Next Share News (NXT)

* ECB pulls out bazooka fund
* Sovereign bonds rally
* STOXX 600 rises together with Wall Street
* FTSE 250 underperforms, Milan outperforms
*

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 Thyagaraju Adinarayan
(thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and
Julien Ponthus (julien.ponthus@thomsonreuters.com) in London.


EIGHT TAKES ON THE FTSE 250 SELL-OFF (1621 GMT)
The FTSE 250 index has sharply underperformed British blue chips and other major
European bourses since the coronavirus broke out.
The index has lost over a 43% value since February 19 peak, against a 33% drop for the FTSE
100 index and 36% for the pan-European STOXX 600.
The losses are also a bit sharper than France, Italy and Spain, which have already
implemented extreme measures such as entire city lock downs .
Today is no different with the FTSE 250 was down 2.5% while most of European bourses and the
FTSE 100 are comfortably trading in positive territory.
Here are 8 takes on why the FTSE 250 is underperforming the FTSE 100 and the rest of Europe:


Craig Erlam, Senior Market Analyst at Oanda
"The collapse in the pound over the last week will certainly be a factor in the FTSE 100
outperformance against the 250.
It’s been quite an extreme drop in the currency and with so much of the revenue in the FTSE
100 coming from outside of the UK, the weaker currency is often a supportive factor.
The drop off in the FTSE 250 appears to have mirrored that of the pound which suggests it’s
reflecting the huge change in the government’s strategy to the coronavirus and economic
consequences."

David Madden, Market Analyst at CMC Markets
"I think the FTSE 250 has underperformed against the FTSE 100 as the sharp fall in sterling
recently has cushioned the blow to the latter.
The likes of GlaxoSmithKline, AstraZeneca and Unilever have seen less selling pressure in
recent weeks - because of their industries, compared with domestically focused UK stocks.
It seems odd the FTSE 250 has fallen 16.8% in the past five trading sessions while the Stoxx
600 has only dropped 8.8%. There appears to be a belief in the markets the UK will be worse hit
than Continental Europe, even though the health emergency is less severe in Britain."

Russ Mould, Investment director at AJ Bell
"The FTSE 250 is about to equal an unwanted record, with its eleventh consecutive daily
decline, something that has only happened twice before, in 1994 and 1998, although the
cumulative falls then were less than 10%, rather than more than 30% this time.
The mid-cap index is seen as more exposed and sensitive to the UK economy that the FTSE 100,
even if around half of its sales come overseas, so the gathering gloom about the UK’s near-term
growth outlook is weighing heavily on sentiment.
A number of mid-caps have also issued downbeat earnings outlook statements this week and in
some cases cancelled planned dividend payments, which has added to shareholders’ woes, including
MicroFocus, William Hill, Marston’s, Elementis and Crest Nicholsoné."

Mike Bell, global market strategist at J.P. Morgan Asset Management:
"The FTSE 250 has a larger exposure to domestic focused stocks than the FTSE 100. So the
recent sharp fall in sterling will have contributed to the outperformance of the more
internationally focused revenues of the FTSE 100.
Also initially markets were more concerned about the effect of the virus on economies
outside the UK but the implementation of more stringent containment measures in the UK over the
last week has made clear that the domestic economy will also take a hit."

Emmanuel Cau Head of European Equity Strategy at Barclays
"FTS100 is much more internationally exposed than Ftse250, so benefits relatively more from
GBP depreciation. I also believe that concerns of a no trade deal brexit are resurfacing as the
June deadline to extend is approaching while UK and EU negotiations appear to have made little
progress".

Neil Wilson Chief Market Analyst at Markets.com
"I think it’s the lockdown effect now for U.K. focused mid caps - pubs, restaurants, train
and bus operators and bookies. I think it’s really that which has hit in the last day or so."

Joshua Mahony, Senior Market Analyst at IG (in a note on Monday)
"With the domestically-focused FTSE 250 being hit hard this morning, there is clearly a
perception within the trading community that the UK strategy is riskier and could result in a
more significant economic impact despite the current lack of a hardline shutdown seen elsewhere.


(Julien Ponthus)
*****


GERMANY: LOOKING FORWARD TO AUTUMN? (1345 GMT)
The coronavirus outbreak has caused the steepest drop in German manufacturers' expectations
in the 70-year history of the survey.
Business confidence in Germany is worst at this point than it was after the global financial
crisis in 2008 or after 9/11 to name a few historic moments. But that doesn't mean GDP growth
will be worst than back then, argues UniCredit.
"We think that the German economy may shrink in 2020 to the same extent as it did in 2009,"
writes UniCredit's chief German economist Andreas Rees.
GDP loss in the second quarter will be in the double-digit range and could easily hit a more
than minus 10% qoq, UniCredit forecasts. But assuming the containment of the coronavirus
outbreak, "a massive rebound in the second half of the year" could be in its way, Rees adds.

