Summary:
- Bayer (BAYN.DE) ordered to pay $2 billion in damages
- DAX (DE30 on xStation5) halts decline at the support zone
- Volkswagen (VOW.DE) to list truck unit this summer
European stocks halted a downward move at the beginning of Tuesday’s session with a higher opening. Gains could be seen all across the continent with Polish, French and Italian equities rising the most in the first minutes of trade. Industrials and builder led higher while utilities and telecoms lagged the most.
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Downward move on the DE30 index was halted at the support zone ranging above the 11850 pts handle. The German benchmark bounced higher at the beginning of today’s session and may be set to test the resistance zone ranging above 12100 pts handle in case upbeat moods prevail. Source: xStation5
Court orders Bayer to pay over $2 billion in damages related to Roundup
Bayer (BAYN.DE) continues to be pressured by claims that Roundup, a product of recently acquired Monsanto, is causing cancer. Yesterday, it was announced that the company has lost another case. Court in California ordered Monsanto to pay $2 billion to a couple that has been using Roundup for 30 years and claims that the herbicide was the cause of their health problems. Aside from those $2 billions the court said that the company should compensate the couple with $55 million for medical bills and suffering. Bayer said that the enormous sum is by no means justified and that it will appeal. While it is likely that the sum will be lowered, the sentiment among US jurors shows that they are quite confident that Roundup is to blame for the health issues of plaintiffs. Having said that, more and more such verdicts are likely to be made in the nearby future what may lead to a global settlement. However, until then the stock may trade under pressure.
Volkswagen plans truck unit IPO in summer
Lacklustre car sales data from China, the threat of the US car tariffs or Nissan-Renault merger rumours all have a detrimental impact on the market sentiment towards the German carmakers. However, one company from the German automotive sector - Volkswagen (VOW.DE) - found a way to boost’ investors interest in its shares. The company announced that it has resumed preparations for the IPO of its truck unit - Traton. Let us recall that the company halted preparations for Traton IPO in March on the back of volatile market conditions. It is rumoured that Traton may be valued at $30 billion, what would make it the biggest European IPO in 2019 so far. Volkswagen said that it wants to list Traton shares ahead of August and that it may sell as much as 25% of the business.
DAX members on Tuesday morning (8:46 am BST). Source: Bloomberg
Other company news
Bloomberg reported yesterday that talks between UBS (UBSG.CH) and the Deutsche Bank (DBK.DE) over joint asset manager have stalled. According to the news agency, discussion over the merger of asset management units of the two banks broke down as the two banks could not agree on who will hold the majority in the combined entity. The combined entity would have over €1.5 trillion in assets under management.
Allianz (ALV.DE) experienced €18 billion of inflows to its asset management unit in the first quarter of 2019. In turn, the company assets reached a record high of around €2.1 trillion.
Beiersdorf (BEI.DE) bought Coppertone sunscreen brand for $550 million from Bayer (BAYN.DE). Brand had over $210 million in sales in the previous year. Note that Beiersdorf is making this purchase just ahead of the summer season therefore it still may be able to capture the bulk of this year’s demand.
The latest stock market sell-off saw Allianz (ALV.DE) share price drop off a cliff. The German company is trading more than 8% lower since the beginning of May. Note that Allianz, like other investment managers, is very sensitive to the overall market therefore easing of a downward pressure can be seen as a relief for shareholders. Source: xStation5
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