* European stocks inch higher
* STOXX 600 up 0.51%
* Germany's Wirecard plunges 20%
* HSBC, UBS, Santander: mixed Q1 results
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 and Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.
BP: DIVIDEND PRIDE? (0812 GMT)
There's nothing to be happy about the first-quarter beat, investors reckon, as BP's
cash flow is drying up fast and the British oil major is still not in a mood to give up payouts
to shareholders.
Let's not forget, second-quarter results are poised to be far worse given how oil prices
have crushed to levels not seen for decades. Citi and Credit Suisse warn about weakening cash
flows and the reflection of it in the company's balance sheet.
"Yet the decision to pay a full dividend in a quarter when cash flow is weakening, net debt
shot up by $6B and the outlook for 2Q is poor can hardly be called prudent," Citi says.
"If this is a short-sharp event of a few months then, with hindsight, BP's actions today can
be borne out. But does anyone really have enough clarity?"
(Thyagaraju Adinarayan)
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OPENING SNAPSHOT: A WIRECARD SENSATION BUT NO Q1 DRAMA (0748 GMT)
There were a lot of blue chips reporting much awaited trading updates this morning but it's
Wirecard the biggest mover on the STOXX 600 with a 20% fall after publishing a KPMG report into
its account.
The second top mover also comes from Germany but this one is in positive territory:
Lufthansa was up 10% after a report the government agreed a rescue package worth about 9 billion
euros.
Looking into the blue chips of the STOXX 50, there were 2 clear winners in today's batch of
Q1 earnings and both of them from Switzerland: UBS and ABB which were up over 4% each.
BP, on the other hand, retreated 1.9% which considering the unprecedented crash of oil
prices isn't a bad performance in the grand scheme of things.
All in all, this latest update on the state of Europe Inc. is no game changer but another
reminder of the pain to come.
Overall the trend is slightly more positive than it was in premarket. The broadly flat start
is morphing into a modest rise with the STOXX 600 up 0.4%.
U.S. futures are also slightly up.
(Julien Ponthus)
****
PLEASE SHELL OUT, INCOME SEEKERS PRAY (0718 GMT)
With UK blue-chip BP agreeing to maintain its 10.5 pence-per share dividend, it's a
consolation to British income funds which last month saw over 15 billion pounds ($18.6 billion)
in payouts cancelled or suspended.
April has been better with some 5.6 billion pounds in dividends being retained, stockbroker
AJ Bell highlights, and the BP news will add to the relief.
This week is a big one for income seekers with some 8.4 billion pound in dividends up for
grabs and statements from the top 5 payers -- Shell, BP, BAT and GlaxoSmithKline and HSBC, which
together accounted for over 40% of FTSE 100 payments last year.
HSBC had already bowed to regulators' pressure to hold back payouts and AJ Bell reckons
payouts from GSK and BAT are in the bag. That left Shell, which hasn't missed a dividend since
World War II, and BP, which last cancelled in 2010 after its Gulf of Mexico oil rig disaster.
Crude's 70% year-to-date fall means energy firms, from U.S. Occidental Petroleum to Norway's
Equinor, slash dividends. Yet, BP has come through so fund managers will be keeping their
fingers crossed for Shell tomorrow.
(Sujata Rao)
*****
ON THE Q1 RADAR: THE GOOD, THE BAD AND THE UGLY (0745 GMT)
It's not all black and white in terms of earnings this morning: good, bad and ugly reports
are painting a dark grey picture of Europe Inc in the time of coronavirus.
Under the spotlight this morning is of course the banking sector, the worst sectoral
performer since the novel coronavirus broke out earlier this year.
The world's largest wealth manager UBS had some good news to report with a 40% increase in
first-quarter net profit as clients increased trading activity during market turmoil.
But warnings that the upcoming coronavirus-induced recession will be ugly were given by
Spain's Santander and HSBC as both set aside more money for bad loans and recorded a fall in
profits.
Talking about profit declines, BP's net income fell by two-thirds as the pandemic
coronavirus hit oil demand. There's a lot at stake for investors as Shell and BP represent an
estimated 24% of the £75bn of FTSE 100 dividends for 2019 not yet hit by the market turmoil.
Interesting lesson about how M&A deals are sailing through the storm with BP amending the
financial terms of the $5.6 billion sale of its Alaska business.
Things got more ugly for Brazil's Embraer has begun an arbitration process against Boeing
after the U.S. planemaker abruptly cancelled a $4.2 billion deal over the weekend.
The assumption that pharmaceuticals are one of the safest bets in times like these was
comforted by Swiss drugmaker Novartis which beat expectations and confirmed its 2020 targets as
the pandemic prompted patients to stock up on their prescriptions in advance.
Another winning trend was illustrated by German online takeaway food company Delivery Hero
whose orders and revenues almost doubled as lockdowns closed restaurants and prompted more
people to order meals and groceries from home.
Rovio Entertainment, the maker of the 10-year-old "Angry Birds" mobile game series, said it
saw an increase in the number of downloads as well as user engagement.
Of course, a lot of the Q1 reports are just simply bad: guidance ditched, outlook grim,
dividend cut.
ABB said it expected the coronavirus epidemic to trigger a "sharp drop" in demand over the
next three months while Norway's Telenor warned that 2020 revenue and earnings will fall short
of its outlook.
Travis Perkins, Britain's largest distributor of building materials, said its total revenue
in the first three weeks of April was about one third of the same period in 2019 due to the
coronavirus crisis.
In terms of individual movers, Wirecard was down about 2% in early trading after it
published an investigation by KPMG into its account.
Also, it seems the suspense isn't over for Lufthansa as company and government sources
report that a state aid deal has not yet been secured.
(Julien Ponthus)
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MORNING CALL: UNCERTAIN OPEN WITH OIL UNDER PRESSURE (0535 GMT)
Futures are trading just marginally in the black this morning while another dive in oil
prices overnight put global markets under pressure.
Asian shares seemed set to end their session in the red but just managed to stage a comeback
into positive territory.
In Europe, it's another big earnings day across countries and sectors with the likes of
Banco Santander, Telenor and Novartis reporting Q1.
The earnings galore is expected to shed some light of how bad the last weeks of the quarter
really were and how ugly Q2 and Q3 look like at the moment.
(Julien Ponthus)
*****
(Reporting by Thyagaraju Adinarayan, Joice Alves, Julien Ponthus in London and Stafano Rebaudo
in Milan)
