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Foreign Stock Roundup: Statoil Buys Oil Field Stakes for $1.45B, Shell Resumes Dividend Payment


A selloff in tech stocks and a crucial U.S. tax legislation dominated proceedings for Europe’s bourses last week. Asia’s stocks remained mixed even as investors largely ignored North Korea’s latest missile launch. Concerns surrounding pension reforms continued to weigh on Brazil’s stocks while Chile’s investors remained apprehensive about upcoming presidential elections.

Tech Selloff Weighs on Europe’s Stocks, Investors Focus on U.S. Tax Bill

Stocks across Europe closed in the red last Monday, weighed down by a selloff in tech and financial services stocks. The STOXX 600 declined by 0.5% even as Europe’s banking index closed the day 0.7% lower. Tech stocks were the worst sufferers of the day, declining by 0.7%.

Comments from the Fed Chair and news related to individual stocks dominated proceedings on last Tuesday even as Europe’s stocks finished in the green. The STOXX 600 added 0.6% with only basic resources stocks closing the day with losses. The FTSE 100, CAC 40 and the DAX gained 1%, 0.6% and 0.5%, respectively. Oil and gas stocks emerged as the day’s strongest gainers.

Stocks across Europe closed with gains on last Wednesday after progress on Brexit negotiations and a new U.S. tax law lifted investor sentiment. The STOXX 600 added 0.3%, with nearly all sectors finishing in the green. Retail stocks were the top gainers of the day, increasing by 1.7%.

The STOXX 600 lost 0.3% on last Thursday as gains made on Wall Street and a hike in oil prices failed to boost Europe’s stocks. The FTSE 100 declined by 0.9% after the sterling notched up gains versus the dollar. Meanwhile, the CAC 40 and the DAX lost 0.5% and 0.3%, respectively. Such losses continued into Friday, with the STOXX 600 declining by 0.7% on last Friday. The FTSE 100, DAX and CAC 40 lost 0.4%, 1% and 1.3%, respectively.

Stocks across Europe ultimately rebounded on Monday, buoyed by news that the U.S. Senate had approved crucial tax legislation. The STOX 600 advanced by 0.9% with all its sectors except technology ending in the black.

Asia’s Stocks Remain Mixed, Investors Ignore North Korea’s Missile Test

Stocks across Asia closed in the red last Monday even though Wall Street had closed a week with strong gains. The Nikkei 225 declined by 0.2%, losing out on early gains. The Kospi lost 1.4% weighed down by tech stocks while the S&P/ASX 200 gained 0.1%. China’s bourses remained weighed down by events in the bond market. The Shanghai Composite and the Shenzhen Composite declined by 0.9% and 1.6%, respectively.

A mixed finish on Wall Street a night earlier led Asian stocks to end mixed last Tuesday. The Nikkei slipped by 0.04% following a volatile trading session, even as defense stocks notched up gains. The Kospi added 0.3% even though tech stocks continued to suffer. However, the S&P/ASX 200 lost 0.1% after telecom stocks weighed on the index. The Shanghai Composite and the Shenzhen Composite gained 0.3% and 1.4%, respectively.

Asia’s investors chose to ignore North Korea’s latest missile launch on last Wednesday. The Nikkei gained 0.5% while the Kospi lost only 0.1%. The S&P/ASX 200 advanced by 0.5%. China’s markets overcame early reverses to end the day with gains. The Shanghai Composite and the Shenzhen Composite added 0.1% and 0.04%, respectively. However, the CSI 300 lost 0.1%.

Stocks across Asia closed last Thursday with losses even as oil prices moved higher. The region’s tech stocks also remained weighed down following the sector’s Wall Street sell off a day earlier. The Nikkei 225 gained 0.6% while the Kospi declined by 1.5%. Losses made by tech, materials and banking stocks dragged the S&P/ASX 200 0.7% lower.

China’s official PMI index came in at 51.8 in November, exceeding most estimates. However, the Shanghai Composite and the Shenzhen Composite lost 0.6% and 0.9%, respectively.

Last Friday, Asia’s stocks closed the day mostly mixed. By the first hour of trading, the ASX 200 moved above 6,000, gaining 0.3%. The Nikkei 225 and the Topix gained 0.4% and 0.3%, respectively. The Kospi ended marginally lower while the Shanghai Composite closed mostly unchanged. Stocks across Asia closed mixed on Monday after the U.S. Senate passed a crucial tax legislation.

Concerns Surrounding Social Security Reforms Hurt Bovespa

On last Monday, Brazil’s stocks declined following concerns that the Temer administration would have to soften its stance on pension reforms in order to receive Congress’ approval. The Bovespa declined by 0.1%, weighed down by such large caps as Vale VALE and Banco Bradesco BBD. The Bovespa rebounded last Tuesday, gaining 0.1%.

Last Wednesday, the Bovespa lost 1.9%, weighed down by the likes of Itau Unibanco ITUB as investors remained concerned about the prospects of pension reforms. The Bovespa declined by 1.6% last Thursday as investor sentiment continued to remain low. Also, Chile’s blue-chip IPSA index lost 0.6% on concerns surrounding the presidential election to be held on Dec 19.

The Bovespa lost only 0.1% last Friday as investors hurried to buy on the dip following the benchmark’s near 3% decline over the last three sessions. Ultimately, the Bovespa rebounded on Monday, gaining 0.6%, after China’s government mandated steel production cuts, boosting shares of mining companies like Vale.

