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* European shares fall to 5-month low
* FTSE at lowest level since April
* France reportedly exploring national lockdown
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UNDETERRED: FORECASTERS STAY UPBEAT ON STOXX PROFIT RECOVERY (1042 GMT)
It looks that SAP's massive kitchen sinking and the fresh lockdown
risks rattling markets haven't really changed the big picture for company profit
forecasters in Europe, who still expect a substantial recovery after a terrible
Q2.
The latest Refinitiv IBES data shows that analysts have upgraded their Q3
earnings estimates for the STOXX 600 once again, while Q4 forecasts were edged
lower just a little.
They now see in Q3 a 30% profit drop, an improvement over 4 percentage
points compared to last week's estimate, while for Q4 they expect a 23% drop,
against the 22.7% fall seen last week.
STOXX 600 earnings more than halved in Q2.
(Danilo Masoni)
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TRADING RANGE ADIEU? (0951 GMT)
After being anesthetized by more than 4 months of range-bound trading
investors are understandably nervous this morning in Europe as lockdown fears
become more real at less than a week to go before an unpredictable U.S.
presidential election.
For sure selling pressure is intense and volatility gauges are on the rise
but we're still far away from the magnitude of what we've seen in the spring
during the first wave of the COVID-19 pandemic when the STOXX 600 fell
nearly 40%.
The pan-European index has lost just 7% over the past 7 sessions on concerns
over the second wave of infections but if things get really nasty, it could well
breach below the range it has been locked into since June.
"Market sentiment severely soured... If sustained, several stock market
indices would be at risk of breaking below their trading ranges established over
the past four months," warns UniCredit strategists.
For now, we're at the bottom of the four-month trading range.
(Danilo Masoni)
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WHEN VIRUS FEARS KILL Q3 RESULTS (0930 GMT)
Fears of a second lockdown across Europe, including France, have triggered a
massive sell-off, pushing European indices to levels seen in May or April.
Not even Q3 positive results did any good to the mood. For instance Deutsche
Bank reported a surprise swing into net profit and upgraded the
revenue outlook for its investment bank, yet European banks are down a
whopping 3.3%, while shares at Germany's largest bank are down 3%.
In retail, Carrefour delivered its strongest quarterly underlying
sales growth for at least two decades. But its shares dropped 2.5%.
Deutsche is not the first European bank to report better than expected
results this quarter, but Q3 results may not be the beginning of a positive
trend.
"While these numbers are certainly encouraging the big question is whether
they are sustainable," Michael Hewson, chief market analyst at CMC Markets UK.
"It is notable that we’ve seen a big reduction in costs, and are likely to
continue to do so".
(Joice Alves)
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LOCKDOWN 2.0 FEARS RATTLE STOCK MARKETS (0841 GMT)
Markets aren't surprised by the spike in COVID-19 cases (the second wave),
but by the rising probabilities of a another complete lockdown. Eurozone stock
markets are testing June lows, while FTSE 100 is in a league of it's own
- April lows!
Election anxiety is also playing its part, but news that France, Germany and
possibly UK mulling a lockdown seems to be the single biggest factor in the
selloff. Healthcare and tech are favourites after a very short period of value
rotation as rates move down and curves flatten again.
The Euro STOXX volatility index soared to 37.3 points highest since June.
"...although we are far better prepared than we were for the first wave the
reality is that the first wave occurred late in the traditional flu/cold/virus
season," Deutsche Bank's Jim Reid says.
"The second wave still hasn’t even hit November or December yet and we’re
still seeing cases soar in many places."
(Thyagaraju Adinarayan)
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ON THE RADAR: CARREFOUR, HEINEKEN, DEUTSCHE BANK (0730 GMT)
European futures are well in the red as COVID-19 cases are rising at
alarming pace across the region, with France's Macron expected to announce fresh
restrictions in a televised address this evening.
In the meantime, a batch of strong third quarter results could cheer up
investors a little.
Europe's largest retailer Carrefour achieved record 8.4%
like-for-like sales growth in Q3, reflecting a stronger performance in its key
markets of France, Spain and Brazil.
While online takeaway food company Delivery Hero raised its
guidance for 2020 sales for the second time this year as coronavirus lockdowns
and investment in ultra-fast deliveries boosted quarterly figures.
Telefonica Deutschland reported solid Q3 results, supported by the
addition of 308,000 postpaid clients and low churn rates as its network
investments paid off.
British fashion retailer Next upgraded its FY profit guidance for
the third time in as many months after full-price sales in its third quarter
exceeded its expectations.
Shares in German sportswear company Puma were down 5.3% in early
trade after the company reported a strong rebound in Q3 sales in the Americas
and Europe but noted that consumer sentiment was turning negative again.
Heineken NV performed better than expected over the June-September
quarter with a surprising increase in beer sales in the Americas, but said the
COVID-19 pandemic was still too uncertain to provide a reliable 2020 outlook.
Shares in Morphosys are up 5.2% in early Frankfurt trade after the
company raised outlook.
Another bank beats expectations: Deutsche Bank shares are up 3%
on Land & Schwarz after the bank reported a surprise swing into net profit in Q3
and upgraded the revenue outlook for its investment bank.
Things weren't great for everyone. Spain's Bankia said its Q3 net
profit fell 79% against the same period a year ago due to 155 million euros in
COVID-19 related provisions.
Shares in BASF were down 1.6% in early Frankfurt trade after the
company reaffirmed it expects 2020 adjusted operating profit to fall to between
3 billion and 3.3 billion euros, down from 4.5 billion euros last year.
Finnish flag carrier Finnair reported a second consecutive
quarterly loss and warned of a similar result in the final quarter.
Peugeot maker PSA Group posted a 0.8% decline in its Q3 sales from
a year ago, though revenue from its core auto division grew again after slumping
earlier in 2020 at the height of coronavirus lockdowns.
On the vaccine front, Novartis has licenced global rights to two
Molecular Partners antiviral drugs that have potential to treat
COVID-19 patients, the two companies said on Wednesday.
(Joice Alves)
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THIRD CONSECUTIVE DAY IN THE RED FOR EUROPEAN BOURSES (0635 GMT)
Futures are pointing to a third consecutive day of losses for European
bourses as coronavirus cases are growing at full speed in the U.S. and Europe.
Uncertainty around the U.S. presidential election, in less than a week, is
also keeping investors on their toes.
In the meantime, oil price rises 2% after companies shut down some U.S. Gulf
of Mexico oil production ahead of storm Zeta.
Financial spreadbetters at IG expect London's FTSE to open 27 points lower
at 5,702, Frankfurt's DAX to open 154 points lower at 11,909 and Paris' CAC to
open 63 points lower at 4,668.
(Joice Alves)
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