Glaxosmithkline Share News (GSK)

* European stocks rebound, up more than 1 pct * Wall Street up only slightly after Monday's rally * Reports of U.S.-China trade talks boost risk assets March 27 - Welcome to the home for real-time coverage of European equity markets brought toyou by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger toshare your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net BLAME IT ON ITALY, OR MAYBE DON'T...(1507 GMT) The ability of investors to shrug off anything from nuclear threats to trade war fearscontinues to bemuse analysts and among their subject of bafflement is the political situation inItaly. "About a month after the parliamentary election, investors are relatively relaxed about thecontinued existence of the Euro. This is astonishing, because the election result would havegiven every reason to believe that Italy is more likely to withdraw", wrote Sentix this morning. The behavioural finance specialist's Euro Break-up Index shows investors don't believe thevictory of the anti-establishment 5-star movement and Italy's far-right League makes the countryany more likely to breaking up from the euro zone. "Given the recent moderation in the message of M5S and Lega, we remainsceptical about any scenario involving a re-consideration of Italian membership in the EU andthe euro or a radical revision of Italy fiscal priorities", UBS analysts said this morning,noting the euro had "been little affected by post-election uncertainty". A number of economists however are blaming the results of the March 4 vote for the fall inEuro zone sentiment in March (see) published today. "The recent falls in economic confidence signal a loss of momentum at the start of 2018 andare consistent with a higher political uncertainty in post-election Italy and the spectre ofrising protectionism", wrote Oxford Economics. While Milan stocks have slightly underperformed other European bourses these last two daysafter the possibility of a coalition government between the 5-Star Movement and the League wasevoked over the weekend, the FTSE MIB has clearly outperformed since the beginning of the yearand even since the election. (Julien Ponthus) ***** TECH LEADERS MOST VULNERABLE TO RISING TRADE BARRIERS (1450 GMT) Tech stocks are top of the charts today with chipmakers ams , Infineon,STMicro in the lead. The index is on track for its best day in three weeksafter a difficult time for the sector hit by trade worries. But semiconductor stocks are also the most likely to be impacted by rising protectionism,according to Citi analysts who've mulled this question today despite the apparent detente innegotiations between the U.S. and China. They reckon it's "highly likely" the semiconductor sub-sector would be targeted as part ofU.S. tariffs, given its strategic importance and contribution to the U.S. trade deficit. Rising protectionism could negatively impact chip demand by: - slowing GDP growth (near-term) - disrupting supply chains (medium-term) - reducing consumer spending as the cost of tariffs is passed on (long-term) It could also throw a spanner in the works for cross-border M&A in semiconductors. Other subsectors such as communication technology, enterprise software and IT services, arelikely to be less impacted, Citi adds. They see ASML as the most resilient stockrelative to chipmaker peers in this climate. (Helen Reid) ***** A TALE OF TWO STOCKS (1414 GMT) Today is probably an opportune time to take a look at two stocks which perhaps exemplify thestruggles facing retailers today: H&M, currently the biggest STOXX faller after its Q1results, and Inditex which owns Zara. All you really need to do is look at the how the shares have diverged since around 2010 (seechart below). And even with all of the obstacles and uncertainty facing retailers today,investors are still upbeat on Inditex's prospects. "(Inditex has) managed to ride this disruption in the industry extremely well, despite beingquite late to it," Alistair Wittet, European equities analyst and portfolio manager at Comgest,said. Inditex is Wittet's second-biggest position in the Comgest Growth Europe ex-UK fund. Wittet pointed to Inditex realising that while physical stores still have a role to play inthe synergy with online, this is as an advertising front for the retailer where the emphasis ison the customer experience, an example