Yesterday, European stocks advanced further. The Stoxx Europe 600 Index gained 1.58%. Germany’s DAX 30 rose 1.64%, France’s CAC 40 climbed 1.49%, and the U.K.’s FTSE 100 was up 2.09%.

90% of STOXX 600 constituents traded higher yesterday.
77% of the shares trade above their 20D MA vs 58% Friday (above the 20D moving average).
47% of the shares trade above their 200D MA vs 44% Friday (above the 20D moving average).

The Euro Stoxx 50 Volatility index eased 0.67pt to 27.6, a new 52w high.

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3mths relative high: Financial Services, Technology
3mths relative low: Telecom., Retail, Food & Beverage, Media

Europe Best 3 sectors
banks, automobiles & parts, technology

Europe worst 3 sectors
utilities, telecommunications, retail

The 10yr Bund yield was unchanged to -0.43% (below its 20D MA). The 2yr-10yr yield spread fell 0bp to -25bps (below its 20D MA).

GE 07:00: May Industrial Production MoM, exp.: -17.9%
UK 07:00: Q1 Labour Productivity QoQ final, exp.: 0.3%
FR 07:45: May Current Account, exp.: E-5.4B
FR 07:45: May Balance of Trade, exp.: E-5B
UK 08:30: Jun Halifax House Price Idx MoM, exp.: -0.2%
UK 08:30: Jun Halifax House Price Idx YoY, exp.: 2.6%

In Asian trading hours, EUR/USD eased to 1.1307 while GBP/USD was little changed at 1.2492. USD/JPY edged up to 107.41. This morning, government data showed that Japan’s household spending declined 16.2% on year in May (-11.8% expected). AUD/USD slid to 0.6957 ahead of the Reserve Bank of Australia’s interest rates decision.

Spot gold slipped to $1,783 an ounce.

JD Sports Fashion, a sports-fashion retailer, announced full-year results: “Revenue increased by 30% to £6,110.8 million (2019: £4,717.8 million) with strong total like for like sales growth in global Sports Fashion fascias of 12% including highly encouraging growth of more than 10% in the core UK and Republic of Ireland Sports Fashion fascias. (…) Group EBITDA before exceptional items on a comparable accounting basis increased by 28% to £623.6 million (2019: £488.4 million). (…) Reported profit before tax increased by 3% to £348.5 million (2019: £339.9 million).”

Whitbread, a hotel and restaurant group, reported that 1Q total sales declined 79.4% on year, saying: “In the UK we currently have over 270 hotels open and expect the majority of the remainder of the estate to be open by the end of July. In Germany all of our 19 operational hotels are open, including 13 that were refurbished and rebranded as Premier Inn during the lock-down period. (…) As expected, our Q1 performance reflects the impact of the closure of our hotel and restaurant operations, in both the UK and Germany, at the end of March.”

Micro Focus, a software and IT company, posted 1H results: “The Group recorded a goodwill impairment charge of $922.2m in the period (30 April 2019: $nil) attributable to the increased economic uncertainty as a result of COVID-19, (…) As a result, the Group generated a statutory operating loss from continuing operations of $906.7m (30 April 2019: Operating profit of $32.6m).”

Electrocomponents, an industrial and electronics products distributor, issued a 1Q trading update: “Q1 revenue declined 11% on a like-for-like basis with trading trends improving across the quarter as mobility restrictions eased in our key markets. The Group exited the quarter with a like-for-like revenue decline of 7% in June.” From a chartist point of view, the share started to consolidate its recent gains. The stock remains in sight of a key resistance at 731p, supported by a rising trendline. Furthermore, the 20DMA is still playing a support role. Above 650p look for a further rise towards the horizontal resistance at 731p.

Ferrexpo, a commodity trading and mining company, published a 2Q production report: “2Q 2020 pellet production up 5% to 2.9MT (1Q 2020: 2.7MT). (…) 1H 2020 pellet production up 5% to 5.6MT (1H 2019: 5.4MT). (…) 1H 2020 sales volumes increased by c.21% to 6.1MT (1H 2019: 5.0MT), reflecting de-stocking.”

SSE, an energy company, was downgraded to “hold” from “buy” at HSBC.

German industrial production rose 7.8% on month in May (+11.1% expected), according to the government.

HeidelbergCement, a building materials supplier, reported that it will book a 3.4 billion euros (before tax) impairment of goodwill and tangible fixed assets, citing effects of the COVID 19 pandemic.

Commerzbank, a banking group, was upgraded to “overweight” from “underweight” at Morgan Stanley.

Italgas, a natural gas distributor, was upgraded to “neutral” from “sell” at Citigroup.

Novartis, a pharmaceutical group, said the European Commission has approved its Enerzair Breezhaler, including the first digital companion (sensor and app) that can be prescribed alongside a treatment for uncontrolled asthma.

Credit Suisse, a banking group, was downgraded to “neutral” from “buy” at UBS.

Kone, an engineering group, was downgraded to “sell” from “neutral” at UBS.

Axa: E0.73, LVMH: E2.6

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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 of sale of any currency. 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. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does 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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