(Joice Alves)
*****


STOCK-PICKING IN A REBOUND (1218 GMT)
For those wanting to look on the bright side, there are research notes out there looking out
how to trade a rebound and in no mood to capitulate.
Jefferies, for instance takes the view that "winners and losers will emerge" from the
coronavirus crisis and scanned 600 stocks in Europe to see which are better placed.
Its conclusion is that rock solid balance sheet in the way forward and here are its seven
picks:

Saxo has introduced on March 9 a ’bounce back basket’ which has so far lost 14% but that it
believes could work as an inspiration when sentiment picks up.
"With the policy moves in the last 24 hours from the Fed starting a Money Market Funds
Liquidity Facility, ECB launching a €750bn quantitative easing programme in bonds and RBA
announcing effectively yield curve control on 3-year government bonds there is definitely scope
for some risk-on sentiment", they write.

(Julien Ponthus)
*****



WORK FROM HOME DIARIES: STUCK IN THE BOILER CUPBOARD (1009 GMT)
As the UK braces for coronavirus shut down, bankers, brokers and analysts are
already facing the challenges of working from home.
"I must tell you about the stresses of working from home yesterday," writes Deutsche Bank's
Jim Reid in his today's note. "With an hour to go until my client credit conference call with
nearly 1500 registered, I realised I couldn’t do the call," he writes.
Reid's worst moment was when he bought a new phone and realised that the only suitable
socket was in his boiler cupboard.
"So I then had to tuck myself into the boiler cupboard... I also had to turn the central
heating off so it didn’t fire up during the call. My family froze for the benefit of our
clients," he says.
"I’m not sure other brokers can match that for commitment." Can you?
Has this happened to you already? Please share your pain with us. What do you do when phone
lines and computers fail to collaborate?

(Joice Alves)
*****



WHO'S HURT BY VIRTUAL HUGS AND KISSES? (0954 GMT)
Don't bank on a V shaped recovery for the travel industry!
With friends, families and businessmen getting used to e-meeting, e-hugging and e-kissing,
there's a chance there's no going back.
There's the short term pain first: a 100% travel ban globally (though this has still not
happened) would lead to a negative global GDP growth print of around -4%, Citi says.
Once these restrictions are lifted, Citi believes the travel & tourism industry is unlikely
to see a V-shaped recovery.
Citi says: "the lack of face-to-face meetings in the corporate world might alter future
business trip schedules".
Hotels are likely to be affected the most as they make a large chunk of their money from
business travellers and conventions.
Citi says "we could see some of the virtual meetings replace costly gatherings as corporate
management teams look for efficiencies."
Meanwhile, crude is plumbing multi-year lows as it's one of the asset class most vulnerable
to travel restrictions. Citi sees oil demand falling by 2.8 million barrels per day against a
growth of 1.25 mb/d expected in late 2019.

Travel & leisure index's rout:



(Thyagaraju Adinarayan)
*****

OPENING SNAPSHOT: BOY, THE MARKET IS UP!
Is it the classic dead cat bounce or is it because the ECB's emergency programme is actually
bringing some comfort? Shoot me if you have a clue (joice.alves@tr.com).
It does help a little that the oil has gained some ground after a brutal selloff yesterday.
European stocks is up more than 1% bouncing off seven year lows as the bloc's
central bank launched last night a set of stimulus measures in a bid to help the major health
and economic crisis across the region.
Europe's construction & materials, banking, and telecom sectors were
rising around 3%, while travel and leisure continued to trade in the red.

(Joice Alves)
*****

ON OUR RADAR: CARS, AIRLINES, RETAILERS, WHAT ELSE?
Futures are pointing to gains across Europe in early trade, but that could change at any
point as main future indices have been trading up and down this morning.
It is not really clear if ECB's 750 bn euros bond buying programme announced last night will
buy a day of peace of mind to stock investors as most of Europe is closed for business due to
the coronavirus outbreak.
The unprecedented corona-virus induced crisis is putting all sectors to the test, especially
retailers (those not selling food). British clothing retailer Next said its balance
sheet and margins will help it to weather the storm.
Fiat Chrysler is the latest car maker to suspend production operations. It said it is
suspending production in North American manufacturing facilities.
Airlines continue to be under pressure and Lufthansa said that the industry may
not survive without state aid.
Back to food for our dose of positive news: UK online supermarket Ocado is seeing a boost in
demand.


(Joice Alves)
******


STRANGE CHANGE OF HEART (0714 GMT)
European futures turned positive for a few minutes, while they were down around 1% earlier
this morning.
Have investors just reacted to the ECB bond buying programme?
It seems it is going to be just as short-lived as other recent rounds of stimuli from
European and U.S. central banks.
Indeed, while we are writing this, futures are already fighting to stay in the black in
choppy market.

(Joice Alves)
*****


ANOTHER SELLOFF EVEN AFTER ECB'S MOVE? (0640 GMT)
The latest round of fiscal stimulus measures is not reassuring investors and futures and
financial spreadbetters point to another day in the red for European bourses.
The ECB launched a 750 bln euro emergency bond purchase programme last evening in a bid to
stop the pandemic-induced financial rout shredding the euro zone's economy as much of Europe is
in lockdown amid the coronavirus outbreak.
Yet, financial spreadbetters expect London's FTSE to open 191 points lower at 4,890,
Frankfurt's DAX to open 353 points lower at 8,089 and Paris' CAC to open 172 points lower at
3,583.
In the UK, the pound collapsed as Boris announced he is closing schools.
Additionally, Britain's oil and gas sector is calling for financial help to survive,
industry body OGUK says, as the oil price crash means the sector may be unable to keep producing
hydrocarbons in the North Sea.

(Joice Alves)


(Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)