CUT TO NEUTRAL VS BUY AT UBS
*ZURICH INSURANCE CUT TO ADD VS BUY AT ALPHAVALUE
>>> PT Change
>>> Initiation
*CRANSWICK RATED NEW BUY AT LIBERUM, PT 2,200P
*MEDIASET RATED NEW BUY AT UBS; PT EU4.85
*MONCLER RATED NEW BUY AT CITI; PT EU15.50
*PRYSMIAN REINITIATED AT BUY AT KEPLER CHEUVREUX; PT EU23
*SAFRAN RATED NEW OVERWEIGHT AT MORGAN STANLEY, PT EU77
*TECHNICOLOR REINSTATED NEUTRAL AT GOLDMAN, PT EU8
>>> Call
>> Stock
*AGEAS REMOVED FROM ANALYST FOCUS LIST AT JPMORGAN
*CAP GEMINI ADDED TO CONVICTION LIST AT GOLDMAN; STAYS BUY
Asian Market Update: Markets recover as China policymakers talk up coordinated response; Yen falls on pressure for more BOJ easing from PM Abe advisor
***Economic Data***
- (AU) AUSTRALIA JAN CONSUMER INFLATION EXPECTATION: 3.6% V 4.0% PRIOR
- (AU) AUSTRALIA NOV HIA NEW HOME SALES M/M: -2.7% V -3.0% PRIOR; 3rd straight decline
- (NZ) NEW ZEALAND JAN ANZ CONSUMER CONFIDENCE INDEX: 121.4 V 118.7 PRIOR; M/M: +2.3% V -3.3% PRIOR
- (NZ) NEW ZEALAND DEC ANZ JOB ADVERTISEMENTS M/M: 1.1% V 2.4% PRIOR; 4th straight increase
- (NZ) New Zealand Dec Manufacturing PMI: 56.7 v 54.9 prior; 1-year high
- (UK) DEC RICS HOUSE PRICE BALANCE: 50% V 50%E; 4-month high
- (BR) BRAZIL CENTRAL BANK (BCB) LEAVES SELIC TARGET RATE UNCHANGED AT 14.25%; NOT EXPECTED
***Index Snapshot (as of 04:30 GMT)***
- Nikkei225 +0.5%, S&P/ASX +0.7%, Kospi +0.4%, Shanghai Composite +0.5%, Hang Seng +0.3%, Mar S&P500 +0.3% at 1,860
***Commodities/Fixed Income***
- Feb gold flat at $1,101/oz, Mar crude oil +0.5% at $28.47/brl, Mar copper flat at $1.98/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 2.4 tonnes to 660.3 tonnes; highest since Nov 20th
- (US) API Petroleum Inventories: Crude: +4.6M v -3.9M prior; first build in 3 weeks
- (US) US interest rate futures now imply less than 1% chance of 4 FOMC rate hikes in 2016 - FT
- USD/CNY: *(CN) PBOC SETS YUAN MID POINT AT 6.5585 V 6.5578 PRIOR
- (CN) PBOC to inject CNY110B in 7-day reverse repos and CNY290B in 28-day reverse repos (largest injection in 3 years); For the week, net injection of CNY315B v CNY40B in prior week
- USD/JPY: (JP) According to a Nikkei survey, many Japan companies wish to see USD/JPY stabilize in ¥115-125 range - Nikkei
- JGB: (JP) Japan's MoF sells ¥1.09T in 1.0% (1.0% prior) 20-year JGBs; Avg yield: 0.924% (1-year low) v 1.041% prior; bid-to-cover: 3.49x v 3.07x prior
- (JP) Japan investors sold net ¥375B in foreign bonds v bought net ¥324B in prior week; Foreign investors sold net ¥358B in Japan stocks v sold ¥746B in Japan stocks in prior week
***Market Focal Points/FX***
- Asian indices are up modestly, lifted by chatter of bargain-hunting from key technical support levels as well as speculation over a coordinated response from the far east. Overnight, PBoC Vice Gov Chen Yulu mentioned the need for policy coordination to prevent risks amid ongoing reduction of overcapacity and deleveraging. China Securities regulator CSRC official also stated that Beijing will not allow the domestic economy to slow too much. And while PBoC chief economist Ma Jun backed up his remarks overnight with suggestion that overuse of RRR cut may be harmful for FX rate, Chinese central bank injected a multi-year high amount of liquidity through reverse repos in its open market operations. At the time of writing in the afternoon part of the Asia session, the risk-on rally has been dented by comments from China state economist forecasting GDP growth to slow to 6.5%.
