In European Equity Markets stocks rose sharply on Wednesday, boosted by strong earning updates from Logitech and Banco Santander, with the STOXX 600 scoring its biggest one-day gain for 11 weeks. The benchmark index rose 1.3 percent and Germany’s DAX rose 1.8 percent to its highest since May 2015, underpinned by gains in Deutsche Bank as investors welcomed the possible listing of its asset management arm. Italy’s FTSE MIB rose 0.4 percent. The banking index rose 3 percent boosted by Santander and Deutsche, up 4 percent and 5.7 percent respectively. Italian banks also rose with UniCredit up 8.9 percent. BT Group edged 0.2 percent lower, stabilising after losing a fifth of its value in the previous session after cutting its forecasts.
In Currency Markets the dollar hit a roughly seven-week low against a basket of major currencies on Wednesday on worries that U.S. President Donald Trump was focusing too much on protectionism and not enough on pro-growth policies. The dollar index was last down 0.3 percent at 100.060 after touching 99.835. Sterling was last up 0.6 percent against the dollar at $1.2593. The euro was up 0.1 percent against the dollar at $1.0741, while the dollar was down 0.2 percent against the yen at 113.53 yen. The Australian dollar bucked the trend and fell against the greenback to a six-day low of $0.7515 after both quarterly and annual inflation undershot expectations, rekindling hopes of one more interest rate cut from the Reserve Bank of Australia
In Commodities Markets oil prices rebounded on Wednesday, reversing earlier losses even after data showed a build in U.S. crude inventories, reinforcing traders’ sentiment that oil is trapped in a range by expected OPEC production cuts and U.S. output growth. U.S. crude futures for March delivery were up 0.04 percent, to $53.20 per barrel after earlier falling to as low as $52.56 per barrel. Benchmark Brent crude was down 2 cents a barrel at $55.42. Crude inventories rose 2.8 million barrels in the week to Jan. 20, in line with expectations. Spot gold had fallen 0.4 percent to $1,204.21 per ounce, while silver fell 1.1 percent to $16.90. Platinum fell 0.6 percent to $989.74 and palladium shed 0.6 percent to $781.60.
In US Equity Markets the Dow Jones Industrial Average extended gains in late morning trading after hitting 20,000 for the first time on Wednesday as strong earnings and President Donald Trump’s pro-growth comments and initiatives reignited a post-election rally. The Dow was up 0.77 percent, at 20,066.22. The S&P 500 was up 0.67 percent, at 2,295.34 and the Nasdaq Composite was up 0.81 percent, at 5,646.42. Eight of the 11 major S&P 500 sectors were higher, led by a 1.05 percent rise in financials. Boeing rose 4 percent after its earnings and IBM gained 1.7 percent, helping to push the index over the top. Goldman rose 0.9 percent. Utilities, real estate and telecom services – defensive parts of the market – were the outliers.
In Bond Markets U.S. Treasury yields increased on Wednesday with benchmark yields hitting a near three-week high as Wall Street’s three key indexes posted record highs on investor optimism about the economy due to policies from the Trump administration. The yield on benchmark 10-year Treasury notes rose 3 basis points to 2.506 percent after touching 2.515 percent earlier, which was its highest since Jan. 3
European Equity Earnings
Santander (SAN SM) – Co. reports Q4 net profit EUR 1.6bln vs. Exp. EUR 1.48bln, 2016 net profit EUR 6.2bln vs. Exp. EUR 6.12bln, 2016 net interest income fell 3.4% Y/Y to EUR 31.1bln vs. Exp. EUR 30.8bln.
Novartis (NOVN VX) – Co. proposes raising dividend to CHF 2.75/shr, while announcing a USD 5bln sharebuy back, Q4 net income fell 11% to USD 936mln, Q4 revenue fell 2% to USD 12.32bln, Q4 core net income USD 2.658bln vs. Exp. USD 2.72bln.
