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* Eurozone shares hit March highs on EU deal optimism
* German stocks touch February highs on tech sector boost
* Slew of positive earnings help sentiment
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.
SUMMER HOLIDAYS DURING COVID TIMES (0945 GMT)
What is the safest way to travel across Europe during COVID-19 times? Cars.
That's quite evident with traffic volumes in the euro tunnel this weekend. Getlink, the
company that runs the Channel Tunnel between Britain and Europe, announced a sweet increase of
passengers, with more than 30,000 cars and over 120,000 people coming and going from continental
Europe to the UK through the tunnel from Friday to Sunday.
It seems that people are quite keen to stay in the safety of their cars, avoiding contact
with the world outside their vehicle.
"The level of activity is attributed to the end of quarantine requirements in the UK but
also customers reassurance of being able to travel while staying in their car," Getlink said.
Other names set to benefit from an increase in road trip holidays this summer include toll
road operators and outdoor products makers such as Trigano, Dicks Sporting, Dometic, Atlantia,
ASTM, Vinci, Colombia Sportswear, Thor Industries, Autogrill, Halfords and Thule, according to
the trader.
Sweden's sport, outdoor and cargo products maker Thule shares jump 5.7% today after Q2
earnings beat. Thule said it sees strong Q3 demand.
(Joice Alves)
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VOLATILITY BACK AT THE BOTTOM OF THE COVID-19 ERA (0859 GMT)
Volatility in European stock markets is back to the bottom of the COVID-19 scare, which
began abruptly on February 24.
At 22.2, it is now very close to the 21 level that marks the lower end of the coronavirus
volatility spike, which went as high as 95!
That being said, we're absolutely not back to the 'old normal' when buying low volatility
was seen as one of the most successful trades of the 2010s!
As you can see below, volatility would have to go down further to 16 or 15 to be back to the
pre-pandemic world:
(Julien Ponthus)
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OPENING SNAPSHOT: HABEMUS RALLY (0738 GMT)
Maybe some investors were hoping for an even more vigorous market reaction but European
bourses are definitely celebrating the EU stimulus deal.
The DAX is up 1.6%, bringing the German blue chip index just a few percentage points from
the record highs hit last February before the coronavirus crash.
The STOXX 600 is rising one percent and has now staged a 40% bounce back from the lows
reached mid march.
Because the deal takes European integration to the next level, countries seen as the most
fragile are getting a boost. Bourses in Spain and Italy are enjoying the highest rises with
Milan up 1.9% and Madrid 1.8%.
If you needed another sign that investors have switched to 'risk-on' just look at how
cyclicals are firing up: banks and autos are leading, both rising over 2.5%.
Not surprisingly, healthcare is the second worst performer, up 0.2%, which shows there's no
big flows of money looking for safe havens.
Today's batch of Q2 earnings isn't spoiling the party quite on the contrary with Randstad,
one of the largest staffing companies in the world, reporting better than expected results.
The Dutch stock is up 5.3%, which tells something about how investors view employment
prospects in the coming months.
Anyhow, instead of a pan-European snapshot, here's a chart of the DAX, which is, as you can
see below, very close to reclaiming record highs:
(Julien Ponthus)
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ON THE RADAR: NOVARTIS, A BATCH OF BETTER-THAN-FEARED Q2 EARNINGS (0651 GMT)
Futures are pointing to a open in the black after EU leaders agreed on a stimulus package to
prop up their economy and as promising study results raise hopes for coronavirus vaccines.
Investors also have a better than feared fresh batch of corporate earnings results to
celebrate: Randstad's core earnings falls sharply in Q2 but it reports smaller than feared
quarterly loss.
Finnish forestry firm Stora Enso reported a smaller-than-expected fall in its underlying Q2
profit. Alfa Laval Q2 profit also beats forecast.
Steelmaker SSAB sees tentative demand recovery after Q2 loss. Fragrance and flavour maker
Givaudan says it is on track to meet its 2020 guidance after net profit rose 9%.
Logitech Q1 operating profit jumps more than 75%. UBS, the world's largest wealth manager,
saw net profit drop 11% in Q2, better than expected.
In its last trade update, premium spirits maker Remy Cointreau improves outlook with help of
lockdown drinking. It now expects mid-year core profit to fall between 35% and 40%, better than
45-50% previously forecast
On the other hand, there is also tough numbers to digest: Swiss drugmaker Novartis cut its
2020 sales outlook on Tuesday after Q2 sales and profit fell, as hospitals that stocked up on
drugs in Q1 slowed purchases. And Swiss chocolate maker Lindt & Spruengli expects organic sales
to fall around 5-7% this year after COVID-related store closures hit sales and profit in the
first half of 2020.
(Joice Alves)
******
WHITE SMOKE IN BRUSSELS: HABEMUS 'GAME CHANGER' OR 'SELL THE NEWS'? (0530 GMT)
After four days and nights of negotiations, EU leaders have finally agreed on a stimulus
package to prop up their economy and bring the bloc's integration to the next level.
Such an outcome was seen as a potential 'game changer' for the continent but looking at the
euro (-0.14%) and stocks futures (+0.5% / +0.7%) there's no sense of euphoria.
On the contrary there's something that smells very much as 'buy the announcement, sell the
news'!
Michael Hewson from CMC Markets took a sobering view on the EU stimulus plan.
"This deal is likely to be yet another sticking plaster on a dysfunctional monetary union,
as it lurches from one crisis to another", but noted that "the principal of some form of joint
debt issuance" which can be seen as a first "baby step towards wider fiscal integration".
It's very early in the session though, so it might be a tad premature to speculate too much
on how the session will unfold.
(Julien Ponthus)
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