Last checked at 
* STOXX and DAX hit fresh highs
* Markets take comfort from slowing coronavirus infection rate
* ABN Amro down sharply after Q4 profit miss
* Wall Street hits another record
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@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus
(julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan.
ENDING IT ON A HIGH (CONTAINS POSSIBLE SPOILER) (1702 GMT)
The STOXX 600 closed up 0.6% at 431.07 points, that's just 0.06 points away the record high
reached in afternoon trading.
So here's a spoiler for the next session: any tick upwards on the STOXX 600 at the open
tomorrow morning will result in a new record high. So no need to act surprised when you see the
news flash!
The driver behind the rally is well identified.
"The mood is bullish as medical reports from China suggest the coronavirus crisis is
expanding at a slower rate", wrote David Madden at CMC Markets in his closing note.
On the other side of the pond, Wall Street is also hitting all time highs as bulls pursue
their relentless run.
Here's the STOXX 600 rising about 20% since August:
(Julien Ponthus)
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THE EU'S GREEN DEAL: A BIG DEAL FOR EUROPEAN BANKS? (1559 GMT)
Amid the lower for longer blues, the macro gloom and profit-denting regulatory constraints,
investors seem sometimes quite desperate to find a good reason to buy European banks after years
of disappointment in that equity space.
But for Peter Garnry, head of equity strategy at Saxo Bank, Brussels' multi-year,
trillion-euro plan to make the EU's 27 member states carbon-neutral by 2050 might be "a
potential long-term catalyst for European banks".
"Europe’s 'green deal' could become an indirectly government subsidy and growth enabler for
European banks", he writes, urging "investors to have European banks on their watchlists".
A similar point is made in the latest MacroTourist newsletter in which its author, Kevin
Muir, speaks of "a monster bubble" being formed around green investment (hello Tesla!), just
like during the dotcom bubble for internet stocks in the 1990s.
A sign of that frenzy towards green investment is that "the European Union seems to be
willing to enter into fiscal deficit spending to combat this climate threat", he argues.
Unveiled in December, the EU's Green Deal involves investment of around 100 billion euros a
year over the next decade, including a 'just transition fund' to help fossil-fuel-dependent
member states adjust and a mechanism to charge non-EU countries a fee if they import carbon into
the bloc.
(Julien Ponthus)
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IRISH BANKS: NOT QUITE W.B. YEATS' SECOND COMING (1425 GMT)
Granted, Bank of Ireland Group and AIB Group haven't quite recovered yet from the beating
they got after Sinn Fein's electoral surge but this is no Second Coming (more of that below).
The two Irish banks are currently up 6% and 1.5% respectively and there's definitely been
some kind of mood swing.
Maybe it has to do with Prime Minister Leo Varadkar who, in a speech this morning, quoted
W.B Yeats and said that the "dark future" painted in the Second Coming poem had not yet come to
pass.
Rather than the "blood-dimmed tide" evoked in the poem, Varadkar was obviously talking about
the left's ambition to reform the pro-business environment credited by many for the economic
prosperity of the country.
Jerome Legras, head of research at Axiom Alternative Investments believes the market has
indeed overacted over the election.
"It's a buying opportunity more than anything else", he says, adding that he has no plans to
divest his investments - in capital or bonds - in Irish banks.
There is a lot in the programme of Sinn Fein, notably on the taxation (hello DTAs!) front
which could dent profit but the actual chances for the left-wing Irish nationalist party to lead
a coalition are limited, he believes.
Even if it were the case, the impact would be nothing on the scale of the "macro shock" that
would be triggered by a reunification of the island.
One thing for sure on the short term is that as you can see below, Bank of Ireland Group and
AIB Group have missed the big recovery enjoyed by the other banks of the euro zone:
Some reading:
Irish banking shares feel heat after Sinn Fein's strong election showing
Irish PM ready for opposition, leaves coalition option open
Some even better reading here: https://bit.ly/2SlV0bB
(Julien Ponthus)
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JOLTS NOT JOLTING ENOUGH? (1415 GMT)
Yesterday's poor job openings data did not cause a blip in the stock markets but it is
indeed seen as an early indicator of the U.S. economy's health.
Job Openings and Labor Turnover Survey (JOLTS) showed that job openings, a measure of labor
demand, decreased 364,000 to 6.4 million, the lowest reading since December 2017.
That indicator's significance can be seen in the chart below, earnings expectations for the
Russell 2000 index in the U.S. closely track the job openings data:
(Thyagaraju Adinarayan)
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UK INFRASTRUCTURE: THE START OF A GOLDEN AGE? (1250 GMT)
PM Johnson's green light to the so-called HS2 multi-billion high-speed rail line in the UK
could be the start of a new boom for the country's construction companies.
Liberum says there could be another "golden age" for the industry after a challenging period
that started in 2007 and saw big players like Carillion and Interserve collapse.
"We now see material upside over the next decade," they say.
Of course there are a lot of unknowns, including on price and terms of the contracts, their
timing, but bottom line it looks there's a boost for many, especially for Costain and Balfours.
