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Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters. You can share your thoughts Joice Alves (joice.alves@thomsonreuters.com) and
Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.
BLEAK MACRO DATA FOR GERMANY, BUT MOBILITY SHINES (0908 GMT)
The worst GDP contraction since 2009 was not a surprise for financial markets and even if
the next quarter could be even bleaker, Germany might overcome the coronavirus crisis better and
before other European countries.
Q1 data showed the construction sector and government consumption were the only growth
drivers. Private consumption, investments and exports all were a drag on the economy, ING says
in a research note.
Then we will have to discount that if two weeks of lockdown brought to this 2.2% quarter on
quarter contraction in Q1 GDP, the next quarter will be worse, as there will be three weeks of
lockdown, followed by a gradual lifting of some restrictions.
But real-time data, such as Google mobility, shows that activity had already accelerated by
mid-May. Social and economic activity, which slowed to 60% of its January level during the peak
of the lockdown, has now returned to more than 80%, ING note says.
The timing of the lockdown coupled with the huge effort by the government to prop up the
economy, worth more than 30% of GDP, "support the view that the German economy could leave the
crisis earlier and stronger than most other countries," it adds.
(Stefano Rebaudo)
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OPENING SNAPSHOT: CLASSIC COVID-19 RISK-ON (0730 GMT)
This session is gradually morphing into a classic COVID-19 risk-on day with miners, travel
and leisure stocks rising up. Oil prices picking up can't hurt, especially with good industrial
data from China.
Sign of the change of mood, Carnival is a top mover, up 7%. The cruise operator announced
job cuts but also benefits from a return in demand that would set sail late this year or early
2021 after travel restrictions.
The telco sector is also on a roll: BT is up 7.8% after the FT report on investors queuing
up to invest in its broadband arm and satellite operator Eutelsat is up about 7%, helped by a
resilient performance in its broadcast division.
GEA Group AG is the top gainer after its trading update with a whopping 10% jump.
One of the biggest loser WH Smith which reported a 85% slump in sales in April.
(Julien Ponthus)
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ON THE RADAR: TOP NEWS FROM SWITZERLAND! (0648 GMT)
European are set to open about 1% in the black this morning with two big news headlines
coming from Switzerland.
Good news first: Swiss drugmaker Roche will start selling a new digital diagnostics
product that it says may simplify and accelerate screening of patients with breathing problems
during the COVID-19 pandemic.
On the grim side, Switzerland's luxury group Richemont expects "headwinds in the months
ahead" due to the new coronavirus as it reported annual profit falling by two thirds.
In terms of market price action, there's already some moves in Frankfurt with GEA and Varta
strongly up in premarket trade after their results.
On the M&A front, BT shares should get a lot of attention after the FT reported it is
in talks to sell a multi-billion pound stake in broadband network operator Openreach.
Probably some relief that Finland's top utility Fortum beat expectations and said it would
stick to its dividend policy.
French manufacturing and minerals group Imerys, whose North America talc unit filed for
bankruptcy after being drawn into cancer lawsuits, said it had reached an agreement to resolve
those talc-related liabilities.
Interesting trading update by William Hill which shows how COVID-19 is hitting the betting
industry: 57% plunge in total net revenue for the weeks since coronavirus lockdowns were imposed
in Europe and North America.
On that note, Eutelsat reported a 4.4% slump in third-quarter revenues as postponed sport
events and reduced travel hit earnings.
In the battered oil industry, Petrofac warned it was now assuming most new projects would be
delayed until 2021.
(Julien Ponthus)
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MORNING CALL: EUROPE SET FOR 4% WEEKLY LOSS (0545 GMT)
The STOXX 600 is set for a 4% weekly loss at the moment, its worst performance since the
peak of the coronavirus crash in mid-March.
European futures are however currently trading in positive territory, exposing the change in
sentiment which has lifted Asian shares after a weak open last night.
While fresh fears of a U.S./China trade war were weighing on markets earlier, oil prices
rose are extending gains with data showing demand for crude picking up in China.
The industrial output of the world's second biggest economic power rose 3.9% in April from a
year earlier, an encouraging sign for European countries hoping to return to growth as they
slowly try to get over coronavirus lockdowns.
(Julien Ponthus)
*****
(Reporting by Stefano Rebaudo, Joice Alves and Julien Ponthus)
