European Stocks Slide as Evergrande Concerns Resurface

The regionwide STOXX 600 index slipped 0.5% after a three-day run of gains. Miners, automakers and retailers fell more than 1% each.

Investors took some profits off the table after mid-week rally as a deadline for paying $83.5 million in bond interest passed without remark from Evergrande, concerns about which rocked financial markets earlier this week.

German sportswear makers Adidas and Puma fell 3.7% and 2.5%, respectively, after Nike cut its fiscal 2022 sales expectations and said it expects delays during the holiday shopping season, blaming the ongoing supply chain crunch.

Broadly, Germany’s DAX fell 0.7%, heading into the weekend when the country will vote to elect German chancellor Angela Merkel’s successor.

British drugmaker AstraZeneca jumped 3.2% after the company said its cancer drug Lynparza met its primary goal in a late-stage trial.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur)

European Stocks Log Best Winning Streak Since 2006, Fourth Week of Gains

The pan-European STOXX 600 index inched up 0.2% to a record high of 476.16, for the tenth straight session. The index has now matched its best winning streak since December 2006.

While the pace of gains has slowed due to thin summer trading, the index has logged nine-day gaining streaks seven times in the past fifteen years.

Germany’s DAX index ticked above 16,000 points for the first time ever, while France’s CAC 40 index index touched its highest level in nearly 21 years.

Both European and U.S. stocks hit record levels this week, supported by rising earnings expectations and improving economic data, even as Asian equities were held back by worries about Chinese regulation and the fast-spreading Delta variant of the coronavirus.

“If investors are concerned about rising Delta variant cases globally there’s little evidence that it is prompting any undue worry, although markets in Asia have been a little more cautious,” said Michael Hewson, chief market analyst at CMC Markets UK.

Meanwhile, speculation that the U.S. Federal Reserve could soon start to unwind its bond-buying stimulus calmed a bit following tame U.S. consumer prices data this week.

Focus will be on the minutes from the U.S. central bank’s last policy meeting next week for clues on the outlook for monetary policy.

“With equity markets almost doubling since the start of the pandemic and a bull market lasting over a decade, investors are questioning how far the bull market can rally,” said Geir Lode, head of global equities at the international business of Federated Hermes.

“With higher inflation and regulatory risk we believe value stocks will outperform growth stocks,” said Lode, adding that he expects stronger earnings growth among mid-cap and smaller companies versus the mega-cap growth companies.

Italian shares were also trading near their highest since September 2008.

Adidas rose 2.3% after it said it was selling Reebok to Authentic Brands Group for up to 2.1 billion euros ($2.5 billion).

Pet supplies retailer Zooplus shot up 41.1% after it accepted a takeover offer worth around 3 billion euros ($3.5 billion) from U.S. private equity firm Hellman & Friedman.

French healthcare company Ipsen tumbled 12.7% after it withdrew a U.S. application for palovarotene, its treatment for an extremely rare disease that causes muscles and tissue to turn to bone.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Additional reporting by Sagarika Jaisinghani and Susan Mathew; Editing by Shounak Dasgupta and Dan Greber)

Marketmind: Muddied Waters

That confusion was evident in global markets too.

World stocks are set to sign off the week on a record high while the U.S. Treasury yield curve is still trading near its flattest levels this year, a sign that bond punters remain concerned about inflation.

For now, the Federal Reserve can maintain its assertion that inflation rises are temporary.

But a majority of economists polled by Reuters expect the Fed to taper its asset purchases in September — the jobs market is stronger and Fed officials appear to be more willing to discuss tapering the $120 billion monthly asset purchases.

Until fresh data adds to the taper debate, markets will likely remain in summer torpor mode.

Even a widening regulatory crackdown in China has failed to ignite broader market unease with the VIX “fear gauge” dropping to a five-week low, and a U.S. equity put/call ratio slipping below already very low levels.

European and U.S. stock futures are generally flat, with the second quarter earnings season supporting sentiment. U.S. investment grade companies have recorded an impressive 30% earnings growth in the June quarter compared to the similar period two years ago, Citibank estimates.

Favourable readings were evident in Europe too with banks, historically laggards, posting impressive results.

The spoiler in the cautiously optimistic markets outlook remains the surging Delta variant of COVID-19, especially in Asia. Malaysia’s central bank on Friday slashed its 2021 economic outlook due to the COVID surge. Australia’s two largest cities – Sydney and Melbourne – remain in extended lockdown.

