Last checked at 
* European shares open down sharply
* Tech giant SAP dumps targets, shares tank
* AstraZeneca up after upbeat vaccine development
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ANALYSTS’ MIXED VIEWS AFTER S&P MOVE ON ITALY (0909 GMT)
Probably many investors are wondering if S&P upgrading Italy’s outlook is a "once and in a
lifetime" move or a vote of confidence on an enhanced European integration, which is getting
traction following ECB measures and the proposal of a EU recovery fund.
Analysts’ views are mixed on the matter, but there’s no doubt the rating agency action took
investors by surprise as 10-year Btp yields are down 8 basis points this morning.
S&P said Italy's outlook balances the negative consequences of the coronavirus pandemic on
public finances against the extraordinary policy response by the European Central Bank.
S&P move “confirms how creditworthiness really depends on funding costs more than anything
else,” a Citi research note says.
But more headwinds might emerge “with poor absorption rate of the EU funds and/or the
crystallization of the Covid government guarantees,” it adds.
Besides, some sort of debt consolidation might be necessary in the future not to mention the
political risk as “right-wing parties championing a less-Europe ticket still gather nearly 40%
of voting intention.”
Unicredit analysts sound more optimistic.
The next ratings action for Italy will be from Moody’s on November 6. “I’m pretty sure they
won’t change anything on that occasion, but S&P has now taken the lead on how the rating
agencies will – read: should - look at Europe,” its chief economist Erik F. Nielsen says in a
research note.
“The SURE bond issue sends two very clear messages: there is a huge demand for a
euro-denominated safe asset and there is strong confidence in the new and enhanced European
project,” according to co-head of the research team Luca Cazzulani.
(Stefano Rebaudo)
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EUROPE OPENS IN THE DARK, BUT THERE'S SOME LIGHT (0841 GMT)
Losses are almost everywhere at the start of trading in Europe with SAP leading
the way, down 19% and set for its worst day in 24 years, after the region's biggest tech company
dumped its targets, underscoring the big risks that the second COVID-19 wave poses to the
economic and corporate recovery.
All country benchmarks are showing heavy declines in early deals as worries over surging
Covid cases dominate, and only healthcare is managing to post a small gain with AstraZeneca
up marginally after an upbeat Financial Times report about the vaccine developed by the
UK drugmaker and the University of Oxford.
The newspaper said their vaccine produced a robust immune response in elderly people, the
group at highest risk. Even though that's not the kind of vaccine breakthrough investors are
looking for, it's still an encouraging development that can keeps markets afloat despite the
fresh lockdown risks.
Here's your snapshot:
(Danilo Masoni)
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ON OUR RADAR: SAP NEEDS A VACCINE TOO (0727 GMT)
Downbeat virus developments and no progress in U.S. stimulus talks are surely a downer this
morning but corporate newsflow isn't helping either.
Shares in German software maker SAP are down 13% in premarket trade after Europe's
largest IT group by market capitalisation cut its guidance for the year and abandoned its
forecast that profitability would expand steadily over the medium term, saying coronavirus
lockdowns would hit demand well into 2021.
There's virus pain also for French car rental company Europcar, which dropped its
2020 financial outlook as it posted a slump in its Q3 results, hit by the impact of the COVID-19
crisis.
Meantime, Lufthansa shares are down 2.3% in premarket after the German airline
said it would ground more planes during winter.
In dealmaking news, U.S. buyout group Carlyle Group is nearing an agreement to
acquire Siemens mechanical drive arm Flender, for about for about 2 billion euros,
Bloomberg News reported citing sources.
Frozen bread maker Aryzta said on Saturday it had concluded discussions with
Elliott Advisors without a binding takeover offer and that it would now look at other options.
Eyes also on UK banks after the Times newspaper reported that local regulators are
considering plans to allow lenders to start paying dividends again next year.
On the Covid treatment front however there's some good looking newsflow. The FT reported
that early results from tests for the vaccine being developed by the University of Oxford and
AstraZeneca, show it produces a robust immune response in elderly people.
(Danilo Masoni)
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MORNING CALL: COVID RISK-OFF (0637 GMT)
European shares were set to start the week in a clear risk-off mood as Covid infections are
surging rapidly across the region, prompting new social restrictions that could hurt the
economic recovery.
Over the weekend Spain imposed local nighttime curfews and banning travel between regions in
some cases, while Italy ordered bars and restaurants to close early and shut public gyms,
cinemas and swimming pools.
France registered a record 52,010 new confirmed coronavirus infections over the past 24
hours.
Meantime in the United States, which saw its highest ever number of new COVID-19 cases in
the past two days, there was no clear progress on a stimulus package.
Euro STOXX 50 futures were last down 1%, DAX futures down 1.3% and FTSE futures down 0.6%.
(Danilo Masoni)
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