The main European stock markets were down in the week from the 3rd to the 7th of March 2014 (London -1.4%, Frankfurt -3.5%, Paris -0.9%, Milan +0.9%). Rising tension between Ukraine and Russia led investors to reduce exposure to equity, causing higher volatility and the appreciation of safer assets (gold and oil hit weekly highs at +1.8% and +2.3% on Friday’s close, respectively). On the macro front, the central bankers of England and the EU kept benchmark rates unchanged (ECB at 0.5%, BOE at 0.25%).
Auto & Parts stocks were slightly down in the week (sector index -0.8% vs Stoxx 600 -1.5%); OEMs benefited from the many new product launches at Geneva motor show, in addition to growth in February car registrations in Europe (Germany +4.3%, Spain +17.8% due to government incentives, Italy +8.6%).
Pirelli shares ended the week up one percent at 12.72€, with an average daily trading volume of 2.4 million shares (in line with the previous 4 weeks). The financial market reacted positively to the placement of the 1.5% shareholding (7 million shares) by Intesa SanPaolo at a price in line with current trading (removing stock overhang worries), whereas Brazilian tyre market data (car replacement +18% yoy in January) confirmed the positive trend of the South American market. Today’s Mediobanca valuation upgrade (TP +1€ at 14€) brings consensus Target Price to 12.1€.