The STOXX 600 started the year on the front foot, gaining 2.1% between the 1st and the 5th Jan 2018, with only six weeks in 2017 boasting better performances. Over 70% of companies on the exchange rose by over 1%. Volumes traded were in line with the twelve month average, as all sectors progressed over the week. In terms of country indexes, all were up, led by the PSI 20 (+4.2%) and the FTSE MIB (+4.2%) in Italy. According to the Markit monthly survey, the eurozone’s service sector growth was at 58.1, its highest level since February 2011. In other macro news, eurozone inflation for December was at 1.4%, year on year, down from 1.5% in November, implying that it may be difficult for the ECB to alter its QE programme drastically in the near term.
Italy’s FTSE MIB up 4.2%
Italy had a week of positive macro and political news as the Markit business Activity Index saw activity in December rise for the 19th consecutive month. From a political perspective, a left wing partnership named +Europe was announced, combining three different parties ahead of this year’s election. The top performing constituents were automakers Fiat Chrysler (+20.2%) and Pirelli & Co. (+6.8%), with banks also performing well, led by Unione Di Banche Italiane (+5.2%), Finecobank (+4.4%) and Unicredit (+4.3%).
Tech top performing sector
Reversing its losses over the last week of 2017, the Tech sector recovered, gaining 3.8% over the week. The top performing stocks were Hardware & equipment stocks, led by semiconductor makers Siltronic (+8.9%), BE Semiconductor (+7.2%), ST Microelectronics (+6.8%) and Infineon Technologies (+6.7%), the four top performers in the sector.
UK insurance stocks under pressure
Admiral Group shares fell 6.5% after JPMorgan downgraded the car insurer to ‘underweight’ from 'neutral’ and cut its target price. JP Morgan said anticipation of the UK government’s U-turn on the so-called Ogden rate or Personal Injury Discount Rate cuts and its proposed whiplash reforms will weigh on pricing in motor insurance. Other British nonlife insurance stocks to end the week in the red included the likes of Hiscox (-3.9%) and Direct Line (-3.1%)
Steinhoff Holdings was the top performer over the week, gaining 88.5%, as the embattled retailer raised a loan facility through its subsidiary Pepkor Europe. Despite this impressive weekly performance, the stock is down 87.4% over the last 12 months.
Ocado Group was up10.1% as short interest pressure fell back, andamidst renewed takeover speculation. The online supermarket has performed well since signing a deal with French grocer Casino in November, and its performance is symbolic of the divergence between online retailers and retailers not making the transition to more online sales, with names such as H&M (-3.8% over the week), lagging.
- 09.01.2018: eurozone U/E
- 11.01.2018: ECB minutes
Top stocks by investor turnover
Nasdaq Advisory Services European Team Alexander Free
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