The week from the 5th to the 9th March 2018 saw volumes traded on the STOXX 600 4.3% above the twelve month average, as the index reversed the majority of last week’s losses, up by 3.1% (STOXX 600 now up over the last 12 months, +1.4%). Over the week, over 60% of constituents gained 3% or more. The main index was supported by strong macroeconomic data, as the Eurozone’s real GDP growth of 2.4% over 2017 was confirmed, whilst Italy’s election results did not have a strongly negative impact on markets, with investors appearing to have anticipated such an outcome. In other macroeconomic news, the ECB confirmed that the money printing program would continue until September 2018, keeping interest rates unchanged.
The top performing indices through the week were the OMXS30 (+4.1%) and the FTSE MIB (+3.8%), meanwhile in terms of sector performance, the Tech sector led the way. Also of note, all sector and country indices gained 1% or more over the week.
Italy’s main index performs strongly despite the rise of populist parties
Italy’s main index, the FTSE MIB was the second best performing index over the week, up 3.8%, despite the victory of populist parties over the weekend. The index was down initially on the results, before gaining over 1% in each day between Tuesday and Thursday. The top performing sectors in the light of this vote were Industrials, whilst banks continued to lag. The relative weakness of banks appears linked to the prospects of the implementation of a largely Eurosceptic government, which may not abide to the EU’s fiscal policy rules. With a significant government debt, with Italian policymakers’ debt recently overtaking those of banks, and as foreign investors sell out of Italian debt, banks, which are viewed as a proxy for sovereign risk, were hit.
Utilities sector boasts a strong performance
The second best performing sector through the week was Utilities, up by 4.5%, with all Utilities stocks up, led by German, French and UK firms. The recent strong performance was accelerated in Germany today, with EON stating that it is planning to take over Innogy from RWE, with the deal valued at around 20bn EUR. Utilities across Europe are up on optimism for further M&A activity.
Siltronic soared 27.1% after the Munich-based silicon wafer group reported its latest figures, saying that it was forecasting a highly-positive 2018 fiscal year.
Smurfit Kappa jumped 25.7% as the Irish packaging giant’s board reaffirmed its takeover offer rejection from US rival International Paper which valued the group at €8.6bn.
Telecom Italia surged 14.8% to its highest level in six months after US activist shareholder Elliott Management pledged to shake up the board of the former state-owned company now controlled by Vivendi of France.
ADP rose 13.7% after BFM Business reported on its website that France would go ahead with plans to privatise the Paris airport operator and that the government would look to sell the whole of its 50.6% stake in the company.
Italy’s Atlantia and Spain’s ACS gained 13.7% and 9.7%, respectively after the two firms said they were in talks over their competing bids for Abertis and a source said they could decide to break up the Spanish toll road company rather than press on with a costly takeover battle.
AXA was the worst performer in the Euro STOXX 600 and its shares tumbled 10.2% as analysts said the French insurer’s planned $15bn acquisition of Bermuda-based commercial insurance and reinsurer XL looked too high.
Boskalis Westminster sank 9.4% after the Dutch construction and engineering firm reported FY earnings and said it would be a "challenge" to match 2017 results.
Amongst the five top ETFs by exposure to Europe, four saw net inflows through the week.
Top Performing Stocks
Top Stocks by Investor Turnover
Nasdaq Advisory Services European Team Alexander Free
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