European Markets Update: DAX +1.0%, FTSE +1.2%, CAC +1.3%, MIB +2.3%
Major European indices trade higher across the board with Italy’s MIB (+2.3%) trading well ahead of other indices. Regional equities have rallied amid hope that a deal will be struck between Greece and its creditors after the country reportedly requested a three-year bailout program that includes tax reforms, according to the Wall Street Journal.
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· Economic data was limited:
o UK’s Halifax House Price Index +1.7% month-over-month (consensus 0.3%; prior 0.3%); +9.6% year-over-year (expected 8.3%; last 8.6%)
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· Germany’s DAX has climbed 1.0% with all but five names trading in the green. Steelmaker ThyssenKrupp leads with a 2.5% gain while heavyweights Bayer, Siemens, and SAP have added between 1.6% and 1.9%. Exporters lag with BMW, Daimler, and Volkswagen down between 0.1% and 1.7%.
· UK’s FTSE trades up 1.2% with energy and mining names in the lead. BG Group, Royal Dutch Shell, Anglo American, and Glencore Xstrata are up between 1.3% and 3.6%. Homebuilders lag with Barratt Developments, Persimmon, and Taylor Wimpey down between 2.4% and 3.5%.
· In France, the CAC trades higher by 1.3%. Financials BNP Paribas, Credit Agricole, and Societe Generale hold gains between 1.6% and 1.7%. Similar to Germany, exporters are on the defensive with Peugeot and Renault down 1.4% and 2.8%, respectively.
· Italy’s MIB has climbed 2.3% thanks to strength in bank names. BMPS, Banca Pop Emilia Romagna, Intesa Sanpaolo, and Banco Popolare are up between 3.2% and 6.3%.
eBay: Channel Advisor reported EBAY’s June SSS of +7.2%; Amazon’s (AMZN) June SSS came in at +26% (61.98 )
· Amazon (AMZN) – Amazon’s June SSS came in at 26%, a slight increase compared to May’s 23.8%.
· eBay (EBAY) – eBay’s June SSS came in at 7.2%, a slight increase from May’s 6.6% and about half the e-commerce growth rate of 15% as predicted by comScore.
· Other 3PM -Non eBay and Amazon marketplaces for June came in at 19.2%, a significant increase from June’s 1.9%. “While our ‘Other 3PM’ category is facing headwinds specific to one of the marketplaces, other marketplaces such as Tesco (TSCDY) (up 98% y/y), Sears (SHLD) (up 33% y/y) and Newegg (up 23% y/y) are helping to counteract that headwind.”
· Google (GOOG) Shopping/PLA — GS came in at 28.7% y/y growth.
· CSE – Comparison Shopping Engines came in at 15.8% for June, an increase from May’s 8.4%.
Opportunities in US-traded Chinese stocks –
Stifel notes that following the downdraft several cos in their coverage appear attractive to them at current levels: Alibaba (BABA, $79.62, Buy), Vipshop, (VIPS, $20.52, Buy), Qihoo 360 (QIHU, $58.63, Buy) and Jiayuan.com (DATE, $5.95, Buy). In each case they believe the co’s fundamentals are solid with catalysts ahead. In addition, several Hold-rated stocks in their coverage, particularly larger-cap names, are becoming more interesting during the sell-off. While each of these Hold-rated stocks faces fundamental challenges in their view, they believe that valuations increasingly reflect these challenges and with further declines the shares may become attractive, all else equal. Their focus would be on Baidu (BIDU, $187.54, Hold), Ctrip (CTRP, $71.10, Hold) and SINA (SINA, $44.52, Hold).
S&P futures vs fair value: -15.30. Nasdaq futures vs fair value: -30.80.
U.S. equity futures trade in negative territory despite upbeat action overseas. The S&P 500 futures trade 15 points below fair value, but that represents an improvement from the overnight standing when S&P 500 futures were down about 30 points amid continued weakness in China’s stock market.
Treasuries have rallied, sending the 10-yr yield lower by five basis points to 2.21%.
The weekly MBA Mortgage Index rose 4.6% to follow last week’s 4.7% decline.
The FOMC Minutes from the June meeting will be reported at 14:00 ET while the Consumer Credit report for May (Briefing.com consensus $18.20 billion) will cross at 15:00 ET.
In U.S. corporate news of note:
· Barclays (BCS 16.04, +0.04): +0.3% after firing Chief Executive Officer Antony Jenkins.
· Container Store (TCS 18.55, +1.05): +6.0% after beating bottom-line estimates on light revenue.
· Microsoft (MSFT 43.90, -0.40): -0.9% after the New York Times reported the company may announce layoffs today.
· Tesla (TSLA 263.01, -4.87): -1.8% after Pacific Crest downgraded the stock to ‘Sector Weight’ from ‘Overweight.’
Reviewing overnight developments:
· Asian markets ended lower across the board. China’s Shanghai Composite -5.9%, Hong Kong’s Hang Seng -5.8%, and Japan’s Nikkei -3.1%
o In economic data:
§ Japan’s May Current Account surplus expanded to JPY1.64 trillion from JPY1.27 trillion (expected surplus of JPY1.38 trillion) while June Economy Watchers Current Index fell to 51.0 from 53.3 (consensus 53.2)
§ South Korea’s July M2 Money Supply +9.5% (prior +9.3%)
o In news:
§ The continued nosedive in China has resulted in more than 50% of A-share listings now being halted for volatility, according to reports
· Major European indices trade higher across the board. France’s CAC +1.1%, UK’s FTSE +1.1%, and Germany’s DAX +0.8%. Elsewhere, Italy’s MIB +2.1% and Spain’s IBEX +1.0%
o Economic data was limited:
§ UK’s Halifax House Price Index +1.7% month-over-month (consensus 0.3%; prior 0.3%); +9.6% year-over-year (expected 8.3%; last 8.6%)
o Among news of note:
§ European equities have rallied amid hope that a deal will be struck between Greece and its creditors after the country reportedly requested a three-year bailout program that includes tax reforms, according to the Wall Street Journal
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