Global stocks mixed with S&P500 on pace for a 6th straight day of losses and European stocks rally as Kering blowout 3Q results put a bid into luxury stocks

by QuantalyticsResearch

US Stocks

  • Global stocks are mixed this morning with US stocks on pace for another day of losses while European stocks rally on the back of strong results from major luxury stocks
  • US stocks index futures are pointing to a mixed open in NY with the Dow Jones minis +0.09%, S&P500 minis –0.20% and Nasdaq 100 minis –0.12%
  • If pre-market trends hold, the S&P500 will be on pace for its 6th straight day of losses
  • The Russell 2000 has now declined more than 12% since hitting its all-time high in August 2017, erasing all its YTD gains as small-cap stocks get hit the hardest as interest rates continue to rise
  • The VIX is little changed this morning and is currently at 21.67 after closing at 20.71 yesterday
  • According to Callum Thomas of Topdown Charts, this month’s pop in the VIX simply puts it in-line with the its 1990-2017 average
  • Bank of America (BAC) October 26 & January 2020 OTM Calls, SPY October 24 & November 16 OTM Puts, FXI December 21 OTM Calls, and USO December 21 OTM Calls are the most heavily traded options contracts in US pre-market trading
  • US 10-Year Treasury Bonds are higher with yields down -2.64 basis points to 3.1412%
  • The US Treasury 2s-10s Spread has narrowed 1.43 basis points to 0.27%
  • WTI Crude is currently down -4.11% to USD$66.33/bbl with the Brent-WTI spread up USD$4.19 to USD$9.41/bbl
  • Gold is currently little changed 0.04% to USD$1230.77/oz
  • Global oil prices are now trading at 2-month lows following Saudi Arabia statement that it is committed to meeting any supply shortfall associated with the sanctions against Iran

Stocks Trending in the News

  • Apple (AAPL) CEO Tim Cook took aim at other Silicon Valley players for their use of customer data.  The Apple CEO said other companies’ uses of data equate to “surveillance” as he expounded on the importance of privacy of data.  Apple’s CEO made the comments at an EU privacy conference in Brussels.  Apple is rated ‘Top Buy’ in our US Large-Cap Global Top Stock Ideas and ‘Attarctive’ in our US Information Technology Global Top Stock Ideas.
  • Boston Scientific (BSX) cut its revenue forecast for the full year to USD$9.79-9.83 billion, down from USD$9.8-9.88 billion.  Boston Scientific also cut 4Q revenue guidance to USD$2.53-2.57 billion, down from USD$2.56-2.61 billion.  Boston Scientific full year EPS guidance of USD$1.38-1.40 up from USD$1.37-1.41 which matches consensus.  Boston Scientific is rated ‘Neutral’ in our US Large-Cap Global Top Stock Ideas.
  • Deutsche Bank (DBK) reported 3Q results below consensus while also lowering guidance for the full year.  Deutsche Bank reported its lowest profit since 2010.  Deutsche Bank reported group revenue of 6.175 billion euros while consensus called for 6.37 billion euros.  Trading revenue for both stocks and fixed income trading came a touch below expectations.  Deutsche Bank’s CEO said they are making progress on slashing costs.  Deutsche Bank is trading 3.3% lower at 8.99 euros.  Deutsche Bank is rated ‘Neutral’ in our European Large-Cap is Global Top Stock Ideas.
  • Heineken (HEIA NA) reported organic beer volumes above expectations.  Heineken saw organic beer volumes grow 4.6% while the estimate was for 4.3%.  Heineken saw Americas volume grow 8.1%, Asia Pacific grew 4.8% while Europe grew 2.2%.   Heineken brewed less in Europe and Asia than expected.  Heineken is trading 1% lower at 77.64 euros.  Heineken is rated ‘Unattractive’ in our European Large-Cap Global Top Stock Ideas.
  • Hilton (HLT) increased full year EPS guidance thought it is still a touch below expectations.  Hilton expects EPS of USD$2.67-2.72 for the full year up from  USD$2.64-2.71, in line with consensus.  Hilton sees 4Q RevPar growing 2-3% with adjusted ebitda in the range of USD$518-538mn.  Hilton 3Q revenue of USD$2.25 billion came below USD$2.4 billion expected.  Hilton is rated ‘Top Buy’ in our US Large-Cap and ‘Attractive’ in our US Consumer Discretionary Global Top Stock Ideas.
  • Kering (KER FP) is trading 7% higher at 377.70 euros after reporting its Gucci brand reported 35% growth in the last quarter, beating the 28% expectations.  Kering delivered strong growth in China at a time growth concerns there are strong for luxury goods sellers.  Kering is rated ‘Attractive’ in our European Large-Cap Global Top Stock Ideas.
  • Lockheed Martin Corp’s (LMT) potential USD$15 billion sale of its Thaad missile defense system is at risk in the wake of the Jamal Khashoggi killing.  The Lockheed Martin Corp sale is part of a USD$110 billion package of arms the US intends to sell to Saudi Arabia.  Lockheed Martin Corp would see sales over a number of years if completed.  Lockheed Martin Corp is rated ‘Attractive’ in our US Large-Cap Global Top Stock Ideas and ‘Neutral’ in our US Industrials Global Top Stock Ideas.
  • Melexis (MELE BB) cut its full year guidance and today is trading 8.8% lower at 54.90 euros.  Melexis cut full year revenue growth at 11% down from 13-14%.  Melexis expects revenue of 146.7mn euros while resent consensus is for 148mn euros.  Melexis sees full year gross margin at ~45%.  Melexis reported 3Q results in line with EPS of 0.74 euros while consensus was 0.77 euros.  Melexis is rated ‘Attractive’ in our European SMID-Cap Global Top Stock Ideas.
  • STMicroelectronics (STM FP) is trading 9% lower at 122.30 euros after lowering guidance.  STMicroelectronics forecast zero improvement in gross margin for the fourth quarter.  STMicroelectronics sees 5.7% revenue growth in 4Q to USD$2.7 billion; the revenue guidance matches guidance but the 39.8% gross margin is below 40.2% guidance for STMicroelectronics.  STMicroelectronics is rated ‘Neutral’ in our European Large-Cap Global Top Stock Ideas.
  • Sunny Optical (2382 HK) closed 4.6% lower at HKD$78.50 after O-Film Tech (002456 CH) announced it is expanding into the vehicle lens market.  Jefferies commented that any new player in the sector would need time to ramp up glass and hybrid lens designs and capacity, so that near term Sunny Optical does not have much to worry about.  Longer term, though, it could be a challenge for Sunny Optical.  Sunny Optical is rated ‘Unattractive’ in our China All-Cap Global Top Stock Ideas.
  • Texas Instruments (TXN) warned that it is seeing waning demand across many of its markets.  Texas Instruments’ CFO warned, “we are heading into a softer market” on the company’s conference call.  Susquehanna wrote in a note that guidance from Texas Instruments “bodes poorly for the group: when commenting on the sector overall.  Texas Instruments is rated ‘Top Buy’ in both our US Large-Cap and US Information Technology Global Top Stock Ideas.

