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.
Q2 DELUGE: THE GOOD, THE BAD AND THE UGLY (0849 GMT)
Here's a round-up of European blue chips' best and worst earnings updates:
CHEERS -- Making the most from the gradual reopening of economies in May/June, AB Inbev
beat expectations in almost every market. Citi says "It has been a long time since
ABInBev has produced results which have beaten expectations in so many geographies and so many
levels of the P&L". Its shares are rising 7%, one of the best performers among European blue
chips.
FLYING HIGH -- Coming off a steep selloff, Airbus and its supplier Safran's
shares are rising 5% this morning on their beats on cash. Airbus is being cheered for
its lower cash burn while Safran beats on free cash flow and sales. Credit Suisse on Safran:
"The group has demonstrated a good proactivity in crisis management and delivers a strong H1
despite the headwinds".
HEALTHY -- Astrazeneca's sales and profit were slightly ahead of estimates, but it
was enough to boost the stock 3% higher. COVID-19 vaccine hope is also likely to drive the
British drugmaker's shares towards fresh record highs. Citi says AZN "potentially may be on
track to raise guidance later in the year".
THE UGLY -- Lloyds' bigger than expected second-quarter provision for bad loans led
shares to 2012 lows. The hefty provision was 60% higher than an average of analyst estimates. On
top of that investors were also more worried about net interest margin outlook, Jefferies: "key
to us is NIM guidance, with management no longer guiding to H2 improvement as hedge run-off
offsets benefits of overdraft pricing return and deposit repricing".
STUCK IN REVERSE GEAR -- Volkswagen's dividend cut disappointed investors and
they punished its shares which slid 5% to 1-month lows. UBS: "Q2 performance has been very
resilient on earnings and cash, risen market expectations likely limit today's upside".
(Thyagaraju Adinarayan)
*****
OPENING SNAPSHOT: LOSING GROUND WITH BANKS AND AUTOS (0734 GMT)
European stocks are lower with markets digesting a huge batch of earnings releases, while
coronavirus worries continue to keep investors’ mood in check.
Investors are tracking the virus' trajectory but also negotiations about a new U.S. stimulus
package, both of which will affect the magnitude of the expected economic recovery.
The STOXX 600 is down 0.7%. Food and beverage is the only sector in the black, up 0.2%,
propped up by AB Inbev shares, rising 8% after their second-quarter results.
Barring the rise in food and beverage, it seems a typical risk-off session with autos and
banks leading losses, down respectively 2% and 1.8%.
Automaker shares are led by Volkswagen whose shares are losing 3.5% after its update. Among
banks Lloyds is down 6.1% after results.
(Stefano Rebaudo)
*****
ON THE RADAR: AB INBEV, AIRBUS, NESTLE...
... it's a never ending list. It's an earnings storm here in Europe.
European futures are pointing to a mixed open as investors are busy digesting a batch of
earnings updates amid rising worries about the impact of rising coronavirus cases globally.
AB Inbev shares steal the show rising 5% in premarket trade after reporting
better-than-expected results. "Even more striking though is the through-the-quarter recovery," a
London-based trader says.
In Germany, Volkswagen shares were rising 1.6% despite a dividend cut. Maybe
their expectation to still report an operating profit on an adjusted bases for 2020 is doing the
magic. Among losers in Germany, Fresenius Medical Care down 1.4% after results, while Zalando
shares are off 2.6% after the company offered 1 billion euros in convertible bonds.
In France, Airbus shares could come under pressure after a top line miss and H1
commercial aircraft deliveries halving. Total says it will take an $8 billon
impairment on the value of its assets, mainly in its Canadian oil sands projects after the
energy group slashed its oil and gas price outlook.
And among the big guns reporting today, Nestle shares are seen rising 1% after its
first-half results come in roughly inline with estimates. It however cut its full-year
underlying sales forecast saying demand slowed after customers' stockpiles in second quarter.
Royal Dutch Shell avoided its first quarterly loss in recent history after bumper
earnings in its trading business offset a collapse in revenue from its main oil and gas
operations.
Banks continue to book hefty credit impairment charges and that has weighed on StanChart
which reported a 33% fall in its first-half pre-tax profit.
Shares in Credit Suisse meanwhile are trading 3.3% higher after the bank said it would merge
its investment banking units.
Other results: ArcelorMittal reported higher than expected second quarter earnings; Orange
posted a 1.8% percent drop in core operating profit in Q2; Safran's core
profits halves in the first half of the year and sees 2020 revenue down 35%.
(Stefano Rebaudo)
*****
MORNING CALL: FED IS NOT ENOUGH (0533 GMT)
European futures are slightly in the black this morning with no clear trend emerging yet, as
a Fed pledge to use all the tools to support the economy is not enough to prop up equities in
the continent.
Investors worry about the pandemic trajectory in many countries and about negotiations for a
new coronavirus relief package in the U.S., as monetary policy alone may not be able to protect
the global economy from the adverse impact of the outbreak.
Rising cases in Spain are a major concern, as a second wave of infections in Europe will
dampen the expected recovery.
(Stefano Rebaudo)
*****