Can ABB spread some joy as European equities wobble? Can ABB spread some joy as European equities wobble? Can ABB spread some joy as European equities wobble?

Can ABB spread some joy as European equities wobble?

Equities 5 minutes to read
Peter Garnry

Head of Equity Strategy

Summary:  After a dizzy run higher, European equities now appear to be losing some of their shine, but upcoming earnings results from Swiss-Swedish engineering giant ABB may provide a little relief.

Equities are finally showing weakness, or maybe just some temporary fatigue. The highs from November proved to be strong resistance levels with traders taking profits from the six-week-old rally. European equities, in particular, look weak this morning despite some upbeat macro data from Sweden showing some improvements in February.

However, economic sentiment data in Italy for February continued to decline, indicating that continued slowing growth in Europe should be expected. On a positive note, despite global equities falling today, South Korean equities have been holding well in the past couple of trading sessions. We use the country as one of the best proxies/signals for indicating where the global economy is headed.

Our main view continues to be negative on equities although some upside opportunities exist in this part of the business cycle. In our monthly equity presentation, which we presented yesterday, we go through our views on equities and how they relate to the current macro environment. We provide concrete opportunities on country and industry level (see screen grab below from presentation) while showing which to avoid in this part of the business cycle.

The stocks mentioned below should not be viewed as investment recommendations but merely as inspiration. We show the largest companies on market capitalisation in each of the countries and industries that have historically been performing well during this part of the business cycle (growing below trend and slowing down).
Source: Saxo Bank
Can ABB deliver some growth optimism?

ABB, one of Europe’s industrial giants, reports Q4 earnings tomorrow at 06:00 GMT with EPS expected to decline by 7% y/y and revenue declining by 10% y/y driven by divestments. Sell-side analysts remain positive on the stock with a consensus price target around CHF 23.17.

The company’s management team is trying to reposition ABB in the digital age, focusing on digital solutions around the existing products and services. While this seems a fine strategy, the key focus short-term is on the robotics segments and the prime reason for the valuation. Robotics and automation is one of the key long-term themes for global investors and something everyone should consider in their long-term portfolios. For tomorrow’s earnings release we are leaning towards a negative surprise to outlook and earnings.

ABB share price:
Source: Saxo Bank

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.