February 8, 2023

Unitranche

Supportive Business Potential

European markets open to close, stocks, data and news

Stocks open higher, Dow rises 300 points

Stocks opened higher Wednesday.

The Dow Jones Industrial Average gained 303 points, or 0.92%. The S&P 500 jumped 0.66% and the Nasdaq Composite rose 0.35%.

— Samantha Subin

Hungary must avoid recession next year, Prime Minister Viktor Orban says

Hungarian Prime Minister Viktor Orban said Wednesday that the country must avoid recession next year and bring its inflation down to single digits by the end of 2023.

According to Reuters, the head of state said in a briefing that Hungary would likely face an energy bill costing between 17 billion and 20 billion euros ($18 billion to $21 billion) next year. He added that his government would be able to raise the funds to cover this expense.

Orban said it would not be necessary to approach the International Monetary Fund for additional financing.

Hungary’s economy is facing a slowdown and currently has the highest central bank interest rates in Europe at 23.1%. Annual inflation is expected to surge to between 26% and 27% in the coming months, as reported by Reuters.

— Hannah Ward-Glenton

UK retail sales unexpectedly pick up in December

British retailers reported a year-on-year increase in sales in December, but expect purchases to drop again in 2023, according to a survey by the Confederation of British Industry.

Retailers and a Reuters poll of economists had anticipated demand would see a year-on-year decline this month as a result of the cost-of-living crisis in the U.K.

The CBI’s trade index rose to +11 in December from -19 in November, much above the -21 estimated by retailers. Forecasts suggest January will see the sales balance drop back down to -17.

— Hannah Ward-Glenton

Good quality corporate debt and gold are where you want to be next year, analyst says.

Good quality corporate debt and gold are where you want to be next year, according to Michael Howell, CEO of CrossBorder Capital.

Good quality corporate debt and gold are where you want to be next year, analyst says

Howell also said the U.S. Federal Reserve may pivot in liquidity before it does in interest rates on “Squawk Box Europe” Wednesday.

Stocks on the move: Uniper up 4.7% as EU clears state bailout

Shares of energy giant Uniper were up 4.7% at 10:30 a.m. London time, after shareholders Monday approved a bailout deal offered by the German government.

The European Commission cleared the plan Tuesday. Reuters reported the move has already cost Berlin 50 billion euros ($53 billion) and will involve up to 34.5 billion euros ($36.60 billion) in further cash injections through to 2024.

The company had warned it faced collapse if a deal was not reached and that shareholders could be left with nothing.

As Germany’s largest importer of Russian gas, Uniper was destabilized by the rise in market prices and the sharp cut-off in deliveries this year.

Among several bailout conditions, the company must divest its 84% stake in the Russian business Unipro, its German district heating arm, and parts of its North American power business, all by 2026.

“The stabilization of Uniper has been achieved,” said chief executive Klaus-Dieter Maubach. “We will do everything in our power to find the best owners for the assets and businesses to be sold.”

Germany must also have an exit strategy in place by the end of next year and seek to reduce its stake to no more than 25% plus one share by the end of 2028.

Despite the uptick on recent news, Uniper’s share price remains down more than 90% in the year to date.

Sportswear brands make gains after Nike results

Shares of European sportswear brands have made gains after Nike beat its latest earnings estimates.

Puma topped the pan-European Stoxx index with gains of 7.4%, followed by JD Sports and Adidas, which were up 7% and 6.6% respectively.

Nike shares were up more than 9% in after-hours trading in the U.S. after the activewear manufacturer posted revenue and profit that were stronger than expected.

— Hannah Ward-Glenton

CNBC Pro: Fund manager says a recession is ‘imminent’ — and names cheap stocks to play it

Market watchers are increasingly worried about a looming recession and fund manager Steven Glass is no exception.

Against this backdrop, he says he’s focusing on companies with earnings visibility that are trading at attractive valuations.

His picks include a Big Tech name that he said is “extremely cheap” with “huge margin potential.”

Pro subscribers can read more here.

— Zavier Ong

Expect a more challenging environment ahead, says Atlantic Equities

Atlantic Equities analysts are anticipating a more challenging backdrop for the global consumer in 2023.

“Inflation may well have peaked on a headline basis but input costs still remain elevated and companies will be looking to at least hold if not take further pricing in some cases,” analyst Edward Lewis said in a note Tuesday. “That may become more challenging as levels of elasticity are beginning to normalize with U.S. retailers starting to push back against pricing, in line with where European peers have been all year.”

He highlighted Coca-Cola and Pepsi as some of his favorite consumer picks, citing “category momentum, ongoing investment and strong execution supporting elevated growth.”

— Tanaya Macheel

Stock market has shed $11.7 trillion so far this year

It’s been a rough year for stocks, which are currently in a bear market and down year to date.

From the market’s yearly high on January 3 to this morning, U.S. stocks have shed $11.7 trillion in market cap, according to data from Bespoke Group.

“The max drawdown was $13.6 trillion at the low on 9/30, so we’ve seen market cap increase by just under $2 trillion since then,” analysts wrote Tuesday. “In dollar terms, this drawdown has been more extreme than anything investors have ever experienced. That’s pretty deflationary if you ask us!”

Of the $11.7 trillion, more than $5 trillion in losses come from just five companies – Apple, Microsoft, Amazon, Alphabet, Meta and Tesla.

—Carmen Reinicke

European markets: Here are the opening calls

European markets are heading for a higher open Wednesday, reversing a negative trend in the previous session.

The U.K.’s FTSE 100 index is expected to open 23 points higher at 7,389, Germany’s DAX 99 points higher at 13,969, France’s CAC up 34 points at 6,478 and Italy’s FTSE MIB up 137 points at 23,830, according to data from IG.

There are no major earnings or data releases.

— Holly Ellyatt