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* European stocks rise higher
* STOXX 600 +1.6%
* Germany's Wirecard plunges 20%
* HSBC, UBS, Santander: mixed Q1 results
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters. You can share your thoughts with Thyagaraju Adinarayan
(thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and
Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.
BROADCASTERS HIT HARDER BY ADVERTISING DECLINE, ALL FOCUS ON Q3 (1130 GMT)
Analysts have probably underestimated the scale of the incoming fall in advertising sales
and might have to revise down their forecast for the main European broadcasters.
Now "we have a much better visibility on depth by countries and we move our -15% (in
advertising) to -32.5-43.5% for Q2," Barclays says in a research note.
But at the end of the day, who cares about Q1 and Q2? The real issue is if and how the
recovery will start, and whether that happens in Q3.
Broadcasters are cheap, but their share price, "could go down some more if there is little
improvement (in advertising) in Q3 versus Q2", it also wrote.
With little visibility at hand, the market currently sees "Q3 being half as bad as Q2", Q4
flat, and in full year 2021 "recovery being half" of the 2020 expected fall.
Barclays' sharpest cuts in advertising forecast are for ITV, and TF1,
while in terms of expected earning per share for Mediaset and again TF1.
(Stefano Rebaudo)
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FRENCH MOM-AND-POP INVESTORS IN PANDEMIC BUYING FRENZY (1011 GMT)
It's completely counter-intuitive but there you go: French mom-and-pop investors went into a
stock market buying frenzy just as the coronavirus pandemic spread havoc across global markets
in February and March.
There's been quite a lot written about pasta and flour stockpiling but piling up stocks
during the worst economic and financial crisis in living memory is an interesting one!
According to a report published by the French financial markets authority AMF, "purchases
of French equities by retail clients increased fourfold in March 2020, and overall volumes
tripled".
While there had been much more selling than buying among retail investors during the past
year, the trend changed abruptly as the virus outbreak grew.
"In the first five weeks of the Covid-19 crisis, a positive balance of around €3.5 billion
was invested by retail clients in SBF 120 equities", the report read.
During the peak of the stock market crisis (March 9-13), investors bought 2.5 billion euros
and sold 1.4 billion euros worth of SBF 120 stocks while that index lost close to 16%.
What's also weird is that the COVID-19 chaos that engulfed trading floors across the globe
and pushed volatility through the roof actually attracted new investors en masse with 150,000
newcomers, mostly younger.
Anyhow, here a link that will bring you to the AMF report: https://bit.ly/2SegfeO
An interesting chart, among all the others in this report, is the balance of buying and
selling in 2019 and 2020. The rush to buy cheap stocks is really impressive:
(Julien Ponthus)
*****
GRANOLAS HEAVIER THAN THE FAAAM'OUS FIVE (0935 GMT)
Major growth/defensive plays with solid balance sheets in Europe which are as sturdy as rock
are going to shape-up the pan-European STOXX 600's moves over the next few years as
they come out almost unscathed from this virus shock.
What matters is, who are these top guns?
Goldman dubs these companies as GRANOLAS -- Glaxosmithkline, Roche, ASML
, Nestle, Novartis, Novo Nordisk, L'Oreal, LVMH
, Astrazeneca, SAP, Sanofi.
"These (companies) have relatively strong balance sheets, low volatility growth and good
dividend yields, around 2%-2.5% (much higher than other asset classes)," Goldman writes in a
note.
They make up 24% of the STOXX 600, heavier than Facebook, Amazon, Apple, Alphabet and
Microsoft's weight on the S&P 500.
(Thyagaraju Adinarayan)
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BP: DIVIDEND PRIDE? (0812 GMT)
There's nothing to be happy about the first-quarter beat, investors reckon, as BP's
cash flow is drying up fast and the British oil major is still not in a mood to give up payouts
to shareholders.
Let's not forget, second-quarter results are poised to be far worse given how oil prices
have crushed to levels not seen for decades. Citi and Credit Suisse warn about weakening cash
flows and the reflection of it in the company's balance sheet.
"Yet the decision to pay a full dividend in a quarter when cash flow is weakening, net debt
shot up by $6B and the outlook for 2Q is poor can hardly be called prudent," Citi says.
"If this is a short-sharp event of a few months then, with hindsight, BP's actions today can
be borne out. But does anyone really have enough clarity?"
(Thyagaraju Adinarayan)
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OPENING SNAPSHOT: A WIRECARD SENSATION BUT NO Q1 DRAMA (0748 GMT)
There were a lot of blue chips reporting much awaited trading updates this morning but it's
Wirecard the biggest mover on the STOXX 600 with a 20% fall after publishing a KPMG report into
its account.
The second top mover also comes from Germany but this one is in positive territory:
Lufthansa was up 10% after a report the government agreed a rescue package worth about 9 billion
euros.
Looking into the blue chips of the STOXX 50, there were 2 clear winners in today's batch of
Q1 earnings and both of them from Switzerland: UBS and ABB which were up over 4% each.
