Home Correction trading EUROPEAN NOON NEWSLETTER – Stocks gain after bullish US trading

EUROPEAN NOON NEWSLETTER – Stocks gain after bullish US trading

0

MARKET ENVELOPES

Shares:

European stocks rose, boosted by upbeat results from Big Tech in the United States, as investors await a fresh wave of corporate earnings.

“Stock markets continue their broad-based recovery and Alphabet earnings provided the final reason for optimism,” IG analysts said. “The Lunar New Year holiday means trading is still weak in Asia, but markets that were open have picked up again.

Shares on the move: Vodafone shares are among the biggest risers on the FTSE 100, up 3.4% after the UK mobile operator said third-quarter trading was in line with expectations and it was on track to meet fiscal 2022 guidance.

Although Vodafone is making progress, it could face pressure from activist investor Cevian Capital unless it steps up its efforts to streamline the business and focus on fewer areas, AJ Bell said.

“Activists don’t like to wait, preferring to seek quick wins to help increase company value,” Bell chief investment officer Russ Mold said. “It could create a culture shock, so expect fireworks between Vodafone management and Cevian if he decides to take a more aggressive approach to pushing for change.” Read more about analysts here [https://newsplus.wsj.com/search/realtime/company/?searchParts=[{%22t%22:%22symbol%22,%22q%22:%22djn:djnabout:VOD.LN%22,%22c%22:%22UK:VOD%22,%22n%22:%22Vodafone%20Group%20PLC%22,%22cs%22:%22STOCK/UK/XLON/VOD%22,%22ds%22:%22VOD.LN%22}, {%22t%22:%22operator%22,%22q%22:%22and%22,%22n%22:%22and%22}, {%22t%22:%22freetext%22,%22q%22:%22market%20talk%22,%22n%22:%22market%20talk%22}]&searchFilterState=open&includeDefaultFilter=true].

Ørsted rose 3.5% in Copenhagen trading after the wind energy company posted fourth-quarter net profit below consensus but revenue above expectations.

Investors also smiled at an 8.7% rise in the dividend and an optimistic profit forecast in 2022, as it expects operating profit to be between DKr 19 billion and DKK 21 billion.

Stocks to watch: The large-scale rollout of Novartis’ new cholesterol-lowering drug Leqvio in England has been delayed as the country’s National Health Service imposed a moratorium on non-Covid-19 initiatives, the official said pharmaceutical products from the Swiss company Marie -France Tschudin.

In an unusual deal, the NHS has agreed to prescribe the drug, given by injection every six months, to at least 300,000 people, over three years, in hopes of preventing some 55,000 heart attacks and strokes .

“We are making sure to prepare everything for the lifting of this moratorium,” she said during a call with reporters. Novartis shares fell 2.3%.

UniCredit shares still have a lot of potential, Berenberg analysts said. Shares of the Italian bank have had a strong run since December, outperforming the sector, and it should continue to revalue as it hits its recently set targets, Berenberg said.

“UniCredit’s total return over the next three years puts it among the most profitable banks in Europe; yet it still trades at a 15-25% discount to them,” Berenberg noted.

The bank plans to distribute most of the organically generated capital between 2022 and 2024, but it will likely still have more capital left over than its target, giving it flexibility.

The CEO’s recent comments offer reassurance that the bank won’t let mergers and acquisitions get in the way of capital distribution plans, Berenberg added.

Land Securities’ new strategy and rebased retail rents should lead to better-than-ever stock prices, although current stock prices remain in line, RBC Capital Markets said.

If the management of the commercial real estate developer and investment firm successfully implements its plan for a more flexible and operational business, better-than-historic share price multiples would be warranted, offering upside potential. ‘about 20% or more,’ the Canadian bank said.

“We expect a combination of news of elevated activity levels and a positive inflection in key trends in financial metrics to drive a continuation of Landsec’s recent share price outperformance,” RBC said. , retaining its outperform rating and target price of 1,000 pence on the share. The shares rose 1.1%.

Santander posted net profit of 2.3 billion euros in the fourth quarter, beating expectations, thanks to a strong performance in the United Kingdom and the United States and lower provisions and higher profit forecasts this year. Read what analysts are saying here [https://newsplus.wsj.com/search/realtime/company/?searchParts=[{%22t%22:%22symbol%22,%22q%22:%22djn:djnabout:SAN.MC%22,%22c%22:%22SAN%22,%22n%22:%22Banco%20Santander%20S.A.%20ADR%22,%22cs%22:%22STOCK/US/XNYS/SAN%22,%22ds%22:%22SAN.MC%22}, {%22t%22:%22operator%22,%22q%22:%22and%22,%22n%22:%22and%22}, {%22t%22:%22freetext%22,%22q%22:%22market%20talk%22,%22n%22:%22market%20talk%22}]&searchFilterState=open&includeDefaultFilter=true].

