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LIVE MARKETS-Europe sluggish, Nestle hits record, Nokia jumps, earnings in focus

Thu, 16th May 2019 08:21


* European shares open down 0.1-0.3% * Nestle hits record high after entering exclusive talks to sell skin health business * Ubisoft down 12% after results * Thyssenkrupp rises 5% on Reuters report Kone eyeing elevator business * Earnings: Generali, NN Group, Bouygues * Asian shares fall after U.S. blacklists Huawei May 16 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net EUROPE SLUGGISH, NESTLE HITS RECORD, NOKIA JUMPS, EARNINGS IN FOCUS (0721 GMT) Following the exuberance seen yesterday on hopes Trump would delay auto tariffs, the U.S. blacklisting of Huawei is resulting in a sluggish open for European shares and the only beneficiaries of this latest twist from the hot Sino-U.S. front appear to be Huawei rivals Nokia and Ericsson, both rising - also helped by a solid update from Cisco Systems. The pan-European STOXX 600 index is down 0.15% percent in early trading and weakness is prevailing across European benchmarks. Nestle briefly hit a record high after it entered exclusive talks to sell its skin health business in a deal worth 10.2 billion Swiss francs but has later succumbed to the downward trend. Elsewhere earning updates and M&A are driving top movers. Ubisoft is down 10% after its update, while ThyssenKrupp is rallying 6% on a Reuters report that Kone is assessing the viability of a bid for its 14 billion-euro elevators division. Thomas Cook is tanking, down 15%, after the travel group said economic and political uncertainty would impact its profits this summer after it saw an increase in losses. Here's your opening snapshot: (Danilo Masoni) ***** WHAT'S ON OUR RADAR AT THE OPEN (0656 GMT) News that the Trump administration has hit Chinese telecoms giant Huawei with severe sanctions has weighed on Asian shares overnight and is set to drag European shares lower once again today, erasing part of the strong gains seen yesterday when trade-sensitive auto stocks drove the market higher on hopes Trump would delay auto tariffs by up to six month. Futures on main European benchmarks are down 0.1-0.3%. On the corporate front, investors will have to digest some fresh deal-making activity, namely from Swiss food giant Nestle which entered exclusive talks to sell its skin health business in a deal worth 10.2 billion Swiss francs, as well as some good-looking earnings updates from French conglomerate Bouygues and insurers NN Group and Generali. Nestle shares are seen edging up slightly towards 100 CHF after ending on Tuesday at a new record high, helped by investors seeking refuge into defensive stocks amid heightened trade and economic uncertainty. Eyes also on Ericsson and Nokia as both shares are indicated 1-2% higher at the open after the U.S. blacklisted rival Huawei, and following a solid report from Cisco Systems, which posted better-than-expected quarterly earnings and gave an upbeat sales forecast, pushing its shares higher on Wall Street and prompting a few price target upgrades. Banks will stay in focus ahead of an extraordinary meeting of Commerzbank supervisory board on May 21 amid ongoing talk of takeover interest from ING Groep and UniCredit, which meanwhile it said Italian banks could come to the rescue of Carige to safeguard financial stability after BlackRock dropped a planned bid for the struggling regional lender. ThyssenKrupp will be another one to watch, up more than 2 percent premarket. Reuters reported that Finland's Kone is assessing the viability of a bid for Thyssenkrupp's 14 billion-euro elevators division even as the German conglomerate pursues plans to list it. Shares in Thomas Cook are seen falling up to 15 percent after the travel group said economic and political uncertainty would impact its profits this summer after it saw an increase in losses. It also said it had received multiple bids for its airline unit after it was put up for sale. Among top gainers could be Norsk Hydro. Its shares are seen rising 4-10% after a Brazilian court has lifted one of two production embargoes on a key plant owned by Norwegian metals maker. Other possible stock-moving headlines: National Grid full-year profit slumps on storm costs; Spun-off Alcon gives first full-year guidance as it posts flat sales; Burberry treads water as awaits new ranges filter into stores; Societe Generale to restart banking operations in Australia; Roche: FDA approves drug combo Venclexta plus Gazyva; French group Arkema to buy U.S.-based ArrMaz in deal worth $570 mln; Wienerberger confirms outlook as it swings back to net profit; Wienerberger confirms outlook as it swings back to net profit (Danilo Masoni) ***** FUTURES FALL, EYES ON NESTLE, THYSSENKRUPP, EARNINGS (0614 GMT) Besides news from the hot Sino-U.S. front (the U.S. sanctions against Huawei), which are set to weigh on the European open today, there is some dealmaking activity and more earnings updates that could keep investors busy this morning. Futures on main European country benchmarks are down between 0.1% and 0.3%. Nestle is on the watchlist after the Swiss food giant said it entered exclusive negotiations to sell its skin health business to a private equity-led consortium in a deal worth 10.2 billion Swiss francs. Still in M&A, Reuters reported that Finland's Kone is assessing the viability of a bid for Thyssenkrupp's 14 billion-euro elevators division even as the German conglomerate pursues plans to list it. Among the early morning earnings to digest we have those from insurers Generali and NN Group, which both beat profit estimates, while French group Bouygues keept its goals after better-than-expected first quarter results. Overseas we had good looking updates from Cisco, which reported better-than-expected quarterly earnings and gave an upbeat sales forecast, while Chinese e-commerce giant Alibaba beat fourth-quarter revenue forecasts, helped by diversification into cloud computing. Tencent Holdings posted a record quarterly profit. Back to Europe, sources said that Commerzbank plans to hold an extraordinary meeting of its supervisory board on May 21 to discuss strategy, while the organisation that defends shareholder interests in the Netherlands called on ING Groep to clarify whether it is interested in acquiring its German rival. ING as well as Italy's UniCredit are seen as possibly interested in a tie-up with Commerzbank. Here are other possible stock-moving headlines: French group Bouygues keeps goals as Q1 operating loss narrows Generali Q1 profit beats forecast, rule changes weigh on capital Insurer NN Group Q1 core profit surges 50%, beats estimates Sunrise boosts FY profit guidance after Q1 profit growth Ubisoft's fourth quarter misses company's expectations Euronext's first-quarter core profit drops as costs bite Spun-off Alcon gives first full-year guidance as it posts flat sales U.S. tariffs against Airbus would harm Delta - airline official Britain's NSF presses on with $1.7 bln Provident hostile bid Telecom Italia and Vodafone to sign deal to merge towers in Italy by summer end UniCredit chairman does not rule out industry rescue of Carige (Danilo Masoni) ***** EUROPEAN SHARES SEEN DOWN AGAIN AS US BLACKLISTS HUAWEI (0526 GM) European shares are expected to open lower this morning after the U.S. administration hit Chinese telecoms giant Huawei with severe sanctions, risking add more stress to the difficult trade talks between the world's two largest economies. In the previous session European stocks surged after U.S. officials said President Donald Trump was expected to delay auto tariffs by up to six months. Financial spreadbetters at IG expect London's FTSE to open 32 points lower at 7,265, Frankfurt's DAX to open 56 points lower at 12,043, and Paris' CAC to open 18 points higher at 5,360, after Asian shares fell overnight following the U.S. blacklisting of Huawei. "While the suspension of auto tariffs is welcome it certainly doesn't mean that President Trump can’t create ripples in other ways, and this is reflected in the more mixed reaction amongst Asia markets. This in turn is expected to translate into a lower European open later this morning," says Michael Hewson, Chief Market Analyst at CMC Markets. (Danilo Masoni) *****



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