Elsewhere, oil prices fell for a second day, while the U.S. dollar held near four-month highs against its rivals.

Key developments that should provide more direction to markets on Friday:

– Europe macro: France unemployment, final July CPI, euro June trade balance.

– U.S. macro: Import price index, Michigan University sentiment readings.

– British engineering firm Babcock to sell its consultancy unit Frazer-Nash for 293 million pounds ($404.5 million) in cash.

– Adidas is selling Reebok to Authentic Brands Group(ABG) for up to 2.1 billion euros.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Saikat Chatterjee; Editing by Dhara Ranasinghe)

Reebok Is Struggling? Its No Longer Adidas’s Problem

Reebok has been struggling for the past few years, and Adidas is ready to part with the sneaker brand after agreeing to sell it to Authentic Brands Group.

Adidas To Sell Reebok To Authentic Brands Group

German apparel giant Adidas has announced today that it has agreed to sell Reebok to Authentic Brands Group. The Reebok deal is set to be worth around 2.1 billion euros, or roughly $2.5 billion and would take away Reebok from Adidas‘s control for the first time in years.

Authentic Brands Group is a New York-based brand management company that is known for its holdings in many ventures such as apparel, athletics, and entertainment. Over the years, Authentic Brands Group has built a reputation for acquiring bankrupt brands such as Brooks Brothers, Aeropostale and Forever 21 and adding them to its retail conglomerate.

At the moment, Authentic Brands Group is not yet a publicly listed company, but it is preparing for an IPO. Reebok has been a part of Adidas since the German company bought it for $3.8 billion in 2006 in a bid to compete with Nike. However, Reebok has underperformed in recent years, prompting repeated calls from investors to sell the brand.

Adidas has been able to successfully enter the United States market without the help of Reebok, thanks to numerous partnerships with celebrities such as Kanye West, Beyonce and Pharrell Williams.

Reebok To Maintain Its Operational Status

According to Reebok, it will maintain its headquarters in Boston. The company will also continue operations in North and Latin America, Asia-Pacific, Europe and Russia. Furthermore, Reebok will work closely with Adidas during the transition period to ensure everything goes as expected.

Jamie Salter, founder, chairman and CEO of Authentic Brands Group, stated that they have been eyeing Reenok for the past few years and they are excited to acquire it. “We are committed to preserving Reebok’s integrity, innovation, and values – including its presence in bricks and mortar” the CEO added.

ADS stock chart. Source: FXEMPIRE

The shares of Adidas went up by 0.57% on the German stock exchange. ADS has performed well this year, rising from EUR 296 to currently trade at EUR 308.

European Stocks Extend Record Rally on Lift From Insurers, M&A Activity

The pan-European STOXX 600 index inched up 0.1%, extending gains to a ninth consecutive session.

British insurer Aviva rose 3.5% after saying it would return at least 4 billion pounds ($5.5 billion) to shareholders, while Zurich Insurance Group added 3.8% on reporting a 60% jump in first-half business operating profit.

Dutch insurer Aegon NV jumped 7.3% after posting much better than expected second-quarter earnings.

Deutsche Telekom rose 2.8% after raising its profit outlook for the second time this year.

The benchmark STOXX 600 clocked its longest winning streak since June, as earnings reports and optimism related to the pace of vaccination across Europe reinforced investor confidence in an economic recovery.

Data showed Britain’s economy grew by a faster than expected 1% in June, after many hospitality firms restarted indoor service in mid-May and as more people visited doctors following the pandemic, lifting healthcare.

Factory output fell in June in the euro zone, as Germany, the bloc’s industrial powerhouse, faltered amid supply bottlenecks, European Union estimates showed.

“The second successive monthly fall in euro-zone industrial production in June was largely due to ongoing supply-chain difficulties in Germany,” said Andrew Kenningham, chief Europe economist at Capital Economics.

“As these will ease only slowly, we don’t expect industry to contribute much to economic growth in the coming months, even though demand is still red hot,” Kenningham added.

Cineworld Group rose 3.9% after it said it was considering a listing of itself or a partial listing of its movie chain Regal on Wall Street.

Meanwhile, Adidas rose 1.6% after selling its Reebok brand to Authentic Brands Groups for up to 2.1 billion euros ($2.5 billion), as the German sporting goods company sought to draw a line under an ill-fated investment.