Data in Focus: The unexpected rise in headline Eurozone inflation to 5.1% in January from 5.0% in December leads Capital Economics to believe European Central Bank policymakers will end net buying altogether assets this year and prepare to start raising interest rates in early 2023, if not sooner.

Looking ahead, Capital Economics predicts that headline inflation will fall to around 2.5% by the end of the year, assuming oil and natural gas prices fall significantly from current levels.

“January’s inflation surprise suggests that risks to our already above-consensus forecast are on the upside,” said Andrew Kenningham, Capital Economics’ chief European economist.

German retail supply problems eased significantly in January, the Ifo Institute said. According to an Ifo survey, 57.1% of German retailers complained that they did not receive all the products they ordered in January.

In December, this figure was 81.6%. “With the end of the Christmas season, the pressure has eased somewhat,” said Klaus Wohlrabe, head of investigations at Ifo. Still, many retailers cannot meet customer demands because they run out of merchandise, Wohlrabe added.

The situation remains particularly problematic in DIY stores, with 94% of businesses reporting bottlenecks. In car dealerships, 84% of businesses cannot meet customer demands and 80% of appliance retailers complain of empty shelves. In supermarkets, 18.4% reported problems, up from 64.4% in December.

US markets:

Nasdaq futures pointed to a jump in tech stocks after Google’s parent company Alphabet reported a surge in earnings, sending its shares more than 10% higher in premarket trading.

With earnings season about halfway through, the number of companies that beat Wall Street expectations for sales and earnings is above average, though lower at the start of the recovery , according to an analysis by Deutsche Bank.

Shares of Alphabet, Google’s parent company, jumped more than 10% in after-hours trading after profits rose by a third last quarter. The search giant also announced a 20-to-1 stock split. PayPal fell nearly 18% after the company reported lower revenue and higher expenses.

Meta Platforms, formerly known as Facebook, Spotify, T-Mobile US and Qualcomm, is expected to report earnings on Wednesday after markets close.

“It helped turn the tide. It reminds people that earnings growth isn’t just about the future and the sauce of tomorrow. Some of these companies are delivering today,” said John Roe, head of multi-funds. -active at Legal & General Investment Management. Investors are buying the dip after the Nasdaq entered correction territory last month, he added.

A January private sector employment data release from ADP is due at 8:15 a.m. ET. Investors are awaiting more information on the state of the labor market, after a report on Tuesday showed job vacancies rose and the quit rate remained high in December.

Forex:

The euro extended its gains against the dollar after data showed eurozone inflation unexpectedly accelerated in January ahead of the ECB’s policy meeting on Thursday. Consumer prices rose 5.1% year-on-year in January after rising 5.0% in December, according to Eurostat.

The data could add pressure on the ECB, which is targeting 2% inflation, to deal with price pressures, with some analysts expecting it to raise interest rates this year.

Any rise in the dollar should peter out fairly quickly as the dollar’s positioning looks stretched, other major central banks are considering monetary policy tightening and the U.S. economy “shows signs of slowing” in the first quarter, the report said. MUFG.

The Omicron variant of the coronavirus has dampened the economy, which “certainly argues” against the Federal Reserve opting for a larger 50 basis point interest rate hike in March, a prospect that has recently propelled the dollar to new highs, MUFG analyst Derek Halpenny said.

MUFG’s analysis shows long dollar positioning — bets on the rising dollar — “at the extreme” and market participants are likely to be cautious about extending those positions, he said.

The Turkish lira fell as new details of a government program to support the currency through exchange-linked lira deposits cast doubt on the viability of the measure, Unicredit said.

“Companies have to tie up funds for six months and yields in real terms remain strongly negative, which may reduce their attractiveness,” Unicredit analysts said.

“In any case, USD/TRY needs to get back above 14.00 at least to gain more upside momentum and attract new buying interest among investors,” they added. USD/TRY rises 0.5%.

Obligations :

HSBC raised its forecast for the end-2022 level of the German 10-year Bund yield to -0.30% from -0.50%, and leaves its end-2023 target unchanged at -0.50%.

“That’s because we think the market will be slow to move away from hawkish pricing, especially given a Fed hike cycle,” said European rates strategist Chris Attfield and strategist Melissa McCallum.

(MORE TO BE FOLLOWED) Dow Jones Newswires

February 02, 2022 06:51 ET (11:51 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.