- Worst week since 2016 for European stocks
- Financials, insurance stocks worst-performing
- Umicore leads gains while Amundi falls
Last week had a devastating impact on the stock market and now I will transmit some articles that illustrate the problem and illuminate the light:
CLOSING SNAPSHOT: EUROPEAN STOCKS BID FAREWELL TO WORST WEEK SINCE 2016 (1647 GMT)
And good riddance - or is there more to come? Is this now the new normal for markets -
higher volatility and rising bond yields?
The market action over the coming weeks will provide further evidence, but for now let's all
say goodbye to the worst week for European stocks in two years.
Here's your closing snapshot - have a good weekend!
(Kit Rees)
ETF, ETP ASSETS SMASH THROUGH $5 TRILLION IN JANUARY - ETFGI (1356 GMT)
While it will be interesting to see the results from this month, ETFs had another strong
month in January as assets invested in ETFs and ETPs listed globally smashed through the $5
trillion milestone, according to research and consultancy firm ETFGI.
Assets invested in ETFs and ETPs rose by a record 6.47 percent ($313 billion) in January,
sucking in a record amount of inflows ($106 billion).
(Kit Rees)
WINNERS AND LOSERS IN EUROPE THIS WEEK (1318 GMT)
In a pretty exciting week for equity markets, let's take a look at some of the top
performers, and biggest losers, in Europe this week.
∙Best-performing major region: Denmark -2.6% (also Portugal -4.1%)
∙Worst-performing major region: Spain -6.2%
∙Best-performing sector: travel + leisure -2.8%
∙Worst-performing sector: basic resources -6.8%
∙Best-performing stocks: TDC +20.1% (rejected takeover approach); AMS
+19.6% (reported jump in Q4 profit); Capita +18.8%
∙Worst-performing stocks: Orion -17.3% (guidance disappointed);
Randgold Resources -14% (issues around new Congo mining code); Deutsche
Bank -13.4% (has been falling since reporting third annual loss; PT cuts
)
(Kit Rees)
BANKS? "AN OASIS OF OPPORTUNITY" (1506 GMT)
We told you about Citi staying bullish on financials but it's not only the sell-side that's
pushing the sector. The buy-side too is showing growing optimism about banks as financial
markets prepare for a higher yield, higher rates world.
Here's Rob James, financials analyst and manager of the Old Mutual Financials Contingent
Capital Fund: "As rates begin to normalise (and that’s what they are doing) bank margins should
begin to recover. Higher margins mean higher profits and higher dividends. This is great news
for investors. Of course, we will need to keep an eye on bad debts – higher loan prices will
inevitably mean higher default levels, but this potential risk should not outweigh the benefits,
as long as the increases in yields are steady, which we believe they will be."
"So, in our view, the banks represent an oasis of opportunity in a tumultuous market."
In the chart you can see how bank stock indexes in Europe have outperformed the broader
market this week, although they haven't been totally immune to the sell-off.
(Danilo Masoni)
EUROPE EQUITY FUNDS REDEMPTIONS HIT 80-WEEK HIGH (1208 GMT)
"The tide of fresh money flowing into Equity Funds turned sharply in early February as fears
that 2018 is the year when inflation finally takes off sparked a major sell-off," says Cameron
Brandt, Research Director at EPFR Global, in his latest update on global flows.
For Europe the abrupt shift has translated into redemptions reaching an 80-week high with
other factors also coming into play.
"Political uncertainty in Italy, Germany and the UK, a broad economic recovery that could
prompt the European Central Bank to accelerate its timetable for normalizing monetary policy and
the resurgence of volatility in US markets kept the pressure on Europe Equity Funds during the
first week of February," he said.
Turning to countries, he said Switzerland Equity Funds recorded outflows 14 of the 19 weeks
since the start of 4Q17, while UK Equity Funds have come under pressure from expectations that
the BoE will resume hiking rates in 2Q18 and that the odds of a disorderly exit from the
European Union are rising.
(Danilo Masoni)
WHY UK UTILITIES WERE NO SAFE HAVEN DURING THE STORM (1430 GMT)
UK utilities underperformed the market during the sell-off, Accendo Markets note today,
"failing to display the defensive attributes that would normally have one rushing to their safe
revenue, profit and dividend streams."
Head of Research Mike van Dulken sees a few reasons for that:
* proposed energy caps by the government
* fear of Labour nationalising the Water sector
* rising interest rates (which make financing more expensive and dividends unlikely to
compete with bond yields)
Here's his conclusion: "As it stands, income seekers have two choices. Risk further capital
depreciation in return for a potentially unsustainable 5% dividend. Or go with Uncle Sam who’s
finally offering a safe near-3% again."
(Julien Ponthus)
And in the end have a good weekend.....