of which is the introduction of augmented realitydisplays in Zara stores from April. "H&M actually went online before Inditex, but their business model wasn't set up for it, andthey were very slow ... in everything else," Wittet added. (Kit Rees) ***** SOLID EUROZONE GROWTH OUTLOOK? "LARGELY DISCOUNTED" (1312 GMT) European shares may be rising sharply and the rebound is strong enough to help investorsturn a blind eye on yet more weaker than expected euro zone data and continue to play catch upwith Wall Street. Today's disappointing data however further underscores how the scope forEuropean macro to outperform high expectations has become pretty limited, as reflected by therecent drop further into negative territory of the Citi Economic Surprise indexfollowing a very long performance in positive ground. "The inevitable happened: confidence and activity indices edged down from their record highlevels in February and dragged the Economic Surprise index into negative territory. Such adecline simply reflects the fact that the (still positive!) growth outlook for the Eurozone isnow largely expected," say analysts at SYZ Wealth Management. In this chart you can see how euro zone stocks have suffered from the absence of economicsurprises. (Danilo Masoni) **** MIDDAY SNAPSHOT: DEAD CAT BOUNCE? (1149 GMT) "Equities are extending their rebound as investors breath a collective sigh of relief that aglobal trade war looks to be off the menu", Mike van Dulken, head of research at Accendo Marketsjust wrote to his clients. The STOXX 600 is currently up 1.4 percent while S&P futures areclimbing 0.5 percent. Here's what the European stock market looked like at 1126 GMT: While investors ignored weak Euro Zone economic data (see here:), they areclearly getting confident a full-blown trade war is off the cards. The sensitivity of the issueis such however that today's rally could only be a temporary respite. As van Dulken says: "There are a lot of risks that financial markets have shrugged off overthe last couple of years, to the amazement at times of investors, but the prospect of a tradewar is clearly not one of these. Ahead of the European open this morning however, a number of analysts were wondering whetherWall Street's surge on Monday would last. "Another dead cat bounce?" said Rabobank, arguing that "it is perhaps too early to declarethat the bulls have regained the initiative – after all rallies do not go in a straight line,which also applies to sell-off". "The situation is still very sensitive and we do think that the relief rally in the equitymarket is purely due to the heavy sell-off. It is more of a dead cat bounce than anything else",wrote Naeem Aslam of ThinkMarkets before market open. As noted in earlier posts, big investment houses, such as Goldman Sachs (see here) are still optimistic on the general trend. "We think that the temptation to ‘buy on the dip’ is likely to limit market setbacks createdby nervous reactions to events", Barclays analysts also wrote this morning. (Julien Ponthus) ***** A "HEALTHIER RALLY" AHEAD? (1052 GMT) We've had a "healthy" correction, but could the recent sell-off lead to a "healthy" rally? Barclays' equity derivative strategists see the possibility of a trade war keeping themarket on edge, which they say would allow some of the "excessive exuberance" to abate. Theypoint to a cooling in equity market valuations since the recent sell-off (see Barclays' chartsbelow) and sentiment among retail investors moderating. "In one sense, we view this as a healthy development, given it would provide an outlet forsome of the excess exuberance," say Barclays' strategists in a note. One thing to watch is how fast volatility normalises. Barclays notes that if this isgradual, it would be a sign that market sentiment was cautious and herald a return to "the“normal” grinding rally". "If equities do not recover sharply, we believe valuations have a better chance ofnormalising, which would set the stage for a healthier subsequent rally," Barclays concludes. (Kit Rees) ***** KEEPING TABS ON THE S&P'S 200-DAY MOVING AVERAGE (1005 GMT) Investors are increasingly looking at the S&P 500's 200-day moving average,especially after the two big sell-offs that roiled markets this year saw the bears surrender tothe bulls just when the U.S. benchmark index hit that level. The S&P fell more than 6 percent