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Good morning,
Markets are called to open flat this morning. This is what's happening today:
European and U.S. equity futures rose, while metal prices rallied as Chinese money-market rates tumbled from records. Asian shares outside Japan fell.
Euro Stoxx 50 contracts added 0.2 percent to 2,597 as of 7:09 a.m. in London. Standard & Poor’s 500 Index futures added 0.5 percent, after the measure sank 2.5 percent in New York. Copper futures gained 0.9 percent to $6,833 a metric ton after plunging 2.7 percent yesterday. Gold climbed 1 percent. The MSCI Asia Pacific excluding Japan Index lost 0.8 percent. Japan’s Topix added 0.7 percent, reversing a 2.9 percent loss, as the yen slid 0.5 percent. South Korea’s won declined 0.6 percent.
Global equities plunged the most in 19 months yesterday after Fed Chairman Ben S. Bernanke said bond buying that has fueled gains in markets around the world may be trimmed this year should risks to the U.S. economy continue to decrease. Chinese money-market rates retreated from their highes after the central bank was said to have made funds available to lenders. The nation’s stocks have slumped this week on concern about tighter liquidity.
“Markets have come off quite a bit because of the U.S. Fed statements and worries about liquidity, the Chinese economy is also a concern,” Kazuyuki Terao, Tokyo-based chief investment officer of Allianz Global Investors Japan Co., whose parent Allianz SE oversees about $2.2 trillion, said by phone. “But the fall looks overdone because fundamentals are still solid and the U.S. economy seems to be improving.”
Stock to watch: GEA (Price E28.22, Price Target E30)
Deutsche Bank Research: After considerable corporate activity in recent years, GEA today is focused on mechanical equipment for the food and process industries. GEA's core business has been consistently profitable over time, and the margin gap versus its peers is closing. We think that growth in 2013 will be modest but over time the high emerging market exposure (~50%) gives GEA above-average growth potential as EM food manufacturing becomes more sophisticated. GEA had a difficult 2012, with problems with acquisition integration and restructuring at Heat Exchangers. Both these problems seem to be receding, which should be good news for both profitability and valuation. We rate GEA a Buy based on upside to our target price.
For more information on GEA or other stocks and bonds we follow, contact our offices on 25688688.
Good day and happy trading!
Kristian Camenzuli
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