Good morning,

Markets are called to open lower this morning. This is after:

  • A preliminary February purchasing managers’ gauge from HSBC Holdings Plc and Markit Economics fell to 48.3, signaling a second month of contraction for Chinese manufacturing and missing an economists’ estimate for 49.5.
  • The yen gained after Japan’s trade deficit widened to a record in January, as surging import costs weigh on Prime Minister Shinzo Abe’s efforts to renew growth.
  • The International Monetary Fund warned of risks to world growth before European manufacturing data today and a report on U.S. jobless claims.

Stock to watch: Valeo (Valeo report results today after the close of the European market)

We have increased our Price Target on Valeo from €87 to €100.80 before the results which are out today after the closing bell. We are overweight on Valeo due to its positioning in the market. With automakers pressured to bring down CO2 emissions, the demand for Valeo’s products is visibly increasing and this is shown in the order backlog. The margin improvement between 2013 and 2016 should come from Valeo’s improvement mix and its ongoing cost containment program. The main risk to our valuation would be a significant decline in auto sales in emerging markets. A copy of our report is available by logging into webtrader or contacting our offices on 25688688.

European Companies Reporting Results Today

• Air France-KLM (AF FP) 7:15am. Preview

• Schneider Electric (SU FP) 7:30am

• Swiss Re (SREN VX), 7am

• Accor (AC FP) 7am

• Aegon (AGN NA) 7:30am

• BAE Systems (BA/ LN) 8am. Preview

• Cap Gemini (CAP FP) pre-mkt

• Centrica (CNA LN) 8am. Preview

• CNP Assurances (CNP FP) 7:30am

• Danone (BN FP) 7:30am. Preview

• Delta Lloyd (DL NA) 7:30am

• Distribuidora (DIA SM) 7:30am

• Essentra (ESNT LN) 8am

• Henkel (HEN3 GR) TBD, FY. Preview

• Lundbergforetagen (LUNDB SS) TBD

• Randstad (RAND NA) TBD. Preview

• Ratos (RATOB SS) 8am

• Rexam (REX LN) 8am

• Safran (SAF FP) 7am

• Suez Env. (SEV FP) TBD

• Sulzer (SUN SW) 7am

• Technip (TEC FP) 7am

• Tenaris (TEN IM) post-mkt

• Valeo (FR FP) post-mkt

• Volvo (VOLVB SS) 8:30am, Jan. sales

Good day and happy trading!

Kristian Camenzuli