Europe Markets: European stocks struggle, but M&A news lifts shares of Carrefour and Telefónica

Europe Markets: European stocks struggle, but M&A news lifts shares of Carrefour and Telefónica

European stocks fought for traction on Wednesday, as investor focus remained on COVID-19 vaccines and rising infections across the region. Deal talk and developments for France’s Carrefour and Spain’s Telefónica were sending those shares higher.


The Stoxx Europe 600 index SXXP, +0.16% was flat after a modest gain on Tuesday. The German DAX 30 DAX, +0.10% fell 0.1%, the French CAC 40 was PX1, +0.31% up 0.1%, and the U.K.’s FTSE 100 UKX, +0.06% was also flat. The pound GBPUSD, +0.15% extended Tuesday’s gains after the Bank of England’s governor Andrew Bailey pushed back against the idea of negative interest rates to boost growth as the COVID-19 pandemic grinds on.



In the U.K., lockdown rule-breakers are facing a tougher approach by police, Martin Hewitt, chair of the National Police Chiefs Council, said at a press conference on Tuesday. The U.K. recorded 1,243 more COVID-19 deaths on Tuesday as it battles a more infectious new strain of the disease.


Elsewhere, the Netherlands has extended a lockdown into next month and German Chancellor Angela Merkel said another 10 weeks of hard measures might be needed.


Read: Why this country is vaccinating its working-age adults before the elderly


U.S. stock futures YM00, +0.11% ES00, +0.14% NQ00, +0.24% rose modestly as investors kept watch on the pandemic, but also stimulus hopes.


“The main focus remains on the new U.S. administration’s fiscal program, which we should get more detail on later this week when President-elect Biden is expected to set out his stall from a policy priority standpoint,” said Michael Hewson, chief market analyst at CMC Markets U.K., in a note to clients. 


Meanwhile, the House of Representatives voted late on Tuesday to approve a resolution urging Vice President Mike Pence to remove President Donald Trump from office. As Pence has previously said he wouldn’t go that route, the House will move ahead with an impeachment vote on Wednesday.


Shares of Carrefour CA, +9.51% jumped 8%, after the French supermarket chain and Canadian convenience-store operator Alimentation Couche-Tard ATD.B, -2.22% confirmed they are in exploratory talks for a possible tie-up.


“Although we struggle to identify a strategic rationale at this stage and consider a merger scenario could bother some shareholders, we have to admit that the news should fuel Carrefour’s momentum over coming weeks,” said Clément Genelot, analyst at Bryan Garnier, in a note to clients.

“Especially after a disappointing year in 2020 with the share price only up 2% and stuck within the EUR14- 17 price range since 2018,” Genelot added.


Shares of Jerónimo Martins  JMT, +1.86%, which operates supermarkets in Portugal, Poland and Colombia, rose 2.7%.


And shares of Telefónica TEF, +1.14% TEF, +9.00% rose 6%, after the Spanish telecom said its Telxius Telecom subsidiary has signed an agreement with American Tower to sell its European and Latin American telecommunication-tower divisions for €7.7 billion ($9.40 billion) in cash.


Shares of ASOS ASC, +2.08% rose 0.8%, after the online retailer said revenue for the first four months of fiscal 2021 came in higher than it expected, and that it expects to report a full-year pretax profit at the top end of current market views.