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IFX - Infineon Technologies AG News Story

€31.62 1.0  3.3%

Last Trade - 14/05/21

Large Cap
Market Cap £35.44bn
Enterprise Value £38.65bn
Revenue £8.61bn
Position in Universe 36th / 1053

LIVE MARKETS-The inventory headache

Tue 21st May, 2019 12:18pm
* Chipmakers gain after U.S. eases some Huawei restrictions * European stocks up 0.3 to 1% * Norsk Hydro climbs 6% on Alunorte embargo lift * Sonova hits record high after results * Telecom Italia up 1.8% after results May 21 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to share your thoughts on market moves: rm:// THE INVENTORY HEADACHE (1117 GMT) Slowing auto demand is hurting industrial semiconductor suppliers and UBS is negative for the short term on carmakers and related semis, seeing downside risks in the second half, defying expectations by some companies that there would be sharp rebound. STMicro is one of the companies that bet on a sharp H2 rebound. "Given that inventories across the supply chain have never been so high since 2009 and taking into account the uncertainty around trade war and end market demand, we see continued risks to the pace of the recovery assumed in the sector," says UBS. According to the bank's research, Daimler had the highest inventory in the carmaker space in Q1 with an increase of 19 inventory days year-on-year. Pointing to a 2 billion euro ($2.23 billion) cash outflow in Daimler's industrial business in Q1, UBS says the sharp decrease was due to higher buildup of inventories, especially at Mercedes-Benz Cars. VW and BMW are other carmakers with high inventory days. These trends are in turn affecting semis with high exposure to autos. Companies such as Belgium-based Melexis, Germany's Infineon and Japan's Renesas are suppliers with high exposure and are typically hit hard from the rising inventory levels. "In light of the recent development with trade tensions, we see increasing risks that the H2 recovery will be more muted than expected and maintain a relatively cautious stance on the autos/industrial semis space," UBS says. The chart below shows performance of semis exposed to autos: (Thyagaraju Adinarayan) ***** WHAT'S AT STAKE IN A UK ELECTION FOR STOCKS? (1056 GMT) Severn Trent's comments today that a renationalisation of water utilities would impact its business have brought concern over a potential UK election back to the fore. Taking utilities back to state ownership is a policy proposal floated by Britain's opposition Labour party which has sparked fears among gas and water firms and investors.*:nL5N2262U1 More broadly, market watchers see a rising risk of an imminent general election, and Goldman Sachs strategists see that likely hitting UK domestic stocks, utilities, and financials the hardest. "Continued stalemate over Brexit, and divisions within the governing Conservative party, mean the risk of a UK general election this year or next has risen," write Goldman's Sharon Bell and team. Interestingly, they find UK markets (measured for these purposes by the FTSE 350) have historically tended to rise in the run-up to and directly after a Conservative win - while they've fallen with Labour wins on average. That trend is far less marked when the Feb and Oct 1974 elections are removed, though, and the rise after a Conservative victory was given back relatively quickly, they add. This time may be different though - after all, current Labour party policy is more radical than that of the past three decades, which could lead to a bigger reaction in markets if left-wing Labour leader Jeremy Corbyn did gain power. For a Factbox on what a Labour party government would nationalise, and how, see:*:nL5N22W501 (Helen Reid) ***** TRUMP TWEETS AND TRILLIONS OF DOLLARS VANISH (0928 GMT) Global stocks have lost about $3 trillion since U.S. President Donald Trump threatened via Twitter further tariffs on $200 bln worth of Chinese imports and eventually the tariffs came into effect. The tweet triggered violent moves and global equities added or gave up (mostly gave up) half-a-trillion dollars on average every day. Here's a graphic showing the big swings: Is trade war affecting just stocks, not quite. 'Game of Thrones' fans in China blamed the political tensions between U.S.-China as the reason for delays in broadcasting the final episode.*:nL4N22W0Z0 In the real world, Bloomberg reports footwear and handbag maker Steve Madden, which sourced more than 90% of its products in China last year, plans price hike during summer holidays due to higher tariffs. (Thyagaraju Adinarayan) ***** A SILVER LINING FOR THE SHUNNED TELECOMS SECTOR (0813 GMT) Telecom Italia shares are climbing 3% hitting a two-week high after its results, despite those not seeming particularly remarkable at first glance. Traders say the positive reaction is partly down to the deep mistrust investors have of the telecoms sector. It's the only sector in Europe in the red so far this year - down 2.1% - as you can see below. "I think it's just the kind of stock that's unloved to a level where OK or not bad news is good enough," says Ameet Patel at Northern Trust Capital Markets. "The drop in net debt is helpful too given a stretched balance sheet is one of Telecom Italia's handful of core issue." Berenberg analysts echo this view: "Results are broadly in line to slightly ahead, net debt progress is encouraging, but questions will be asked about rate of fixed broadband losses." Competition dynamics were also a positive factor. Equita analyst Domenico Ghilotti says "higher rationality in the market is reported in the first quarter (price increases, less aggressive use of second brand)", expected to lead to stabilisation in ARPU (average revenue per user). Indeed, another analyst - who declined to be named - said the Italian telecoms market is one of the only ones in Europe where competitive pressures are in fact easing. (Helen Reid) ***** TRADE-SENSITIVE TECH STOCKS CLIMB ON HUAWEI RELIEF (0721 GMT) It's the usual suspects gaining today as the pendulum swings again towards hopes that escalating U.S.