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Auto & Transport Roundup: Market Talk

19 Aug 2017 8:20 am

2326 GMT [Dow Jones]--Activist investor ValueAct Capital Management raised its stake in Trinity Industries (TRN) to 11% from 10.7% with the purchase this month of 1.1M additional shares, the railcar manufacturer says in a regulatory filing. The hedge fund purchased the stock at prices ranging from $27.38 to $28.57 a share from Aug. 3-18. The purchase lifts ValueAct Capital's leading stake in TRN's to 17.3M shares. ValueAct has been expanding its investment in TRN recently after establishing a stake in the company about a year ago, according to Factset. TRN ended down 0.11% at $28.20. (robert.tita@wsj; @bob_tita)

1608 GMT - Morgan Stanley lowers AutoNation's (AN) 2017 and 2018 EPS by 9% and lowers its share-price target to $49 from $53. Dealer results were generally weak in the second quarter and the SAAR decline accelerated, analyst Adam Jonas says. The auto dealer is also dealing with challenging environment in Texas that doesn't look like it's going to improve in the near term, and at the same time, it's investing in its brand extension strategy. Yet, "we remain generally positive on the long term positioning of auto dealers...as they transform from retailers into pure mega fleet managers." AN rises 1.9% to $41.72. (adrienne.roberts@wsj.com; @AdrRoberts)

1551 GMT - London's blue chips fall as fears about the direction of the Trump administration hit US shares and drag European peers with them. The FTSE 100 Index drops 0.9%, or 63.9 points, to 7324 as the Dow declines 0.1%, with Germany's DAX and France's CAC 40 also falling. "The President isn't just alienating the already hostile Democrats, but swathes of his own party, with more and more Republicans disturbed by his reaction to the white nationalist protests in Charlottesville last weekend," says Connor Campbell at Spreadex. On a quiet day for London equities, Randgold Resources is the top riser, up 1.2% as the gold price gains 0.3% on geopolitical concerns. Airlines fall on fears about tourism after the Barcelona terror attacks. (philip.waller@wsj.com)

1520 GMT - The federation of unions representing airline pilots worldwide has issued an unusual warning about problems caused by drone operations in the vicinity of Stockholm Arlanda international airport. The group said the airport has been temporarily shut down on "several occasions" recently, including a roughly hour-long closing Aug. 7 that caused some aircraft to divert, and a more recent closing that also resulted in "a Mayday call" by a flight crew and aircraft diversions. Union officials are concerned about the effect of Swedish safety rules that can require a 30-minute halt to landings and takeoffs at the field after a drone is spotted. They urge airline cockpit crews to exercise "extreme caution when flying" in the area and "consider taking extra fuel to allow for" last-minute closures and diversions. (andy.pasztor@wsj.com)

1444 GMT - Boeing (BA) end-of-2018 price targets now range from $170 to $302, according to Thomson Reuters. The stock cooled over the past two sessions, mainly on concerns over valuation following its 52% run-up this year. Buckingham Research keeps its $203 target though boosts its 2017 sales and earnings targets, focusing on the prospect of higher defense revenues rather than an extra pop in the larger commercial business. BA up 0.2% at $235.95. (doug.cameron@wsj.com; @dougcameron)

1407 GMT - Air Berlin's bonds are trading under their "dirty" price on the Luxembourg Stock Exchange as of Thursday, with the exchange changing the quoting convention from "clear" after the airline's insolvency filing earlier this week. "It's a common market practice in such situations and its aim is to avoid settlement problems," says Guy Weymeschkirch, head of markets and surveillance at the exchange. Given the situation, people may just want to know how much accrued interest they are getting, according to BayernLB strategist Miraji Othman. Dirty bond prices include accrued interest when clean don't. Air Berlin bond prices have crashed this week and now trade at a few cents per euro. (tasos.vossos@wsj.com, @tasosvos)

1312 GMT - Shares of Lufthansa (LHA.XE) turned positive midday, climbing 1.07% to EUR20.88. "The dip that occurred after the terror attack in Spain is being used as a buying opportunity," a trader says. The market assumes that, as was the case with other attacks, there will be no lasting effect on the airline industry. As a result, buyers are starting to jump back in. They are also considering the potential positive effects that could come as a result of the insolvency of Air Berlin (AB1.XE), parts of which Lufthansa is said to be potentially targeting for acquisition. (herbert.rude@dowjones.com, sonia.amaralrohter@dowjones.com)

1238 GMT - Airline stocks head lower in the face of fears about lower demand for tourism after the terror attacks in Barcelona. EasyJet PLC falls 0.3%, Ryanair Holdings PLC drops 1.45%, Air France-KLM is off 0.9% and IAG backtracks 1.4%. The attacks are likely to hit airline earnings and investors are concerned about a knock-on impact on demand later in the year, which was already looking tough for the industry. "Airlines are already dealing with a price war and several have warned about the second half," says Neil Wilson at ETX. "The attacks in Spain will do nothing to help and should hit earnings, although we won't know to what extent until the quarterly updates come in." (philip.waller@wsj.com)

1215 GMT - French container operator CMA CGM signs letter of intent to build up to nine mega-vessels with two Chinese yards worth around $1.5B. The ships, capable of moving 22,000 containers each, will have an option to be powered by liquefied natural gas, making them the first vessels of this size to burn cleaner fuels, as regulators are increasingly putting pressure on the shipping industry to minimize emissions. China's Hudong-Zhonghua Shipbuilding (Group) and Shanghai Waigaoqiao Shipbuilding (SWS) are the two yards that will build the vessels, people with knowledge of the matter said. (costas.paris@wsj.com)

1200 GMT - Shares in Dutch tank-storage terminal operator Royal Vopak NV drop 7.1% to EUR38.42 after it posts lower 1H earnings and warns on full-year profits. Vopak says operating profit before depreciation and amortization in the period falls 11% to EUR258.1 million. It forecast 2017 earnings 5-10% lower than the EUR822 million it achieved in 2016, blaming expected lower tank occupancy rates, higher investment costs, non-recurring benefits last year and foreign exchange movements. UBS says the results were weaker than expected. "Much will depend on whether we see any incremental weakness later this year, or whether this marks the trough," the Swiss brokerage says. (philip.waller@wsj.com)

1118 GMT - European shares fall in lunchtime trading on negative sentiment following the terror attacks in Barcelona. The Stoxx Europe 600 drops 0.8%, or 3.2 points, to 373.69 as airlines lose ground, with shares in Ryanair Holdings PLC, IAG PLC, Air France KLM and EasyJet PLC all falling. "As we've seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings," says Neil Wilson at ETX Capital. "Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be tough." Shares in German drug-maker Stada Arzneimittel AG rise 12% after Bain Capital LLC and Cinven Group Ltd. prevailed in their second takeover bid. Shares in Dutch tank-storage terminal operator Royal Vopak NV drop 8% after it posts lower 1H earnings. (philip.waller@wsj.com)

1117 GMT - Indian low-cost carrier IndiGo says it has grounded 8 of its Airbus A320 Neo aircraft. The company didn't say why the aircraft had been grounded, but added that the move was planned weeks in advance. News reports had suggested that some aircraft were facing engine problems, though this was not confirmed by the company. Shares of InterGlobe Aviation, which owns the airline, closed 0.5% lower, after falling as much as 2.3% in intraday trade. (anant.kala@wsj.com)

(END) Dow Jones Newswires

August 19, 2017 04:20 ET (08:20 GMT)

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