Last checked at 
* European shares lower after positive start
* STOXX 600 down more than 1%
* Wall Street tumbles on tech selloff
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 Joice Alves (joice.alves@thomsonreuters.com)
and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Danilo Masoni
(danilo.masoni@thomsonreuters.com) and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in
Milan.
TECH UNWIND: $1 TRILLION AND COUNTING... (1528 GMT)
Tech-heavy Nasdaq 100 is down 4.2% and the scale of the drop is massive. More than
$600 billion wiped off from the index and the benchmark S&P 500 is losing nearly twice of
that.
Wall Street's selloff pushed Europe into negative territory but it's only down 1.1%, for
once, thanks to its low tech exposure.
"In the last week we have observed how the VIX Index has increased despite new record highs
which is an unusual behaviour," Peter Garnry writes in a note.
Tesla and Apple shares were unusually volatile yesterday, the former fell as much as 15%
intraday. The fragility led to today's sharp decline in which the big five U.S. tech stocks lost
more than $300 billion in one of the worst sell-offs since late March.
"What happened (yesterday) was a sharp reversal in call options to put options volume on
U.S. equities indicating significantly shift in options volume," Garnry says.
"Our guess is that the number of outstanding call options to put options were dramatically
reduced yesterday."
Fed, where are you?
"Welcome to margin call land... The greater fool theory passing to looser and looser 'easy
money', leveraged hands without deep pockets now all under water and getting stopped out left,
right and centre," says a London-based trader.
(Thyagaraju Adinarayan)
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"PARTY LIKE IT IS 1999" (1524 GMT)
Do you believe tech stocks are way too expensive.
Think again! Maybe you're using just the wrong metric.
Berenberg says while there are clear bubble signs emerging and absolute valuations have hit
worrisome levels, on an earnings yield gap basis vs bonds, tech can look extremely cheap.
Looking at what happened in the run-up to the TMT bubble bursting in March 2000 after a
spectacular surge in 1999, Berenberg says tech may be still far from its peak point.
"Party like it is 1999...", they say.
Berenberg notes that the recovery from March 2020 lows has been extraordinary but just not
as incredible as the late 1990s, and that relative valuation continues to look supportive.
"Those who back an economic recovery into 2021 should stay invested and overweight the
sector," they add.
(Danilo Masoni)
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TOOOOOO BIG TO FAIL NOW (1353 GMT)
Wall Street continues to be too big to fail, and oh boy it's hard to imagine a world without
a policy backstop especially after this COVID-19 blow, which has taken global financial assets
as a share of GDP to a record 234%. The value was less than global GDP back in 1990.
"For much of the past 10 years Wall St. has proved 'too big to fail' and monetary policy
makers have implicitly supported asset prices to boost economic growth; in 2020 the policy is
more explicitly engineering an overshoot in asset prices to end recession," BofA says in a note.
Nasdaq has been adding $1.6 billion per hour since March while central bank asset purchases
have been running at $1.4 billion, according to BofA.
Staggering numbers isn't it? The power of interest-free money has given us the shortest bear
market ever with a baggage of $258 trillion debt (280% of global GDP).
(Thyagaraju Adinarayan)
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FEELING LESS SQUEEZED ON TESLA (1126 GMT)
Telsa's surge to stratospheric levels may prove antigravity is possible, at least
on the stock market. But this move is unlikely to be perpetual.
New shares coming to the market with a $5 billion cash call and news that top investor
Baillie Gifford has cut its stake in Elon Musk's company could surely trigger a break.
Tesla has fallen this week from its all-time peak and there's some relief for short sellers.
This GraniteShares 3X short Tesla ETF is rebounding for second day after hitting a
record low on Monday. It's still 95% down since inception in July but compared to its all-time
low it has almost doubled in value.
(Danilo Masoni)
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TIME FOR SOME VALUE? MAYBE, BUT FORGET BANKS! (1028 GMT)
Investing in companies with battered valuations can be tempting, especially if you think the
craziness over turbo-charged tech is unsustainable and as signs are emerging that "value" is
ready for a comeback.
