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Global Equities Roundup: Market Talk

2 Mar 2018 10:01 am

The latest Market Talks covering Equities. Published exclusively on Dow Jones Newswires throughout the day.

1001 GMT - U.S. President Trump's blanket 25% tariff on steel imports was "politically unfeasible and will be viewed as a direct tax on U.S. consumers," according to Seth Rosenfeld, a senior research analyst covering European and U.S. steel at the investment bank Jefferies in London. The bank, however, remains bullish on U.S. steelmakers, with prices heading sharply higher and imports sinking. But he added: "For an equity market already obsessed with inflation risks... get ready for a doozy!" As for European steelmakers, Mr. Rosenfeld expects the European Commission to "respond aggressively and quickly" with hawkish measures of its own to protect European mills. Mr. Trump's decision to on Thursday announce the broad sweep of his tariff plans without policy details left Mr. Rosenfeld wondering if we there would be exemptions for NATO and NAFTA members. He asked, are we really at "the beginning of an extended negotiating process?" (zeke.turner@wsj.com; @zekefturner)

0958 GMT - IMI reported flat sales growth on an organic constant-currency basis, as well as flat operating margins for the full year, but these figures don't tell the full story, Jefferies says. The engineering company made good strategic progress and IMI's full-year results were in line with expectations, almost across the board, Jefferies says. IMI's outlook remains healthy and its Precision unit is in very good shape, the brokerage says. Nevertheless, forecasts for the group's earnings per share are unlikely to change much, Jefferies notes. (Max.Bernhard@dowjones.com; @mxbernhard). (Max.Bernhard@dowjones.com; @mxbernhard)

0957 GMT - Carrefour's proposed dividend per share of EUR0.46 is primarily due to the company's cautious outlook, which highlights expected currency headwinds and higher depreciation charges, says CFRA. Carrefour's second-half 2017 results missed expectation on tax expenses, says the brokerage. Carrefour's weaker-than-expected 2H net income was due to a higher effective tax rate, says the brokerage. CFRA cuts its target price for the French retailer to EUR18.50 from EUR20.00 and says the valuation is justified by Carrefour's potential for a turnaround under its new management, despite near-term headwinds. Carrefour shares trade down 1.4% at EUR17.56. (anthony.shevlin@dowjones.com)

0952 GMT - Schroders's earnings growth is set to normalize in 2018 after the asset manager posted strong results for 2017, says CFRA. The company's adjusted pretax profit of GBP800 million is 8% ahead of consensus thanks to growth in assets under management and good cost control, but its EBIT margin lags behind that of its peers, says the research agency. CFRA is impressed with Schroders's diversified strategy and footprint, and it raises its target price to GBP37 from GBP35, but maintains a hold rating on the expectation of lower earnings growth in 2018. Schroders trades 1.2% lower at GBP33.43.(nathan.allen@dowjones.com)

0951 GMT - GMT - Mondi has flexibility for mergers and acquisitions given its modest net debt to Ebitda leverage and consistent cash generation, Jefferies says. The paper and packaging company also has capacity to expand its capital expenditure, the bank says. The recent de-rating poses an attractive buying point, Jefferies says, noting that the 2017 results were in line with expectations. Shares trade at 1863.50 pence, up 1.3%. (marc.bisbalarias@dowjones.com; @bamarc)

0946 GMT - Mondi has delivered a solid set of results that the market should appreciate, says Investec. The investment bank says the market has overreacted to short-term issues in 2017, discounting the company's long-term performance record, which caused the share price to underperform. Investec reiterates its buy rating, saying that Mondi has demonstrated that progress is being made in the consumer packaging business, that cost inflation is manageable and, importantly, that it has capital for M&A and dividends. Shares at 0941 GMT are up 1.2%, or 22 pence, at 1,862 pence. (oliver.griffin@dowjones.com; @OliGGriffin)

0939 GMT - London Stock Exchange Group's 2017 results were at the "bottom end" of consensus estimates, says N+1. London Stock Exchange Group reported pretax profit of GBP564 million and revenue of GBP1.77 billion. N+1 said the results suggest "small downgrades" to consensus expectations and the market is likely to react badly to the disappointment. Shares are down 128 pence, or 3.3%, at 3814 pence. (adam.clark@dowjones.com)

0937 GMT - Gemalto is currently losing its historical business--making SIM cards for phones--but the stock still offers a limited but risk-free upside potential, Bryan Garnier says. Analysts say the company is also suffering in its payments business, which manufactures chips for credit cards, and that it hasn't managed to generate enough revenue to make its recurrent investments profitable. However, according to the bank, Thales' EUR51-a-share takeover offer for Gemalto is generous enough to convince the chip maker's shareholders, as it provides an opportunity to receive "substantial and immediate cash." Shares trade 0.3% higher at EUR49.64. (marc.navarro@dowjones.com)

0937 GMT - Jefferies says that Evraz's recent track record has assuaged the brokerage's past fears, which were founded on concerns that earnings would be hampered by cost inflation in Russia and slow margin performance in the U.S. Jefferies says that Evraz is currently in a position to benefit from its unique leverage on vanadium and coking coal, which are seeing rising prices due to Chinese demand and persistent supply constraints. Prices will normalize in time, but could stay higher for longer, Jefferies says. The brokerage raises its rating to hold, and its target price to 425 pence. Shares down 3%, or 13.30 pence, at 434.90 pence. (oliver.griffin@dowjones.com; @OliGGriffin)

0937 GMT - Dana's proposed acquisition of GKN's Driveline division could plausibly offer shareholders better value than a Melrose Industries takeover, says Jefferies, but the relative size of the two businesses makes it a demanding deal. GKN is fighting off a GBP7.4 billion hostile bid from turnaround specialist Melrose, and had previously said that it was considering spinning the unit off. Jefferies notes that Dana, a car-part producer, had sales of $7.21 billion in 2017, compared with GKN Driveline's sales of GBP5.31 billion ($7.29 billion). (carlo.martuscelli@dowjones.com)

0933 GMT - Peugeot's German unit Opel Vauxhall continues to burn money, posing a risk to the French car maker's cash flow, says Berenberg. Opel has a "strong-looking" operating income, which has investors hoping for a quick turnaround after years of losses, but the German car maker's cash flow hasn't improved. Berenberg expects the unit to continue to eat into Peugeot's cash flow, at more than 1 billion euros per year at least until the end of 2019. To offset those losses, Peugeot depends on a supportive European car market and a cyclical downturn would lead to "meaningful cash outflows once revenues start to fall," says Berenberg. (Max.Bernhard@dowjones.com; @mxbernhard)

0929 GMT - Indonesian stocks fared better than most in the region, though they still broke a 2-week winning streak. The JSX fell 0.4% to 6582.32, putting the week's drop at 0.6%. Still, it's up 3.6% this year, faring better than most in the world amid the pullback of the past month which continued today on pending US steel and aluminum tariffs. Recently volatile United Tractors retreated 2.3% and Harum Energy skidded 6%, trimming the year's surge to 60%. (kevin.kingsbury@wsj.com; @kevinkingsbury)

(END) Dow Jones Newswires

March 02, 2018 05:01 ET (10:01 GMT)

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