last week to end a tick above the 200-day average, but onMonday it staged a powerful bounce, indicating how crucial that level has become for the market. Going forward, any breach below it may well be seen as a negative signal and JCI Capitalfund manager Alessandro Balsotti believes that from now on investors will be monitoring it evenmore "religiously". And what about Europe? Well it's a different story: the STOXX 600 has been tradingbelow the 200-day average since early February. (Danilo Masoni) ***** SHARES SHRUG OFF WEAK EUROPEAN DATA BUT "PEAK GROWTH" NARRATIVE BUILDS (0950 GMT) Economic sentiment in the euro zone slipped for a third month in a row in March as managersin manufacturing, services and retail became slightly less optimistic, European Commission datajust showed. But stocks are taking this in their stride and have even accelerated their risefrom 1.2 percent to 1.5 percent since the data was published. A whole bunch of research this morning ahead of the publication noted, like DNB's dailynote, that "Eurozone macro data surprises have been more negative than positive recently" andthat "growth is strong, but no longer accelerating". For CMC Markets, "the beginning of possible micro fissures in the European growth story"and "momentum indicators ... flashing warning signs" may be an explanation as to why Europeanmarkets are having a hard time keeping up with their U.S. counterparts. In a strategy note on European equities this morning, HSBC said that its "economics team'sview of GDP growth momentum fading through the course of this year" backed investing in longerduration fixed income and in stocks with higher dividend yield for their "defensive attributes". On the trading floor however the consensus seems to be that the euro zone's economic healthstill backs an optimistic view of its shares. There can be "a lot of noise in macro data in thenear-term", Chris Dyer, director of global equity at Eaton Vance just told us. "Generally we think the European economy is on a good footing", Dyer, who is overweightEuropean equities, said, adding that the weakness in economic data will only become a concern ifit continues. Here's a chart by DNB showing the loss of growth momentum in Europe: (Helen Reid and Julien Ponthus) ***** OPENING SNAPSHOT: EUROPEAN STOCKS BOUNCE (0727 GMT) European shares are joining in a global relief rally in risk assets as trade tensions ease.Sectors which were hit hardest over the past few sessions, such as autos, basicresources and tech, are the biggest gainers early on. The biggest individual mover so far is France's Casino, which has jumped around 6percent after its Monoprix chain agreed to sell products via Amazon. This shows just how crucialit is for companies to demonstrate that they are keeping up with the times and exploring onlineopportunities. Regarding the spreadbetters and ESMA's restrictions on CFDs, it's a mixed bag following adecidedly negative start, with IG down slightly but both CMC and Plus500 making gains. Here's your opening snapshot: (Kit Rees) ***** WHAT'S ON THE RADAR FOR THE OPEN (0649 GMT) European stocks are set to surge with futures climbing 1.4 to 2.2 percent across the majorbenchmarks, riding the wave of rising equities worldwide after Wall Street indices had theirstrongest day in years as investors bet on a trade war détente. Retail stocks will be ones to watch after French supermarket group Casino struck a deal withAmazon to make groceries from its Monoprix chain of stores available on Amazon’s Prime Nowservice to Parisian customers this year. The partnership extends Amazon’s reach into the European grocery market, and while Casinoshares are seen rising 3 to 5 percent, the news could shake investors’ confidence in retailnames that are more behind the curve. In M&A news, GlaxoSmithKline shares are expected to rise 3 to 4 percent after the pharmacompany announced it was buying out Novartis’ stake in their consumer healthcare joint venturefor $13 billion. Novartis is seen up 1 percent. Another corporate break-up story from Akzo Nobel which is to sell its Specialty Chemicalsbusiness for $12.6 billion to U.S. private equity firm Carlyle Group and Singapore’s GIC –ending the simplification effort which began as the paint maker sought to evade a takeover fromPPG in April 2017. Its shares are set to rise 2 to 4 percent. Spreadbetters such as