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* Luxury stocks are taking the stage in Europe
* Bloomberg reported Kering is in talks to acquire Moncler
* STOXX 600 up 0.1%, FTSE 100 down 0.5%
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Joice Alves. Reach her on Messenger to share your
thoughts on market moves: joice.alves.thomsonreuters.com@reuters.net
HOW TO TRADE THE TRADE? (1434 GMT)
As we head closer to 2020, there's an influx of advices coming from market gurus at major
banks on how to position yourself amid the ongoing geopolitical uncertainties.
UBS has three simple tips:
* Domestic over global - The Swiss bank believes investors should choose countries and
sectors that derive a high proportion of their revenues domestically as they will likely be more
stable choices.
* Consumer to business spending - "While consumers ultimately bear the cost of higher
tariffs, their small spending decisions are less vulnerable to geopolitical uncertainty than
major business capital expenditures. Recently, manufacturing has borne the brunt of the
traderelated slowdown, while consumer-facing sectors have proved more resilient".
* Look for future beneficiaries - If the U.S.-China tensions persist, emerging market
infrastructure could offer opportunities as supply chains adjust and boost demand for infra
outside China. Some companies are already shifting their supply chains to Vietnam, Malaysia, and
Thailand, promising economic and market upside.
(Thyagaraju Adinarayan)
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A DISTURBING CONSENSUS: NEXT FINANCIAL CRISIS EXPECTED WITHIN 5 YEARS! (1317 GMT)
"Institutional investors (83%) say we are in for the next global financial crisis within the
next five years", Natixis IM writes about a survey of 500 financial companies conducted in
October and November 2019.
So much for the 'never again' mantra which triggered a wave of regulations and mandatory
increased capital buffers after the subprime debacle of 2007-2008...
Among issues which are seen as threats global financial stability, rising levels of public
debt is seen as a big one for 89% of respondents.
Shorter term, here are another batch of interesting takeaways from the survey:
(Julien Ponthus)
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CORPORATE DEFAULT RATES TO DOUBLE IN 2020 - MOODY'S (1135 GMT)
Companies are doing well when it comes to repaying their debts but next year this might
change, although defaults will be rising from a very low base.
Moody's estimates that default rate will be 1.35% this year and it is expected to more than
double, rising to 3.6% in 2020.
There are companies at risk of default in an array of sectors including retail (Debenhams),
according the a report from the rating agency.
"Most EMEA-specific industry sector outlooks are negative, reflecting deteriorating business
conditions and low growth prospects for larger European economies," Moody's says.
However, low interest rates, well-diversified debt maturities and generally good liquidity
for the large majority of rated companies will keep a lid on defaults proliferation, Moody's
adds.
(Joice Alves)
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LUXURY STOCKS STEAL THE STAGE (0859 GMT)
Luxury stocks are taking the stage in Europe after reports the owner of Gucci and Balenciaga
Kering is in talks to acquire Italy's Moncler.
Shares in Moncler jumped over 11% and hit record high after the report of Kering's
interest.
Burberry's shares are up 3% and shares in Hugo Boss are up 2.3%.
More broadly, European shares steadied after yesterday's stellar gains, as mixed signals on
a U.S.-China "phase-one" trade deal continued to discourage investors from making risky bets.
Here is a snapshot of the European bourses at the open:
(Joice Alves)
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ON OUR RADAR: LUXURY AND MONEY ( 0753 GMT)
Stock futures of most European bourses point to a flat or slightly higher start as investors
try and make sense of the latest development of the 17-month trade war between the U.S. and
China, while digesting some weak industry data from Germany.
Sentiment improved yesterday after Bloomberg reported that the two countries were closer to
seal a "phase-one" deal and Trump said trade talks were going "very well".
But European bourses will have the German industry orders data to digest. Orders fell by
0.4%in October.
The top movers are expected to be Kering and Moncler. Traders see
Moncler's shares up 8 to 10% higher after reports that the parent company of Gucci and
Balenciaga has held exploratory talks to buy the Italian brand.
Reuters reported yesterday that the U.S. threat of tariffs on French goods from handbags to
Champagne are proving just a glancing blow to giants like LVMH and Kering
this week, as investors say high pricing power can protect the luxury brands.
More on the M&A front: European stock market operator Euronext agreed to buy a 66%
stake of Nordics-focused power market firm Nord Pool, in a deal valuing the company 850 million
Norwegian crowns ($93 million), including debt.
Metro Bank is under pressure as its chief executive Craig Donaldson is leaving
after a torrid year in which the British lender was engulfed in a damaging accounting scandal
that has also cost it its chairman and wiped 90% off its market value.
Corporate headlines to digest:
Ryanair cuts planned capacity and jobs, blames 737 MAX delays
Italian court blames penny pinching for falsified bridge checks at Atlantia
Novartis CEO plans 80+ submissions for drug approvals through 2022
(Joice Alves)
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A SLOW START(0635 GMT)
European bourses are expected to open flat or slightly higher as the Asian stock market
inched higher after a Bloomberg report yesterday that the the U.S. and China were closer to seal
a "phase-one" deal, but conflicting messages from U.S. President Donald Trump kept a lid on the
advance.
While investors try and make sense of the latest developments, which could end the 17-month
trade war between the world's largest countries, they will also have to digest the latest German
factory orders data for October, due today and expected to be weaker, as well as the euro zone's
Q3 GDP figures and monthly retail sales data.
Financial spreadbetters at IG expect London's FTSE to open flat at 7,189, Frankfurt's DAX to
open 10 points higher at 13,151 and Paris' CAC to open 6 points higher at 5,806.
(Joice Alves)
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(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)