Citi is the latest to become more constructive on that space, but warns against the danger
of getting trapped into financials, which it kept out of its value upgrade to 'positive' after
more than 12 months being 'neutral'.
"Value is bifurcating between cyclical Value that benefits from rising Breakevens and
inflation expectations, and Financials which are struggling with low nominal interest rates," it
says.
Moreover, Citi says its new stance does not mean investors should rotating all their
portfolios.
"By no means are we advocating a rotation away from Growth or specifically IT, however
equity markets are tracking Breakevens and this will favour some Cyclical Value stocks," it
adds.
Below a Citi chart showing how various investment styles have performed last month across
regions.
(Danilo Masoni)
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RISK-APPETITE MIGHT NOT LAST LONG (0951 GMT)
While risk appetite seems to be back with stocks rallying for a third straight day on hopes
for more stimulus and a vaccine, some investors remain cautious as a number of significant risks
are still in place.
"After a buoyant August for risk assets, the rally is likely to flatten out. Rising new
infections into the autumn, a levelling recovery pace and political risks (U.S. politics,
Brexit, geopolitics) will keep a lid on risk sentiment," a Generali Investment report says.
Further down the line, the asset manager says investors should beware of a possible cliff
edge effect on the economy related to the unwinding of relief measures. It warns that a "rise in
insolvencies could trigger shockwaves via increased NPLs".
For now, Generali Investment says it is ready to increase the "pro-cyclical bias in
portfolios as the Covid paralysis fades out" and that it is "slightly overweight on equities
after a good performance in August with rotation towards value and cyclicals".
In regional preference, it is neutral on Europe versus U.S..
(Stefano Rebaudo)
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OPENING SNAPSHOT: RISK-APPETITE ON STIMULUS AND VACCINE HOPES (0742 GMT)
A fresh risk-on session is underway with investors betting on the positive impact of
stimulus plans by central banks and governments.
Also vaccine hopes are propping up risk sentiment after Sanofi and its British
peer GSK said they expected the first results on their protein-based vaccine by early
December 2020.
The STOXX 600 index is up 1.2% with travel and leisure stocks leading gains, up 2%,
along with automakers, while the bank sector, which was battered in the last few days, is up
1.8%.
Shares in Melrose are up 9.3% after the company posted higher-than-expected trading
over summer months.
Siemens Healthineers is down 4.1% after the company launched a 2.9 billion euro
capital increase.
Cautious reaction by shares in Sanofi and GSK, up 0.4 and 0.6% respectively.
(Stefano Rebaudo)
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ON THE RADAR: VACCINE HOPES AND A CAPITAL INCREASE (0633 GMT)
European stocks are set to open higher on bets government and central bank stimulus will get
economy and financial markets off the coronavirus hook quickly.
Meanwhile, Pharma companies continue their race to develop treatments against the virus.
Today Sanofi and its British peer GSK said they expected the first results on
their protein-based vaccine by early December 2020, and if the data turned out to be positive,
they plan to request regulatory approval for the product in the first half of 2021.
In other company news, with shares in Siemens Healthineers down 4.2% in early
trade after the company launched a 2.9 billion euro capital increase to finance parts of the
planned takeover of U.S. peer Varian.
On the earnings front, Capgemini expects double-digit revenue growth in 2020
driven by a gradual second-half recovery, crediting diversification for its resilience during
the coronavirus crisis.
Iliad reported a 1.8% rise in half-year revenue.
Roche said new data showed its big-selling multiple sclerosis treatment Ocrevus was
a "highly effective treatment option offering a favourable and consistent benefit risk profile".
(Stefano Rebaudo)
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MORNING CALL: STILL BETTING ON STIMULUS (0528 GMT)
European stock futures are in the black as investors keep focusing on the huge liquidity
available and on stimulus plans, hoping for a quick recovery from a pandemic-induced recession.
China helps, with signals that its economy is on its way for a significant rebound as the
Caixin/Markit services Purchasing Managers' Index (PMI) stayed above the 50-mark in August,
while companies hired more people for the first time since January.
In the U.S. mixed macro data with a slowing recovery in the labour market triggered
expectations that the Congress may feel the pressure to reach a deal on a new relief package.
(Stefano Rebaudo)
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