Is seven years bad luck over for European telcos?
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IS SEVEN YEARS BAD LUCK OVER FOR EUROPEAN TELCOS? (1039 GMT)
Morgan Stanley equity analysts think 2023 could mark a "reversal of fortunes" for European telco stocks, which have been atypically outperforming in the recent rally.
Given their defensive nature, telco stocks usually outperform in a falling market, not the other way round.
"However, we note that this year is different. The broader stock market has returned +9% YTD, while telcos have returned +13%."
And the party ain't over yet.
MS equity analysts think there is scope for the STOXX telco index .SXKP to continue this outperformance, marking a turnaround from historical underperformance of -50ppts over the last seven years.
Why the turnaround in fortune?
They point out improvements in four specific headwinds that have weighed on telco stocks in recent years.
Those four headwinds are; anti-trust blockades to attempted European telco consolidation, lagging top line growth, increasing capex and quant investing that has kept 'value' stocks like telcos out of fashion.
But "encouraging signs of a meaningful improvement" are emerging in each area.
Firstly, they highlight the proposed merger between French telecom operator Orange's Spanish unit with Spanish rival Masmovil, which is pending approval and completion, as "pivotal".
"We expect that an approved merger in Spain could trigger further expectations of transactions in Spain, Italy, UK, France, Denmark and Sweden," they write, adding that in the past consolidation has triggered meaningful telco share price outperformance.
They also point out a progressive improvement in top-line dynamics across the sector evident in the latest batch of Q4 results, as well as falling capex and lack of warnings as further signs of an improving landscape for the sector.
The analysts also believe quant investing could turn from a headwind to neutral or even a tailwind, as investors refocus on free cash flow rather than top line growth.
Deutsche Telekom DTEGn.DE and the Netherlands' Koninklijke KPN KPN.AS are among their top picks in the sector.
(Lucy Raitano)
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STRONG START FOR STOXX 600 (0851 GMT)
European shares have started the new week off on a positive footing, rebounding after the biggest weekly fall since mid-December last week.
The pan-European STOXX 600 .STOXX is up 0.9% following last week's 1.4% drop when evidence of accelerating U.S. inflation sent global stocks lower on expectations of higher interest rates.
Britain's FTSE 100 .FTSE is up 0.8%, while Germany DAX .GDAXI and France's CAC 40 .FCHI are gaining 1.3 and 1.2%, respectively.
All sectors are firmly in the green, with energy .SXEP, chemicals .SX4P and tech .SX8P leading the way higher.
Shares in German bank Commerzbank are up 3.8% after the company rejoined the blue-chip DAX index, marking a turnaround after it dropped out in 2018.
Dechra Pharmaceuticals is lagging, down 16% after the company guided to the lower end of analyst expectations.
Here's your opening snapshot:
(Samuel Indyk)
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EUROPEAN FUTURES CAUTIOUSLY HIGHER (0728 GMT)
European equity futures are cautiously rebounding today following a sell-off on Friday after U.S. inflation came in hotter than forecast , adding to expectations that the Fed will have to raise rates higher and keep them there for longer.
Futures on the Euro STOXX 50 STXEc1 are up 0.2%. Futures on the DAX FDXc1, CAC 40 FCEc1 and FTSE 100 FFIc1 are trading up 0.1-0.6%.
Focus in Europe for investors this week will be on euro area consumer prices data and the accounts of the ECB's last policy meeting, both due on Thursday.
The data calendar is light on Monday with final euro area consumer confidence for February and U.S. January durable goods orders the highlights.
(Samuel Indyk)
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IT'S ALL ABOUT INFLATION(0659 GMT)
Markets are back to inflation watching. Just as global economic growth worries ease and labour markets remain tight, price trends have become the main focus for investors.
A slew of strong U.S. economic data has reinforced the view that interest rates will stay higher-for-longer.
The latest evidence came in the personal consumption expenditures price index, the Federal Reserve's preferred gauge of inflation, which shot up 0.6% last month after gaining 0.2% in December.
Over in Europe, preliminary February inflation data is due from Germany, France, Spain and Portugal on Monday and Tuesday, followed by the euro bloc flash number on Thursday.
Though headline euro area inflation is easing, there is mounting realisation that it could proving more stubborn than earlier expected.
European Central Bank officials are not ruling out that rates might need to go up significantly beyond March.
Traders are now pricing in another 75 basis points of moves in the 20-nation euro zone before the end of the summer.
On Monday, the downbeat sentiment took a toll on Asian markets. with a benchmark index falling 1% to the lowest levels since early January. The dollar hovered near a seven-week highs whle U.S. Treasury yields edged up.
Incoming Bank of Japan Governor Kazuo Ueda said the merits of the bank's current monetary policy outweigh the costs, stressing the need to maintain support for the country's economy with ultra-low interest rates.
This week, European investors will also digest results from the likes of Lufthansa, fund manager Abrdn, London Stock Exchange and Telefonica.
Meanwhile, jittery markets are also keeping any eye on any new developments on the Russia-China front after the U.S. said any lethal aid from China to Russia would come at 'real costs."
Republican Representative Michael McCaul has said that Chinese leader Xi Jinping is preparing to visit Moscow next week for a meeting with Russian President Vladimir Putin.
On the corporate front, this week at the world's largest telecoms conference, a clash between Big Tech and European Union telecoms firms over who will underwrite network infrastructure is set to dominate discussion at Barcelona.
Key developments that could influence markets on Monday:
European economic data: Euro zone Feb consumer sentiment, Germany Feb CPI
U.S. economic data: Jan durables goods orders
(Anshuman Daga)
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ECB still in rate-hiking mode to contain inflationhttps://tmsnrt.rs/3YWqEMm
U.S. inflation reaccelerates as prices remain hothttps://tmsnrt.rs/3YegxBL
Stoxx openhttps://tmsnrt.rs/3J6nLDz
Telecomshttps://tmsnrt.rs/3krhdpx
متعلقہ اثاثے
تازہ ترين خبريں
دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