European Equity Upgrades/Downgrades
BT (BT/A LN) UPGRADED TO NEUTRAL FROM UNDERPERFORM AT MACQUARIE
INMARSAT (ISAT LN) DOWNGRADED TO SECTORPERFORM FROM OUTPERFORM AT RBC
LAND SECURITIES (LAND LN) UPGRADED TO BUY FROM NEUTRAL AT GOLDMAN SACHS
SCOTTISH AND SOUTHERN ENERGY (SSE LN) UPGRADED TO BUY FROM HOLD AT HSBC
RECKITT BENCKISER (RB/ LN) UPGRADED TO BUY FROM HOLD AT BERENBERG
SPIRAX-SARCO ENGINEERING (SPX LN) UPGRADED TO OUTPERFORM TO SECTOR PERFORM AY RBC
ASHMORE (ASHM LN) UPGRADED TO BUY FROM NEUTRAL AT UBS
LEGAL AND GENERAL (LGEN LN) DOWNGRADED TO MARKET PERFORM FROM OUTPERFORM AT BERNSTEIN
KING FISHER (KGF LN) DOWNGRADED TO UNDERPERFORM FROM NEUTRAL AT EXANE
IMI (IMI LN) UPGRADED TO SECTOR PEROFRM AT RBC
PROSIEBEN (PSM GY) UPGRADED TO OVERWEIGHT FROM EQUAL WEIGHT AT BARCLAYS
AXEL SPRINGER (AXL GY) UPGRADED TO EQUALWEIGHT FROM UNDERWEIGHT AT BARCLAYS
EDF (EDF FP) UPGRADED TO HOLD FROM REDUCE AT HSBC
ICADE (ICAD FP) UPGRADED TO BUY FROM NEUTRAL AT GOLDMAN SACHS
METROPOLE TELEVISION (MMT FP) UPGRADED TO OVERWEIGHT FROM EQUALWEIGHT AT BARCLAYS
VIVENDI (VIV FP) DOWNGRADED TO UNDERWEIGHT FROM EQUAL WEIGHT AT BARCLAYS
AXA (CS FP) DOWNGRADED TO NEUTRAL FROM OUTPERFORM AT EXANE
SCHNEIDER ELECTRIC (SU FP) UPGRADED TO OUTPERFORM FROM SECTOR PERFORM AT RBC
ELIOR (ELR FP) DOWNGRADED TO HOLD FROM BUY AT BERENBERG
LEGRAND (LR FP) UPGRADED TO SECTOR PEROFRM FROM UNDERPEORM AT RBC
SNAM (SRG IM) DOWNGRADED TO HOLD FROM BUY AT HSBC
RAIFFEISEN (RBI AV) UPGRADED TO BUY FROM NEUTRAL AT UBS
ABB (ABBN VX) UPGRADED TO OUTPERFORM FROM SECTOR PERFORM AT RBC
ZURICH INSURANCE (ZURN SZ) UPGRADED TO OUTPEROFRM FROM NEUTRAL AT EXANE
SWATCH (UHR VX) UPGRADED TO BUY FROM HOLD AT DEUTCHE BANK
ARYZTA (ARYN SZ) DOWNGRADED TO NEUTRAL FROM BUY AT GOLDMAN SACHS
TELENOR (TEL NO) UPGRADED TO HOLD FROM SELL AT BERENBERG
ALFA LAVAL (ALFA SS) DOWNGRADED TO UNDERPERFORM FROM SECTOR PERFORM AT RBC
BT (BT A/ LN) DOWNGRADED TO HOLD FROM BUY AT BERENBERG
LAGARDERE (MMB FP) DOWNGRADED TO UNDERWEIGHT FROM EQUALWEIGHT AT BARCLAYS
METRO (MEO GY) DOWNGRADED TO NEUTRAL FROM OUTPERFORM AT MACQUARIE
PEARSON (PSON LN) DOWNGRADED TO HOLD FROM BUY AT INVESTEC
PUBLICIS (PUB FP) DOWNGRADED TO EQUALWEIGHT FROM OVERWEIGHT AT BARCLAYS