PEERS & MARKETS

Another strong week for European financial markets rising for the fourth consecutive week (Milan +1.9%, London +1.5%, Frankfurt +1.4%, Paris +1.2%). Stocks trading was supported  by positive macroeconomic data from the U.S. (April retail sales +0.1% vs. -0.3% expected, consumer confidence in May 83.7p vs 77.9) and China where industrial production grew 9.3% in April compared last year. In Europe, the German GDP was back to growth quarter-on-quarter in the first three months of 2013 (+0.1% yoy, -0.7% the previous result).

European Auto&Parts index achieved a weekly rise of 6.9% following data on April car registrations in Europe back to positive growth after 19 months of decline (+1.7% yoy). Market figures from Michelin and Pirelli positively impacted

Tyre related stocks benefited also from tyre market figures released by Michelin and Pirelli which show improvements in European demand and confirm the solid demand in Latin America.

Pirelli ended the week at 8.98€ (before coupon detachment) with an increase of 3.2%. Average daily traded volumes was about 2.5 million.

PEERS & MARKETS

The main European stock markets were up in the week from the 6th to the 10th of May (Milan +2.1%, London +2.5%, Frankfurt +1.9%, Paris +1.0%), reaching the highest levels since June 2008 (Stoxx 600). Investor optimism was supported by better than expected economic data (German industrial production +1.2% in March, Chinese export +14.7% in April) while efforts to stimulate growth through monetary easing continued: Australia and South Korea trimmed their benchmark interest rate by 25 bps in the week (taking rates to 2.75% and 2.5%, respectively).

Auto & Parts stocks advanced in line with the overall market (Stoxx A&P +0.8% in the week), with tyre companies gaining almost 3 percentage points. According to broker Morgan Stanley, good Q1 2013 results by tyre makers eased investor concerns about industry pricing, given the current environment of falling raw material input cost and soft demand.

Pirelli shares were up strongly in the week (+6.1%, closing at 8.7€). Daily average trading volume totaled 3.8 million shares, 10.3 million on the day following the presentation of Q1 2013 results (Pirelli closed +7.3% on that day). Results were in line with market expectations and showed an industry-leading growth in volumes (+3.9% thanks to Pirelli’s exposure to emerging markets and the Premium segment) as well as the benefits of a distinctive positioning in the Industrial business (profitability was up 50% yoy). Pirelli confirmed the 2013 targets announced in March.

PEERS & MARKETS

The main European stock markets continued to deliver positive returns in the week from the 29th of April to the 3rd of May (Milan +2.2%, London +1.5%, Frankfurt +3.9%, Paris +2.7%, Madrid +3.0%). Expectations of an intervention by the ECB to lower the benchmark interest rate sustained the market (rate lowered by 25bps to 0.5% in line with expectations).

Auto & Parts stocks were up, with the European Stoxx index gaining 4.5% as the main players reported Q1 earnings. Investors reacted positively to results by the main German OEMs; car makers underlined how inventory is under control and the second half of the year should see an uptick in earnings.

Pirelli closes the week at 8.2€, up 6.8% with an average daily volume of 2.3 million shares. According to CITI, Pirelli’s exposure to emerging markets should allow the company to outperform the sector for what concerns volume growth in the first quarter of 2013. Goldman Sachs expresses a more cautious view on the sector, due to ongoing competitive pressures in mature markets.