The main European stock markets were up from the 2nd to the 6th of June, 2014, marking the 8th consecutive weekly gain (Stoxx 600 +0.9%, Milan +3.1%, London +0.2%, Frankfurt +0.4%, Paris +1.4%, Madrid +2.5%). Investors reacted positively to decision by European Central Bank to lower interest rates (benchmark rate -10bps at 0.15%, negative deposit rate at -0.1%) and support lending to companies through TLTRO (targeted longer-term refinancing operations, worth 400€/mld). US labor market data provided further support: 217,000 new jobs were added in May (net figure), and unemployment rate was 6.3%.
Auto & Parts stocks performed in line with market (sector index +1.4%). According to LMC, May auto sales in Western Europe were up by 4.5% yoy, with an annual rate (SAAR) of 11.8 mln pcs, slowing down from April’s 12.1 mln pcs.
Pirelli shares closed the week at 12.54€, up 1.4 percentage points with an average volume of 2.5 million shares traded per day, in line with the previous four weeks. In an update report, brokers Goldman Sachs upped recommendation (from Sell to Neutral) and Target Price on the shares (+3€ at 13.6€); the analyst confirms the positive view on the business – exposed to Premium segment and structural growth in South America – and updates the estimates based on new FX scenario, natural rubber pricing trends and the deconsolidation of the Steelcord business. Consensus target price stood at 12.77€ with 85% of analysts advising to Buy or Hold the shares.