- Volatility in Japan centered around commentary from an unnamed PB Abe advisor urging the central bank to announce more QE at its upcoming meeting later this month. Abe's aide noted conditions for more QE are in place, the risks of further Yen strength cannot be underestimated, and that the BOJ risks a credibility problem if it continues to push back expectations for reaching inflation target. Later in the day, BOJ Gov Kuroda merely reiterated that the timing of reaching 2% CPI target is determined by oil prices, though economic fundamentals remain firm. USD/JPY hit session highs above 117.40 - up nearly 50 pips from the lows - on PM Abe's aide comments.
- Other USD majors are also volatile - AUD/USD rose 50pips above 0.6950 and has since erased most of those gains while NZD/USD was up 40pips above 0.6470. Crude oil prices slid as low as $28.25/brl in the wake of a large build in API petroleum inventories. S&P e-mini traded up as much as 1% to 1,874, but gains are also coming undone in afternoon hours.
- High-profile rate decision from Brazil Central Bank saw a hold against expected 50bp rate hike due to rising inflation and falling exchange rate. The decision was not unanimous - 2 out of 8 members voted for a hike - but the statement erred on the side of caution noting "increased domestic and particularly external uncertainties."
***Equities***
US equities / ADRs:
- XLNX: Reports Q3 $0.49 v $0.49e, R$566M v $555Me; +8.1% afterhours
- FEYE: Guides Q4 EPS loss in line with prior guidance (-$0.38 to -$0.36 v -$0.37e), R$184-185M v $188Me; Acquires iSIGHT Partners for $200M in cash; +6.5% afterhours
- KMI: CFO: expect more impairments ahead if markets continue to decline - earnings call comments; +3.7% afterhours
- OGXI: Announces Update on Phase 2 Spruce Trial in Previously Untreated Metastatic Non-Small Cell Lung Cancer; -32.6% afterhours
Notable movers by sector:
- Consumer discretionary: Boyaa Interactive International 434.HK -3.9% (guidance)
- Financials: China CITIC Bank 998.HK +0.7% (FY15 result); Ping An Bank Co 000001.CN +1.3% (FY15 guidance)
- Industrials: Guangzhou Baiyun International Airport Co 600004.CN +0.4% (guidance); Aurizon Holdings AZJ.AU +1.1% (Q2 result); Broadspectrum BRS.AU -1.2% (raises guidance)
- Technology: Sharp Corp 6753.JP +2.5%, Hon Hai 2317.TW +0.8% (Hon Hai said to have offered to take over Sharp)
- Materials: Yunnan Tin Co Ltd 000960.CN +3.5% (Chinese tin smelters agree to cut production); Kingsgate KCN.AU -7.3% (Q1 result); Drillsearch Energy DLS.AU -0.7% (revises FY16 guidance); South32 S32.AU -0.3% (Q2 result); Independence Group IGO.AU +4.0% (cuts FY16 capex); OZ Minerals OZL.AU +8.3% (Q4 result); Iluka Resources ILU.AU +0.6% (Q4 result)
- Energy: Kunlun Energy Co 135.HK +2.5% (guidance); China Coal Energy 1898.HK +0.4% (Dec result); Woodside Petroleum WPL.AU -1.4% (Q4 result); Yanzhou Coal Mining Co 1171.HK +0.3% (Q4 result)
- Utilities: Yaskawa Electric 6506.JP -6.1% (9-month result)