IG Group, CMC Markets and Plus500 are seen down 2 percent premarketafter a move from European markets regulator ESMA to crack down on contract-for-difference (CFD)trades offered to retail clients. (Helen Reid) ***** MORNING HEADLINE ROUND-UP (0637 GMT) Here's a round-up of key headlines for European companies this morning - note the news thatCasino's Monoprix is going to be teaming up with Amazon to sell groceries on Prime Nowin Paris. Casino's shares are seen up as much as 5 percent premarket. GSK buys Novartis stake in consumer healthcare venture for $13 bln H&M Q1 pretax dives in line with expectations, flags more markdowns Deutsche Bank seeks to replace CEO with Goldman executive -report Amazon wins grocery foothold in France through Monoprix deal Galliford Try to raise 158 mln stg to cover Carillion project costs Nordex sees lower sales, margins as wind industry tightens Akzo Nobel to sell unit to Carlyle, GIC for 10.1 bln euros (Kit Rees) ***** EUROPEAN STOCK FUTURES SURGE (0610 GMT) Futures for the major European stock markets have opened sharply higher, rising 1.1 to 1.8percent with the DAX in the lead, as investors place bets on a strong bounce at the open. Meanwhile analysts are still mulling what caused the late-afternoon slump in sharesyesterday. Here's Peel Hunt strategist Ian Williams: "The trigger was not immediately obvious with neither further strength in the euro, or thelatest wave of Russian diplomatic expulsions, especially convincing reasons for such a move. Amore worrying interpretation is that investors may be taking advantage of even the most modestof rallies to lighten their equity exposure." If Williams is right we may see a volatile session today as well - but for the moment allsigns are pointing to a strong rebound for the European market. (Helen Reid) ***** BULLS TO KEEP THE UPPER HAND (0548 GMT) Goldman Sachs' Bear/Bull indicator is above 70%, a level normally associated with animminent bear market (see below). But the GS team led by Peter Oppenheimer reckons relativelyattractive equity valuations will protect markets from a big drawdown, at least for now. There's also a wide spread in the underlying variables behind the indicator: very low levelsof unemployment and strong growth momentum are normally accompanied with "tighter monetarypolicy, a flatter yield curve and rising core inflation," notes GS. "But these remain subduedand without these risks rising, the prospect of a recession and 'cyclical' bear market is low." Valuation meanwhile is becoming less of a risk, they add - the forward consensus PE for theMSCI AC World is back to its 1990 average and below its average excluding Tech stocks. Highvaluations are mostly confined to the U.S. market. Furthermore, free cash flow yields have increased along with P/E ratios, and the total cashreturn from equities (dividend yield + buyback yield) has risen in most markets. So the overall message from GS is: don't panic! The bulls will prevail, at least for now... (Helen Reid) ***** MORNING CALL: EUROPEAN STOCKS TO BOUNCE BACK STRONGLY(0520 GMT) Good morning and welcome to Live Markets. Risk appetite is back! European stocks are called to open strongly higher today after a weakclose yesterday. They're being pushed up by the equities rally on Wall Street and in Asiaovernight greeting news that the U.S. and China are holding behind-the-scenes trade talks. White House officials are asking China to cut tariffs on imported cars, allow foreignmajority ownership of financial services firms and buy more U.S.-made semiconductors, accordingto a person familiar with the discussions. Asian shares bounced back overnight with the Nikkei up 1.7 percent and Chinese blue-chipsgaining 1.2 percent. The gains came after a stellar session on Wall Street with the Dowdelivering its third-biggest point gain ever, jumping 2.8 percent, while the S&P 500 gained 2.7percent and the Nasdaq surged up 3.3 percent. A negative currency effect could weigh on European stocks today, though, with the euro stillnear the six-week high against the dollar it touched yesterday. It had its biggest one-daypercentage gain since June 2017 yesterday. Spreadbetters call the DAX 183 points higher at 11,971, the CAC 40 up 60 points at 5,127,and the FTSE 100 78 points higher at 6,966. (Helen Reid) ***** (Reporting by Helen Reid, Danilo Masoni, Julien Ponthus and Kit Rees)