BP, on the other hand, retreated 1.9% which considering the unprecedented crash of oil
prices isn't a bad performance in the grand scheme of things.
All in all, this latest update on the state of Europe Inc. is no game changer but another
reminder of the pain to come.
Overall the trend is slightly more positive than it was in premarket. The broadly flat start
is morphing into a modest rise with the STOXX 600 up 0.4%.
U.S. futures are also slightly up.
(Julien Ponthus)
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PLEASE SHELL OUT, INCOME SEEKERS PRAY (0718 GMT)
With UK blue-chip BP agreeing to maintain its 10.5 pence-per share dividend, it's a
consolation to British income funds which last month saw over 15 billion pounds ($18.6 billion)
in payouts cancelled or suspended.
April has been better with some 5.6 billion pounds in dividends being retained, stockbroker
AJ Bell highlights, and the BP news will add to the relief.
This week is a big one for income seekers with some 8.4 billion pound in dividends up for
grabs and statements from the top 5 payers -- Shell, BP, BAT and GlaxoSmithKline and HSBC, which
together accounted for over 40% of FTSE 100 payments last year.
HSBC had already bowed to regulators' pressure to hold back payouts and AJ Bell reckons
payouts from GSK and BAT are in the bag. That left Shell, which hasn't missed a dividend since
World War II, and BP, which last cancelled in 2010 after its Gulf of Mexico oil rig disaster.
Crude's 70% year-to-date fall means energy firms, from U.S. Occidental Petroleum to Norway's
Equinor, slash dividends. Yet, BP has come through so fund managers will be keeping their
fingers crossed for Shell tomorrow.
(Sujata Rao)
*****
ON THE Q1 RADAR: THE GOOD, THE BAD AND THE UGLY (0745 GMT)
It's not all black and white in terms of earnings this morning: good, bad and ugly reports
are painting a dark grey picture of Europe Inc in the time of coronavirus.
Under the spotlight this morning is of course the banking sector, the worst sectoral
performer since the novel coronavirus broke out earlier this year.
The world's largest wealth manager UBS had some good news to report with a 40% increase in
first-quarter net profit as clients increased trading activity during market turmoil.
But warnings that the upcoming coronavirus-induced recession will be ugly were given by
Spain's Santander and HSBC as both set aside more money for bad loans and recorded a fall in
profits.
Talking about profit declines, BP's net income fell by two-thirds as the pandemic
coronavirus hit oil demand. There's a lot at stake for investors as Shell and BP represent an
estimated 24% of the £75bn of FTSE 100 dividends for 2019 not yet hit by the market turmoil.
Interesting lesson about how M&A deals are sailing through the storm with BP amending the
financial terms of the $5.6 billion sale of its Alaska business.
Things got more ugly for Brazil's Embraer has begun an arbitration process against Boeing
after the U.S. planemaker abruptly cancelled a $4.2 billion deal over the weekend.
The assumption that pharmaceuticals are one of the safest bets in times like these was
comforted by Swiss drugmaker Novartis which beat expectations and confirmed its 2020 targets as
the pandemic prompted patients to stock up on their prescriptions in advance.
Another winning trend was illustrated by German online takeaway food company Delivery Hero
whose orders and revenues almost doubled as lockdowns closed restaurants and prompted more
people to order meals and groceries from home.
Rovio Entertainment, the maker of the 10-year-old "Angry Birds" mobile game series, said it
saw an increase in the number of downloads as well as user engagement.
Of course, a lot of the Q1 reports are just simply bad: guidance ditched, outlook grim,
dividend cut.
ABB said it expected the coronavirus epidemic to trigger a "sharp drop" in demand over the
next three months while Norway's Telenor warned that 2020 revenue and earnings will fall short
of its outlook.
Travis Perkins, Britain's largest distributor of building materials, said its total revenue
in the first three weeks of April was about one third of the same period in 2019 due to the
coronavirus crisis.
In terms of individual movers, Wirecard was down about 2% in early trading after it
published an investigation by KPMG into its account.
Also, it seems the suspense isn't over for Lufthansa as company and government sources
report that a state aid deal has not yet been secured.
(Julien Ponthus)
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MORNING CALL: UNCERTAIN OPEN WITH OIL UNDER PRESSURE (0535 GMT)
Futures are trading just marginally in the black this morning while another dive in oil
prices overnight put global markets under pressure.
Asian shares seemed set to end their session in the red but just managed to stage a comeback
into positive territory.
In Europe, it's another big earnings day across countries and sectors with the likes of
Banco Santander, Telenor and Novartis reporting Q1.
The earnings galore is expected to shed some light of how bad the last weeks of the quarter
really were and how ugly Q2 and Q3 look like at the moment.
(Julien Ponthus)
*****
(Reporting by Thyagaraju Adinarayan, Joice Alves, Julien Ponthus in London and Stefano Rebaudo
in Milan)
