MARKETS EUROPE/stock exchanges expand profits – Milan weak

FRANKFURT (Dow Jones)–Europe’s stock markets extended gains on Monday afternoon after a fairly benign opening on Wall Street. In retail, however, there is talk of a shaky stabilization. “The market remains caught between fears of interest rates on the one hand and strong company results and better economic signals on the other,” said one participant. The DAX rose by 0.8 percent to 15,227 points, the Euro-Stoxx-50 was 0.9 percent higher at 4,122 points.

The speech by ECB President Christine Lagarde in front of the European Parliament in the late afternoon could be interesting. “It will be seen whether the head of the ECB gets cold feet in view of the multi-sigma market reactions of the last week,” said Commerzbank. She is likely to reiterate that the ECB is not getting complacent on inflation and stress the importance of the upcoming March meeting. After the sharp price corrections on the money market and the widening of spreads, however, they should also calm down.

Bucking the trend on the pan-European stock exchanges, the listings in Milan are down 1.2 percent. Investors fear that debt-ridden Italy could be the main loser of an ECB monetary policy shift. Attention is primarily focused on the bond market there, where yields continue to rise sharply at the beginning of the week. Ten-year Italian government bonds are yielding at 1.84 percent (+9 basis points), while Bunds are yielding at 0.22 percent.

Financial stocks benefit from rising yields

Banks are the winners of rising yields, and the sector is growing by a further 1.0 percent. Ulrich Stephan, investment strategist at Deutsche Bank, sees further potential here: “Because of the approaching turnaround in key interest rates, their favorable valuation and the positive economic outlook for the European economies, I see further upside potential for bank shares”. The main winners, however, are travel stocks with a plus of 3 percent in view of further easing.

According to the analysts at Citi, among the losers of the rise in interest rates, the growth stocks, the sell-off has now turned out to be too strong. The MSCI European Growth Index has underperformed the Value Index by around 15 percent since the beginning of the year. This represents one of the three largest shifts from growth to value in a decade. The P/E ratio in the sector has fallen to 23 from 30 last year. The tech sector is up 1.2 percent at the start of the week.

Faurecia shares are up 1.4 percent. It is seen positively that the French automotive supplier has taken its synergy target in the course of the Hella takeover to EBIT to more than 250 million euros annually after previously 200 million. According to the Citi analysts, Faurecia has identified ten synergy projects that account for more than 95 percent of the synergies and the implementation of which is now beginning.

A dealer reported a report by Reuters as positive, according to which the EU competition authority could give its approval to the merger between the Finnish company Konecranes and Cargotec subject to conditions. Both companies had already offered in the past few weeks to sell parts of the business in order to gain approval. This includes Konecranes’ lift truck business as well as Cargotec’s Kalmar solution business. Konecranes shares are up 8.6 percent, Cargotec up 7.0 percent.

Financial investors fail with Aareal takeover

The failed takeover of Aareal Bank (-4.9%) by financial investors is no big surprise on the stock market. Other activist investors had secured around 30 percent of the shares and wanted a higher takeover price. Aareal’s price setback could now be used as a buying opportunity for other investors, according to the trade. Because a look at the shares of Deutsche Bank and Commerzbank shows that they are already listed well above the pre-corona level.

Aurubis is up 2.5 percent: The copper processor has presented good final business figures and confirmed the increased forecast. The operating result before taxes increased by 85 percent. The group is benefiting greatly from the high smelting wages and the high metal prices.

According to Bryan Garnier, Ceconomy’s first quarter disappoints with sales 2 percent below expectations and EBIT 7 percent below estimates. In addition to a high basis for comparison, the reasons are the corona-related restrictions in the DACH region and delivery bottlenecks. However, the stock is recovering from the daily lows and is now 3.7 percent ahead.

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Stock index last +/-% absolute +/-% YTD

Euro Stoxx 50 4,122.33 +0.9% 35.75 -4.1%

Stoxx 50 3,726.28 +0.9% 32.16 -2.4%

DAX 15,226.66 +0.8% 127.10 -4.1%

MDAX 33,142.75 +0.2% 62.19 -5.6%

TecDAX 3,423.91 +0.5% 16.65 -12.7%

SDAX 14,932.99 +0.3% 49.92 -9.0%

FTSE 7,568.01 +0.7% 51.61 +1.8%

CAC 7,003.28 +0.7% 51.90 -2.1%

Fixed income market last absolute +/- YTD

German ten-year return 0.22 +0.01 +0.40

US 10-year yield 1.93 +0.02 +0.42

FOREX last +/- % Mon 8:12 Fri 17:32 % YTD

EUR/USD 1.1430 -0.2% 1.1433 1.1451 +0.5%

EUR/JPY 131.53 -0.4% 131.82 131.94 +0.5%

EUR/CHF 1.0558 -0.5% 1.0575 1.0588 +1.8%

EUR/GBP 0.8453 -0.2% 0.8447 0.8452 +0.6%

USD/JPY 115.09 -0.2% 115.29 115.22 -0.0%

GBP/USD 1.3521 -0.1% 1.3526 1.3547 -0.1%

USD/CNH (Offshore) 6.3660 +0.1% 6.3612 6.3646 +0.2%

Bitcoin

BTC/USD 43,388.53 +4.3% 42,741.95 40,251.67 -6.2%

ROHL last VT-Settl. +/- % +/- USD % YTD

WTI/Nymex 91.17 92.31 -1.2% -1.14 +21.8%

Brent/ICE 92.62 93.27 -0.7% -0.65 +19.5%

METALS last day before +/- % +/- USD % YTD

Gold (Spot) 1,815.05 1,808.03 +0.4% +7.03 -0.8%

Silver (Spot) 22.90 22.52 +1.7% +0.38 -1.8%

Platinum (Spot) 1,019.00 1,028.98 -1.0% -9.98 +5.0%

Copper Future 4.47 4.49 -0.5% -0.02 +0.1%

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DJG/mpt/ros

(END) Dow Jones Newswires

February 07, 2022 10:01 ET (15:01 GMT)