Equity Brief: Earnings Step Over Low Expectations

Equity Brief: Earnings Step Over Low Expectations

City Index  | Jul 23, 2019 15:38

  • European stock market sentiment builds strongly on Monday’s improvement with the best day for the Germany’s DAX, and the broad STOXX 600 since mid-June
  • They rose almost 2% and above 1% respectively earlier as the latest batch of earnings topped low expectations
  • Trading is also garnished by relief for the continent’s most battered sectors. There’s also speculation that reads better for Europe’s beleaguered banks, suggesting certain exemptions to deposit rates that will almost certainly turn more negative in coming months
  • Wall Street is also on the front foot after a solid session a day before. Again, a reasonable slate of earnings helps, as does sparse news on potential U.S.-China trade talks. Such indications as there are leave the door open for the resumption of high-level face-to-face negotiations in coming months

Corporate News

  • UBS (NYSE:UBS) and Banco Santander(LON:BNC) (LON:BNC) underpin the bank sector with better than forecast quarterly net income. Their 1% and 3.3% respective stock price gains helped propel the key European bank index up 1.7% towards the U.S. open. That’s despite the Swiss lender’s crucial wealth business seeing outflows, prompting a warning about the global economy. It’s possible that caution may cap the sector rally into the close. Still, the Spanish group noted Americas as a bright spot, whilst confirming more sluggish going in Europe
  • Ams (SIX:AMS), a supplier of sensors to Apple (NASDAQ:AAPL), has its best day since October, rising 10% at one point after pacing profit expectations. Reaction weakened later after the highly-levered Swiss group reaffirmed interest in buying another Apple contractor, Osram (DE:OSRn), for €3.7bn, even though the German firm said it accepted a €3.4bn private equity offer
  • Germany’s Daimler AG (DE:DAIGn) NA O.N. (LON:0NXX) and Continental, the latter a rival of auto parts maker Faurecia (LON:0MGR), gave Europe’s auto sector a break from the year’s malaise. China’s BAIC will buy a 5% stake in DAI. The German components group (whose shares are
  • down 30% this year) failed to surprise on the downside with a lowered outlook. Its French counterpart maintained 2019 guidance
  • The earnings cheer largely continues on Wall Street with Stanley Black & Decker Inc (NYSE:SWK), United Technologies Corporation (NYSE:UTX), Coca-Cola Company (NYSE:KO), Biogen (NASDAQ:BIIB) and Lockheed Martin (NYSE:LMT). KO: set for a firm session after topping estimates across key metrics; UTX crushed headline estimates, but mostly tilts higher on the latest in a string of guidance upgrades; biotech BIIB: profit surged 72%, enabling a 2019 upgrade; defence firm LMT: backlog ballooned to $137bn, up $3.5bn and it also raises profit expectations
  • Apple-Intel (NASDAQ:INTC) talks are being reported, as the iPhone maker seeks solutions for a gap in its modem offer (it hasn’t had a new one for years) and the chip maker has been vocal about exiting non-core businesses. INTC and AAPL rise a little, setting a backstop for the day for all three major U.S. index groups to build on

Upcoming Corporate Earnings

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions."

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City Index

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