Stocks in the News

BlackBerry Ltd. BB has lost a payment dispute with Nokia Corp. (NOK) due to which, the former will pay approximately $137 million to the latter.

Per The International Court of Arbitration, BlackBerry has failed to make certain payments to Nokia under a patent license contract. Consequently on Nov 29, the arbitration panel had ruled in favor of Nokia.

Zacks Rank #3 (Hold) BlackBerry will record a GAAP charge on its results. Nokia has already realized a major portion of the amount.

Meanwhile, BlackBerry is pursuing a separate patent infringement complaint against Nokia in the United States and Germany. The smartphone maker claims that Nokia infringed on 11 of its patents. However, the Finnish network equipment maker says the claims are without merit. (Read: BlackBerry to Pay $137 Million to Nokia on Contract Dispute)

Petróleo Brasileiro S.A. or Petrobras PBR and its partners have initiated oil production in the Libra block of Santos Basin. The offshore oil field is located 200 kilometers south of Rio de Janeiro. The Libra field — one of the biggest pre-salt oil fields in Brazil — was discovered in 2010 and has recoverable oil resources in the range of 7.9-15 billion barrels.

The Brazilian state-run integrated energy company reported that production was initiated through the Pioneer of Libra floating production, storage and offloading (FPSO) unit in the pre-salt of Santos Basin. The FPSO vessel is the company's first unit capable of reinjecting all the gas produced during the tests that will induce the flow of crude oil. The unit has a processing capacity of 50,000 barrels of oil and 4 million cubic meters of gas per day.

Per Total S.A. TOT, a partner of Zacks Rank #3 Petrobras in the field, the technical cost of production in the field is estimated at around $20 per barrel. Another FPSO vessel with 150,000 barrels per day capacity is expected to be deployed in the field after the final decision. (Read: Petrobras Starts Production in Libra Field of Santos Basin)

Statoil ASA STO has entered into an agreement with Total SA to acquire equity interests in two fields — Martin Linge and the Garantiana— from the latter for a total consideration of $1.45 billion. The fields are located in the Norwegian continental shelf (NCS). Statoil will acquire a 51% stake in the Martin Linge field and 40% in the Garantiana discovery.

On completion of the transaction, Statoil’s holding in the Martin Linge field will increase to 70% from 19%. Per the transaction, Statoil will also receive remaining tax balances with a nominal post-tax value of over $1 billion.

The agreed purchase price for Garantiana is based on an effective date of Jan 1, 2017. The amount payable is subject to adjustment on completion of the transaction in 2018. Statoil will become the operator of the field once the transaction is concluded in 2018. The stock has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AstraZeneca AZN announced that it filed a regulatory application in Japan to expand the label of its cancer drug, Tagrisso (osimertinib), for the first line treatment of patients with EGFR mutation-positive non-small cell lung (“NSCLC”). Tagrisso is approved in the United States, European Union, Japan and China as a second-line treatment option for patients with EGFR mutation-positive NSCLC. (Read: AstraZeneca Files for Label Expansion of Tagrisso in Japan)

Meanwhile, AstraZeneca announced that the European Medicines Agency (EMA) has accepted a variation to the Marketing Authorisation Application (MAAv) for the label expansion of Tagrisso (osimertinib). AstraZeneca is looking to get Tagrisso approved for the first-line treatment of adult patients with locally-advanced or metastatic non-small cell lung cancer (NSCLC) whose tumors have EGFR mutations. (Read: AstraZeneca's Tagrisso Label Expansion Filing Accepted by EMA)

Royal Dutch Shell plc RDS.A shares rose 3.4% on Nov 28 to eventually close the day at $63.93 after the company announced plans to resume full-cash dividend payouts and share repurchase program.

On Management Day, which was observed on Nov 28, CEO of Zacks Rank #3 Shell — Ben van Beurden — announced the resumption of cash dividends from the fourth quarter of 2017. Beurden also announced plans to buy back shares of at least $25 billion by the end of 2020. (Read: Shell Resumes Full-Cash Dividend Payment on Oil Revival)

ABB Ltd. ABB recently teamed up with Hewlett Packard Enterprise Company (HPE) to combine the former’s industry-leading digital offerings, ABB Ability, with Hewlett Packard’s innovative hybrid information technology (“IT”) solutions.

The partnership will leverage Zacks Rank #3 ABB’s expertise in operations technologies (“OT”) and Hewlett Packard Enterprise’s proficiency in IT to come up with joint industry solutions, which will help turn industrial data into insights and automatic action. (Read: ABB & Hewlett Packard Collaborates for Industrial Solutions)

Performance of Leading Foreign Stocks

The table given below shows the price movements of 10 of the largest stocks listed on indexes worldwide, over the last five days and during the last six months.

Next Week’s Outlook

Latin America’s stocks continue to be weighed down by political concerns. Such trends are likely to provide guidance to the region’s stocks over the next few days as well.

On the other hand, investors across the world received a major boost after the U.S. Senate approved landmark tax cuts. This development is likely to boost stocks on Wall Street and on Europe’s bourses over this week.

China’s stocks have remained largely unaffected by events in North Korea. This reflects a new found resilience among stocks from the region. Overall, global stocks are likely to notch up additional gains over this week.

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