CAPIS - Capital Institutional Services Inc.

03/08/2018 | News release | Distributed by Public on 03/08/2018 13:23

CAPIS EU Close – 3/8/2018

As expected rates were left unchanged by the ECB with some new news noted by Draghi in his presser. While rates remained as-is, bond purchases at €30B a month will continue past September which is not new. But he added that until inflation is sustained at an acceptable level, maturing bond proceeds will be reinvested to help 'deliver the appropriate stance'. Also, the prior pledge to increase QE if necessary was dropped. Inflation is seen running at 1.5% for the balance of the year with the economy as a whole growing faster than previously seen. GDP views were upped to 2.4% this year. After an initial move higher the Euro sold off, currently holding just north of 1.22 vs the Dollar. The large trade surplus on outsized exports in China we reported earlier will be in focus this afternoon as President Trump is said to layout tariff details.

On that indices ticked up with strength seen into the close. Miners fell, weighing on the Basic Resource sector that shared losses with Retail today. Food rallied over 2% with several large names seeing solid gains today. Personal Goods, Tech, and Utilities also saw strong gains on the session. Volume on the day though was only 6% higher vs the recent month's turnover.

BMW +.1% met expectations for the FY with profit up on SUV demand and US tax reforms. Like peers though, costs are on the rise with R&D spending for EV's up along with material prices and the stronger €.

Continental +1.6% accelerated higher post noting inline FY17 earnings and FY18 sales expectations. Their CFO noted a growing order backlog along with a ramp-up in spending related to R&D which he said goes hand in hand. The spending though is expected to reduce adj ebit margin from 10.9% to 10.5% this year.

Other earnings include Casino -3.7% which shook off earlier lows as growing competition, especially in Columbia, could affect FY estimates. Linde +3.3% met FY17 #'s noting the Praxair merger is still on track for completion in the 2H.

From earlier: ACS +7.8%, Atlantia +5%, Abertis -4%, Hochtief +7.3%, Smurfit Kappa -.3%, JCDecaux -3%, Merck KGaA -4.2%, Engie +3.8%, and Hugo Boss -6.9%.

Tonight consumer inflation will be released in China along with earnings growth in Japan. Trade data will be released in the UK along with Industrial Production and labor costs. Both Industrial & Manufacturing Production is expected in France along with Ind Prod in Spain. Earnings are expected from Lufthansa and Inmarsat.