* European shares in the red
* Chaos marks first Trump-Biden debate
* China's factory activity accelerates
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 Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) and Danilo Masoni (danilo.masoni@thomsonreuters.com) in
Milan.
A REAL ESTATE BUBBLE IN THE EURO ZONE? (0926 GMT)
Real estate did not suffer much from the coronavirus crisis as lower-for-longer rates and
stimulus plans supported demand, but some cities might have stepped into bubble-risk territory.
According to UBS, the major cities at risk of a bubble are in the euro zone.
Three reasons are behind the recent surge in prices, according to UBS.
Home prices are a backward-looking indicator of the economy as they react with a delay to
economic downturns. Then the number of transactions declined, while most potential home buyers
did not suffer direct income losses in first half of 2020.
"Credit facilities for companies and short-time work schemes mitigated the fallout from the
crisis, supporting employees’ housing affordability," it says.
“It’s clear that the current acceleration is not sustainable. Rents have been falling
already in most cities, indicating that a correction phase will likely emerge when subsidies
fade out and pressure on household incomes increases,” it adds.
In many cities buying from investors willing to rent is going to be subdued as
“price-to-rent ratios have reached a record-high and rental growth is uncertain.”
(Stefano Rebaudo)
*****
OPENING SNAPSHOT: M&A DRIVES TOP MOVERS, SHELL UP, AIRBUS DOWN (0729 GMT)
European shares opened almost flat after earlier indications from futures for a loss.
M&A newsflow is the driver behind top movers.
TP ICAP is down 8% after the world's biggest inter-dealer broker said it's in
advanced talks to buy electronic trading network Liquidnet Holdings for $600-700 million, while
Covestro is down 4.9% on news it will purchase Dutch peer DSM's Resins and
Functional Materials business for about 1.6 billion euros.
In the opposite direction, French utility Suez is up 6.6% after peer Veolia
sweetens its offer for a 29.9% stake in the rival.
Royal Dutch Shell is off to a volatile start. After hitting March lows the stock is
now up more than 1% as it looks investors are giving thumbs up to its plans to cut its workforce
by up to 9,000 10% as part of a major shift to low-carbon energy.
Airbus is down 1.4% after Reuters reports the WTO has authorized the EU to impose
tariffs on U.S. goods worth $4 billion, raising the prospect of more trade frictions ahead
(Danilo Masoni)
*****
SHELL OVERHAUL, MORE M&A, AND CHIPMAKERS ON OUR RADAR (0652 GMT)
The chaotic Trump-Biden debate did nothing to soothe worries over a contested election
outcome and it barely moved the needle in betting markets, which give a narrow Biden victory.
It may be little surprise then that U.S. futures are currently taking a hit, down more than
1%, and the open in Europe isn't going to be much different.
The positive China data may have a negligible impact on sentiment, while a Reuters report
that the WTO has authorized the EU to impose tariffs on U.S. goods worth $4 billion has raised
the prospect of more trade frictions ahead.
In corporate news, Royal Dutch Shell announced on Wednesday plans to cut up to
9,000 jobs, or over 10% of its workforce, as part of a major overhaul to shift the oil and gas
giant to low-carbon energy. Its shares are seen up 1%.
M&A continues with German plastics maker Covestro buying Dutch peer DSM's
Resins and Functional Materials business for about 1.6 billion euros. The news is set
to weigh on Covestro shares, which fell 2.9% in early trade.
In the UK, William Hill has agreed to be acquired by Caesars Entertainment.
In earnings, a downbeat sales forecast from chipmaker Micron could have a negative
readacross for sector peers here in Europe. Infineon shares fell more than 1% in
premarket trade.
In more positive news, Swiss adhesives and construction materials maker Sika looked
upbeat. It confirmed its target for annual sales growth of 6-8% until 2023 and said it expects
more favourable second-half market conditions even as the COVID-19 pandemic continues.
British online fashion retailer Boohoo reported a 51% increase in first half profit
and raised its full year guidance, while shares in IT solutions supplier S&T rose
1.9% in premarket trade after saying it may exceed full year 2020 guidance.
The world's largest catering firm Compass however expects annual organic revenue to
fall by 19% and said it would impair about 100 million pounds worth of assets as it reviews its
contracts to deal with the blow from the COVID-19 pandemic.
Eyes also on exchange stocks such as Deutsche Boerse, Euronext and LSE
after news that Trump's antitrust chief will scrutinize Wall Street data feed pricing
heavily hit shares in US exchange stocks.
On the COVID-19 treatment front there is some good news. A single dose of Johnson &
Johnson's experimental vaccine produced a strong immune response against the novel coronavirus
in an early-to-mid stage clinical trial, while GSK said it was optimistic
the industry will be able to make an immunisation against COVID-19 widely available next year.
(Danilo Masoni)
*****
MORNING CALL: GOING DOWN POST TRUMP-BIDEN DEBATE (0534 GMT)
Shares in Europe look set for a lower start this morning as a chaotic Trump-Biden debate,
which did little to soothe worries about a contested election, outweighs positive data from
China, where factory activity expanded at a faster pace in September.
Euro STOXX futures were last trading down 0.6%, adding to losses seen yesterday
when markets pulled back after a big rally at the start of the week.
Over in Asia, shares rose slightly with MSCI's broadest index of Asia-Pacific shares outside
Japan up 0.2%, while U.S. futures were last showing declines of 0.7%.
(Danilo Masoni)
*****