Stock Spirits Group soared 43.7% funds as funds affiliated with private-equity firm CVC agreed to take over the London-listed vodka maker in a deal valuing it at 767 million pounds ($1.1 billion).

Dragging down miners, UK-listed shares of global miner Rio Tinto slipped 5.5% on trading ex-dividend.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in BengaluruEditing by Shounak Dasgupta and David Holmes)

Stock of The Day: Adidas

A short analysis today of Adidas, a German company, which needs no introduction. It’ll be a very short analysis because the situation here is very straightforward. We have one crucial support, which is being currently tested by the price. What will happen from here will depend on the mid-term sentiment on this instrument.

So at the end of June, Adidas broke the crucial horizontal resistance, slightly above the psychological level of 300 EUR. It was not just a round price but also the upper line of the sideways movement locked inside of the rectangle formation (yellow lines).

That breakout, gave us a buy signal and indeed, the price did climb higher making new all-time highs. Not bad, huh? Sentiment changed though when the global markets started to slide. Adidas did not resist and went down as well.

And here we are, Adidas is currently testing the 303 EUR support but this time, from the top. As long as we stay above, the sentiment is positive. A bounce here in the shape of a hammer or a bullish engulfing pattern would be a great occasion to buy.

On the other hand, the price closing a day below the yellow support would be a very negative sign as that would mean a false bullish breakout and if you’ve been following us long enough, you know what that means. If not, then let me explain: it means trouble, big, big trouble.

For a look at all of today’s economic events, check out our economic calendar.

Will Earnings Season Bring Volatility To The Stock Market?

The Commerce Department last week reported that the U.S. economy grew at a +6.4% annual rate in the first quarter, slightly below estimates but still strong. If it would have come in real hot and much higher bears would have pointed to fanning the inflation flames even further.

This mindset of “bad-news-could-be-good-news” is helping to keep the stock market at or near all-time highs. If economic data somewhat disappoints it means the Fed stay dovish and accommodative for longer.

Fundamental analysis

That might be important to keep in mind as April data starting this week is expected to be extremely good. The April Employment Report is due next Friday and with upper-end of Wall Street estimates look for upwards of +1 million new jobs being added. Other key April data next week includes the ISM Manufacturing Index on Monday, and the ISM Non-Manufacturing Index on Wednesday.

employment

If the data comes in better than expected the bears will win the nearby battle and have the upper hand when talking higher inflation and the Fed perhaps tightening sooner than anticipated. So this week could be a bit tricky whereas “disappointing-data” could actually be digested as a win for the bulls and “strong data” a win for the bears.

The earnings calendar is packed again next week with big names including Activision Blizzard, Adidas, AllState, Cerner, Cigna, CVS, Dominion Energy, Enbridge, Etsy, Hilton Worldwide, Moderna, Monster Beverage, Nintendo, PayPal, Peloton, Pfizer, Rocket Companies, Square, TMobile, Wayfair, and Zoetis.

COVID-19

Checking in on U.S. progress against Covid-19, the number of adults that have received at least one dose is around 60%-65%, depending on the source. Global cases continue to rise led by India, where new infections have been hitting new record highs every day for weeks now. The country reported a staggering 380k new infections and 3,645 new deaths on Thursday while less than 10% of the population has been vaccinated.

Bottom line, the global restart will not be synchronized like many bulls had hoped would be the case and global growth may continue to struggle. At the moment the U.S. market doesn’t seem to care. It will be interesting to see if increasing inflation and continued global headwinds will eventually come home to roost.

SP500 technical analysis

SP500 earnings season

Earnings season can bring volatility to the stock market. At the beginning of May, cycles turn to the downside. Note, this is only a timing tool and it never shows the amplitude or strength of the move. When cycles are topping, it means we can expect a move down or choppy trading. This is it.

But relying on cycles only is not a good idea. Insider Accumulation Index shows bearish divergence on a daily chart. At the same time, Advanced Decline Line is still strong. The key resistance is around 4250 at the moment. I believe earning season can bring a profit booking to the stock market. If that happens, watch 4000 – 39500. It was a massive resistance and now it might turn into support. Intermarket Forecast is neutral. But if it turns to the downside, we will finally see a pullback in SP500.

For a look at all of today’s economic events, check out our economic calendar.