European equity indices recorded gains in the week from the 8th to the 12th of April, 2013 (Milan +3.5%, London +2.2%, Frankfurt +1.1%, Paris +1.8%, Madrid +3.1%). Investor sentiment was fuelled by the intention of the Bank of Japan to continue the monetary easing “beyond a 2-year period” until the target inflation rate of 2% is reached. In addition, the increase in Chinese imports (+14% in March), signaled the well-being of the country’s internal demand. Following 5 consecutive days of gains, European equities retreated on Friday due to disappointing US retail sales data (-0.4% in March) and fears that the Cyprus government might need more financial help than initially anticipated.
Auto & Parts stocks were in negative territory, with investors tactically reducing their exposure to the sector after poor auto sales in March and following comments from key automakers pointing at a difficult market environment in Europe, with an impact on Q1 2013 results.
Pirelli stock was down in the week and closed at 7.34€, with daily average volume traded of approximately 4.5 million shares. JP Morgan initiated coverage of the stock with a “Neutral” recommendation and a 9.5€ Target Price. According to the analyst, Pirelli and the sector currently discount short term fears on European volume and pricing trends. The broker agrees with the decision to postpone the presentation of the Industrial Plan, now scheduled for November in order to provide better visibility on the medium-long term context of reference.