EU indices under pressure | TA focus on Thales


European stocks report | Pearson | Thales | Lonza Group | Equinor...

Downtrend 1

Yesterday, European stocks were little changed. The Stoxx Europe 600 Index, Germany's DAX 30, France's CAC 40 and the U.K.'s FTSE 100 were all broadly flat at close.

41% of STOXX 600 constituents traded higher yesterday.
66% of the shares trade above their 20D MA vs 72% Wednesday (above the 20D moving average).
51% of the shares trade above their 200D MA vs 51% Wednesday (above the 20D moving average).

The Euro Stoxx 50 Volatility index eased 0.9pt to 23.31, a new 52w high.

3mths relative high: Chemicals, Industrial
3mths relative low: Media, Travel & Leisure

Europe Best 3 sectors
financial services, real estate, construction & materials

Europe worst 3 sectors
energy, media, travel & leisure

The 10yr Bund yield fell 3bps to -0.49% (below its 20D MA). The 2yr-10yr yield spread rose 1bp to -19bps (above its 20D MA).

UK 07:00: Jun Retail Sales YoY, exp.: -13.1%
UK 07:00: Jun Retail Sales MoM, exp.: 12%
UK 07:00: Jun Retail Sales ex Fuel MoM, exp.: 10.2%
UK 07:00: Jun Retail Sales ex Fuel YoY, exp.: -9.8%
FR 08:15: Jul Markit Composite PMI Flash, exp.: 51.7
FR 08:15: Jul Markit Services PMI Flash, exp.: 50.7
FR 08:15: Jul Markit Manufacturing PMI Flash, exp.: 52.3
GE 08:30: Jul Markit Composite PMI Flash, exp.: 47
GE 08:30: Jul Markit Services PMI Flash, exp.: 47.3
GE 08:30: Jul Markit Manufacturing PMI Flash, exp.: 45.2
EC 09:00: Jul Markit Composite PMI Flash, exp.: 48.5
EC 09:00: Jul Markit Manufacturing PMI Flash, exp.: 47.4
EC 09:00: Jul Markit Services PMI Flash, exp.: 48.3
UK 09:30: Jul Markit/CIPS Manufacturing PMI Flash, exp.: 50.1
UK 09:30: Jul Markit/CIPS UK Services PMI Flash, exp.: 47.1
UK 09:30: Jul Markit/CIPS Composite PMI Flash, exp.: 47.7

In Asian trading hours, EUR/USD advanced to 1.1614 and GBP/USD bounced to 1.2752. USD/JPY dropped further to 106.53.

Spot gold was flat at $1,887 an ounce.

Pearson, a publishing and education company, reported 1H results: "Pearson's sales decreased by 18% in headline terms to £1,492m (H1 2019: £1,829m). (...) Adjusted operating profit declined to a loss of £(23)m (H1 2019: £144m) with a profit impact of c.£140m from COVID-19 trading pressures after cost mitigations. (...) Our statutory operating profit of £107m in H1 2020 compares to a profit of £37m in H1 2019, the increase was largely due to the gain on sale of Penguin Random House. (...) The Board is declaring an interim dividend of 6.0p (2019: 6.0p)."

Ferguson, a distributor of plumbing and heating products, reported that revenue from continuing operations fell 3.6% on year in the period from May 1 to July 21, compared with a 15.3% decline in April.

AstraZeneca, a pharmaceutical group, said its "Breztri Aerosphere (budesonide/glycopyrrolate/formoterol fumarate) has been approved in the US for the maintenance treatment of patients with chronic obstructive pulmonary disease (COPD)".

Hapag-Lloyd, a shipping and container transportation company, was upgraded to "buy" from "neutral" at Citigroup.

Thales, an aerospace and defence company, announced that 1H adjusted net income dropped 60% on year to 232 million euros and EBIT declined 57% to 348 million euros on revenue of 7.75 billion euros, down 5.4% (-13.6% organic growth). The company said it now expects full-year EBIT of 1.3 - 1.4 billion euros and revenue of 16.5 - 17.2 billion euros.

From a technical point of view, the share price remains within a rising rising wedge since March. In addition, the stock price is stuck within a symmetrical triangle pattern since June. Prices are nearing the key support at 68E (trend line support + overlap). Caution is warranted as a break below 68E would trigger a bearish acceleration towards 59.76E and March low at 52.5E. As long as 68E is support, a rebound is possible towards the intermediary resistance at 77.9E. 

Source: GAIN Capital, TradingView

Dassault Aviation, an aircraft manufacturer of military and business jets, announced that 1H adjusted net income declined 69.6% on year to 87 million euros and adjusted operating income sank 78.0% to 55 million euros on adjusted net sales of 16.19 billion euros, down 9.0%.

Mapfre, a Spanish insurance company, is expected to release 2Q results.

Lonza Group, a chemicals and biotechnology company, posted 1H net income jumped 59.5% on year to 477 million Swiss franc and EBIT grew 21.4% to 618 million Swiss franc on revenue of 3.07 billion Swiss franc, up 3.3% (+7.7% in constant exchange rate). The company added: "The Board of Directors decided to divest the LSI segment via a sale process, which will be initiated in H2 2020. (...) Lonza Group confirms its Outlook for full-year 2020 at above mid-single digit-sales growth and a stable level of CORE EBITDA margin."

Equinor, an Norwegian energy company, announced that it swung to a 2Q net loss of 251 million dollars from a net profit of 1.48 billion dollars in the prior-year period, but narrowed from a 1Q net loss of 705 million dollars. Adjusted earnings after tax sank 43% on year to 646 million dollars  on total revenue of 7.60 billion dollars, down 56%.

Hexagon, a global technology group, is expected to report 2Q results.

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