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* STOXX on track for worst month since March
* Miners down after Glencore results
* Oil and gas stock index leads gains
* Ubisoft shares slump as the game maker cuts its FY
guidance
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IS MARCH BACK? (1100 GMT)
Growing cases of COVID-19 and new national lockdowns in two
of Europe's largest economies put European shares on track for
its worst month since March's brutal selloff, and it is getting
clear to investors that it is the case to price in more pain.
"Even a successful vaccine is unlikely to become widely
available before Q2 2021, more economic pain looks inevitable,"
writes Barclays.
But how much pain shall we price in?
Barclays analysts think things won't get as bad for the
economy as it did in the spring "with many businesses and,
importantly, schools remaining open. Government support programs
are being extended and targeted more precisely, which should
provide much needed cushion to activity".
"Although the slow progress on the EU recovery fund is
problematic", Barclays expects the ECB to boost its policy
support in December with a 6-month Eur500bn extension for its
Pandemic Emergency Purchase Programme, an increased monthly
Asset Purchase Programme and further easing of the TLTRO
(targeted longer-term refinancing operations) terms.
Additionally, it says the resurgence seems "less global" as
it hasn't hit China and Asia but mostly Europe and the U.S.
Barclays hasn't made much change to its equity strategy in
October because last month, it had already reduced cyclical
exposure on rising concerns about a second wave.
It downgraded consumer discretionary to underweight, as the
sector is highly exposed to mobility and social restrictions;
and upgraded staples to market weight, as a defensive hedge.
"We acknowledge that a concerted slowing in activity
may warrant further targeted action to reduce cyclical exposure.
But for now, we remain comfortable being overweight
China/stimulus/North Asia/tech exposed cyclicals like miners,
industrials and tech," Barclays strategists say.
(Joice Alves)
*****
BANKS UP, TECH AND BASIC MATERIALS DOWN (0855 GMT)
European equities are in negative territory but the fall is
less severe than anticipated by futures as strong company
results are supporting the pan-European index, which
though is still set to stage its worst month since March.
The STOXX 600 index is dropping 0.3% with tech stocks among
the worst performers, following mixed results from U.S. tech
giants and a fall in Apple on Wall Street.
The Spanish banking index is up 1.2% as shares in
Banco de Sabadell, Caixabank < CABK.MC > and BBVA
are flat to higher after results.
Europe's basic materials index is down 0.6%, after
Glencore posted stronger production but trimmed coal
production guidance as a strike at the Cerrejon mine in Colombia
entered its 60th day on Friday. Glencore stocks fell 1.5%.
Shares in Proximus are among the winners of the
session up 7.7% after the company reported Ebitda above analysts
expectations and raised its full year guidance.
(Stefano Rebaudo)
*****
ON THE RADAR: TOTAL, SWISS RE, SPANISH BANKS (0738 GMT)
European stocks are set to open sharply lower as worries
about possible new lockdowns coupled with risks of a contested
outcome of U.S. elections rattle investors.
A batch of positive results is not giving much support.
Swiss Re stocks are up 0.5% in premarket trade as
the reinsurance company reported a smaller-than-expected net
loss in the first nine months after booking claims and reserves
of $3 billion related to COVID-19.
Total trimmed its investment target for 2020,
though the group returned to profit in the third quarter and
maintained its dividend.
The pandemic hit results of Spanish banks, which however
came out better than expected.
Banco Sabadell's third-quarter net profit fell 77%
from a year ago due to higher provisions but beat forecast,
while the lender announced an efficiency plan.
Caixabank posted a net profit of 522 million euros
versus analysts’ expectations of 319 million euros.
BBVA net profit beat market expectations, but was
down 6.9% from the same period a year ago to 1.14 billion euros
on more loan loss provisions.
Air France-KLM unveiled a 1.05 billion-euro better
than expected operating loss and warned of worse to come as a
resurgent coronavirus brings new travel curbs.
Shares in LafargeHolcim are up 0.7% after the
company raised its guidance, after results.
Proximus reported Ebitda above analysts
expectations and raised its full year guidance.
Amundi reported a high level of net inflows and
an operating income of 307 million euros.
BP plans to stop producing fuel in Australia and will
convert its loss-making Kwinana oil refinery, the biggest of the
country's four.
Julius Baer Gruppe plans to set up business in
China in partnership with a local financial firm.
Lonza Group agreed with AstraZeneca to make
AZD7442 an experimental combination of two antibodies that may
be used to prevent and treat COVID-19.
(Stefano Rebaudo)
*****
EUROPE'S STOCK FUTURES WELL IN THE RED (0628 GMT)
European stock futures are sharply lower as record numbers
of coronavirus cases across the world and the outcome of U.S.
elections remain the major concern for investors.
The ECB signalling it will provide more stimulus to fight
the impact of the pandemic gave some support to stocks yesterday
but wasn’t far from analysts’ expectations.
U.S. stock futures are down around 2%, after a positive
session on Wall Street, helped by quarterly reports from tech
giants and solid GDP data.
(Stefano Rebaudo)
*****