European Stocks

  • European stocks are advancing this morning, bucking the trend in US markets pre-market as luxury stocks rallying following a better than expected interim sales report from Kering (KER FP)
  • The Euro Stoxx 600 is currently up +0.51%, the FTSE 100 is higher by +0.71%, the DAX has advanced +0.24%, and the CAC 40 has risen +0.62%
  • Investor sentiment for European stocks is positive with the advance/decline ratio for the Euro Stoxx 600 currently at 1.79x
  • Telecommunications (+1.95%), Personal & Household Goods (+1.56%), and Retail (+1.52%) stocks are the top performers in the Euro Stoxx 600 today
  • Basic Resources (-1.67%), Technology (-1.06%), and Banks (-0.21%) stocks are the worst performers in the Euro Stoxx 600 today
  • 7 stocks in the Euro Stoxx 600 are at 4-week highs while 302 stocks are at 4-week lows
  • 4 stocks in the Euro Stoxx 600 are overbought while 214 stocks are oversold according to the 16-day RSI Measure
  • VSTOXX, the European stocks equivalent of the VIX, is little changed this morning and is currently at 20.52 after closing at 21.36 yesterday
  • EUR€ is currently down -0.549% against the USD$ to 1.1408
  • GBP£ is currently down -0.524% against the USD$ to 1.2915
  • CHF is currently down -0.169% against the USD$ to 1.0034
  • German 10-Year Bunds are higher with yields down -0.4 basis points to 0.405%
  • UK 10-Year GILTs are higher with yields down -1 basis points to 1.459%

Asian Stocks

  • Asian stocks finished mixed overnight, with stocks in Hong Kong hitting their lowest levels since May 2017
  • Chinese stocks continue to exhibit significant intraday volatility with the Shanghai Composite experiencing a 2.5% swing in intraday trading: at one point the index was +1.8% and at another point, the index was down 0.7%
  • The Nikkei 225 finished up +0.37%, the Hang Seng ended down -0.38%, the Hang Seng China Enterprise declined -0.08%, and the CSI 300 was +0.15%
  • Investor sentiment for Japanese stocks finished neutral with the advance/decline ratio for the Nikkei 225 closing at 1.1x
  • 0 stocks in the Nikkei 225 hit 4-week highs while 112 stocks reached 4-week lows
  • 0 stocks in the Nikkei 225 closed overbought while 25 stocks closed oversold according to the 16-day RSI Measure
  • Investor sentiment for Hong Kong stocks finished neutral with the advance/decline ratio for the Hang Seng closing at 1.17x
  • 0 stocks in the Hang Seng hit 4-week highs while 8 stocks reached 4-week lows
  • 0 stocks in the Hang Seng closed overbought while 6 stocks closed oversold according to the 16-day RSI Measure
  • Japan 10-Year Government Bonds are higher with yields down -1.7 basis points to 0.135%
  • JGBs 2s-10s Spread has narrowed 1.5 basis points to 0.25%
  • JPY¥ is currently little changed against the USD$ at 112.6
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