-China tensions may ultimately moderate. Trump's move to ease restrictions on Huawei is boosting chipmakers Infineon, STMicro, and AMS up 1.4 to 3.5%, with the tech sector climbing 1.1%. The autos & suppliers sector .SXAP was also a top gainer, up as much as 1.1%, but quickly fell back to trade up just 0.5% - a sign investors aren't especially hopeful of trade tensions more broadly being defused. Norsk Hydro is top of the STOXX, rising 5.2% after a Brazilian court lifted its embargo on the company's Alunorte alumina plant. Telecom Italia is rising 3.3% after its results slightly beat expectations. The telecoms sector is the only one in the red for this year, and with sentiment so negative any sign of progress is very well received by the market. Sonova is also rising 4.2% and hit a record high after it beat second-half expectations. Here's your opening snapshot: (Helen Reid) ***** WHAT'S ON THE RADAR: TRADE WAR RELIEF, EYES ON FRESNILLO, TELECOM ITALIA (0653 GMT) An easing of restrictions on Chinese tech company Huawei was set to deliver some relief to European markets on Tuesday, with futures up 0.4 to 0.6%, recovering after the STOXX 600 had its worst day in a week. What one trader called an “austerity drive” at Daimler could help the German carmaker’s shares up: it plans to cut administration costs by 20%, according to a Handelsblatt report citing sources. Traders saw the stock rising around 1%. With results slowing to a trickle, Telecom Italia stood out: Italy's biggest phone group was hit by stronger competition in the first quarter, sending its domestic revenues and core earnings down. Swiss hearing aid maker Sonova reported an increase in full-year sales, sending its shares up 2% in pre-market, while the outlook was mixed for German retailer Ceconomy: Q2 earnings declined but EBITDA slightly beat expectations, while management struck a negative tone about a challenging market environment. Miner Fresnillo also said it expects 2019 to be more challenging than 2018, and traders saw the stock falling 2-5% after the company missed its long-term silver target. In the UK, mortgage competition took its toll on lender Nationwide, driving profit down, while supermarket chain Tesco said it would stop mortgage lending at its bank unit also due to fierce competition. Builder Galliford Try said it would cut 350 jobs in a strategic review shifting its focus to its "core strengths" in building, water, and highways. And UK water utility Severn Trent warned on the impact of potential renationalisation of water utilities, which it says remains a possibility if the government changes. It said nationalisation may impact its ability to deliver on its strategic objectives. Its shares were seen rising 2% after its full-year results met estimates. (Helen Reid) ***** HUAWEI RELIEF DRIVES EUROPEAN FUTURES UP (0622 GMT) Futures are up strongly, rising 0.4 to 0.6% in Europe as an easing of restrictions on Huawei delivers some relief to the market. An interesting theme coming out of results in the UK: mortgage competition. Lender Nationwide reported annual profits fell due to heightened competition in the mortgage market, and Britain's biggest supermarket chain Tesco said it would stop mortgage lending at its bank unit, also due to cut-throat competition. Water utility Severn Trent also touches on a hot-button topic of the moment: the possibility of renationalisation of utilities under an opposition Labour government. The company said renationalisation "remains a possibility" in the event of a change of government. Britain's Nationwide annual profit falls on mortgage market competition*:nL4N22W3BK Britain's Tesco to stop mortgage lending at bank unit*:nFWN22W0T7 Severn Trent Says Renationalisation Of Water Industry Remains Possibility In Event Of Change Of Govt*:nASP0011VL Homeserve Says Expects To Deliver "Further Strong Growth" In Fiscal 2020*:nFWN22W0QR (Helen Reid) ***** DIA RESCUE DEAL, DAIMLER COST-CUTTING DRIVE, TELECOM ITALIA RESULTS (0558 GMT) With results slowing to a trickle, Telecom Italia, Sonova, and Ceconomy are the main earnings focus, while DIA and Daimler have also made headlines. Spanish retailer DIA avoided insolvency proceedings at the last minute, agreeing a deal with Santander after the close yesterday to secure financing. German carmaker Daimler is on an austerity push, planning to cut administration costs by 20%, in order to reach profit margin targets threatened by global trade woes, according to a Handelsblatt report. And Italy's biggest phone group was hit by stronger competition in the first quarter, sending its domestic revenues and core earnings down. Here are your early headlines: Spanish retailer DIA strikes rescue deal with banks*:nL5N22W4GY Daimler plans to cut administration costs by 20% - Handelsblatt*:nL5N22W5F0 Telecom Italia core earnings fall 2.1% in Q1, meet expectations*:nFWN22W0AG HSBC plans more China tech jobs in push for market share*:nL4N22W0HQ Sonova full year sales rise 4.4% to 2.8 bln Sfr*:nL5N22X0IJ Ceconomy Confirms FY 2018/2019 Outlook*:nS8N22Q04J (Helen Reid) ***** RESPITE FOR EUROPEAN STOCKS? (0521 GMT) European stocks are again expected to rise at the open, but how long that will last is debatable after yesterday's hopeful start yielded to heavy losses by the end of the day - its worst in a week. Asian shares won some respite on Tuesday after Washington temporarily eased trade restrictions imposed last week on China's Huawei, although fears of a further escalation in tensions kept investors on edge.*:nL4N22X13M The U.S. government has temporarily eased trade restrictions imposed last week on China's Huawei, a move aimed at minimizing disruption for its customers but dismissed by its founder who said the tech firm had prepared for U.S. action.*:nL2N22W19U Financial spreadbetters expect London's FTSE to open 21 points higher at 7,332, Frankfurt's DAX to open 58 points higher at 12,100, and Paris' CAC to open 12 points higher at 5,371. (Helen Reid) ***** ($1 = 0.8974 euros) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BLOG HEADSHOT FUTURES MAY 21 OPENING SNAPSHOT MAY 21 Sector Trillions of dollars GS election markets Industrial semis ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Helen Reid, Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)
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