Here's some snippets on the potential benefits:
* Costain's FY22 FD EPS could increase 34%
* At Kier, HS2 could add £10m to £15m to EBIT in FY22
* At Balfours, we expect an EPS impact of <10% in FY22
* At Keller, HS2 is expected to boost UK geo-technical market by up to 30%
* At Renew, HS2 is unlikely to be a significant contributor
* Morgan Sindall has no direct exposure to HS2
(Danilo Masoni)
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"RENEWA-BULL OR RENEWABUBBLE?" (1009 GMT)
Utilities are lagging the market today but that hasn't happened often recently as
their 11% run YTD puts the sector far ahead others in terms of performance.
Behind the upward path are drivers such as ultra-low yields, cornonavirus concerns and the
renewable energy boom.
The big question is whether the overall positive phase can be defined as a "renewa-bull or
renewabubble" -- as RBC analysts put it.
They remain positive on the space, and "this comes despite the significant outperformance of
renewable exposed names over the past two years," they say.
"The 2020s could prove to be the decade of decarbonisation as the global ambition on the
energy transition accelerates," they add.
European utilities have done much better than the STOXX 600 since February 2018 and
even compared to the popular FANG stocks they slightly outperformed, as you see in
this chart.
(Danilo Masoni)
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WUHAN WOES: UK RETAILERS SEE NO REASON TO PANIC (0852 GMT)
The China dependency has led markets to talk up supply chain disruptions, especially among
retailers, due to coronavirus, but the million-dollar question has been what's the impact and
how long does it take to recover?
Jefferies has reached out to a few retailers and the short answer from almost all of them
has been they have not been affected "materially". And with slowing infection rate its analysts
believe impact to European supply chains will be limited and short term.
Here's Jefferies' insight on UK retailers:
** Boohoo is least impacted as it has 500+ suppliers and sources less than 50% from
outside the UK.
** ASOS stock levels are at comfortable levels and it sources typically from
factories along the east coast of China (far from Wuhan); has flexibility to switch suppliers.
** Superdry expects a few weeks of disruption, but nothing material, and says it
has sufficient options.
** An extra one-month delay will cause real concerns on stock shortfalls for Next.
** N Brown sources about 37% of products from China, but is not impact much as it
had shipped all its key lines prior to Chinese New Year.
(Thyagaraju Adinarayan)
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OPENING SNAPSHOT: FRESH RECORD HIGHS FOR STOXX 600 AND DAX (0815 GMT)
The STOXX 600 and Germany's DAX hit record highs again today as
coronavirus infection rate slows down and Chinese factory workers are gradually returning to
work.
Among single stocks, the moves have solely been on earnings today with Evolution Gaming
topping the STOXX 600 index, rising 12%, after its fourth quarter revenues jumped 51%.
In the Netherlands, ABN Amro is down 6% (worst on STOXX) after its net income for
the fourth quarter fell short of analysts' expectations, and Heineken is up 4.4% after
it said it expects operating profit for 2020 to grow by a mid-single digit percentage.
Here is your snapshot:
(Joice Alves)
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ON OUR RADAR: KERING AND DUTCH COMPANIES (0752 GMT)
Futures point to a higher opening this morning on hopes that the coronavirus outbreak may be
peaking and the gains are further supported by some positive earnings reports.
However, there's not much to rejoice on the earnings front as the latest data from Refinitiv
showed that European companies are expected now to report a decline in profits in the
quarter, a reversal in expectations that they would end a nine-month long earnings recession.
Coming back to today's results, Kering posted higher-than-expected fourth quarter
sales, helped by Gucci, but the luxury giant said the coronavirus epidemic in China could
heighten uncertainties for the sector.
It's a busy earnings day in the Netherlands with some mixed earnings reports. Heineken
said it expects operating profit for this year to grow by a mid-single digit
percentage after 2019 earnings came in line with expectations.
Paints and industrial coatings maker Akzo Nobel's quarterly sales dipped amid weak
demand, notably from car makers, and ABN Amro is seen down 2-3% after it
reported stable net income for the fourth quarter, missing analysts' expectations.
Apart from earnings, there's an unusual high number of senior executive moves today:
Clariant's CFO is leaving for a new job at Maersk; Heineken CEO
plans to step down in the summer and he will be replaced by the head of the company's
Asia-Pacific region; Thyssenkrupp appointed a new Chairman of the Executive Board of
Thyssenkrupp Steel Europe.
Some action expected also in these UK companies:
Babcock nudges down profit forecast on oil and gas woes
Plus500 posts lower 2019 profit, says H2 buoyant
Dunelm upbeat on FY outlook as third quarter starts well
(Joice Alves)
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EUROPEAN STOCKS SEEN HIGHER ON HOPES CORONAVIRUS IS SLOWING (0638 GMT)
European bourses are seen opening in positive territory this morning after Asian shares
nudged higher on hopes the worst of the coronavirus outbreak in China may be over.
Investors will also have a number of earnings results to digest: Akzo Nobel
reported worse-than-expected 4Q earnings and ABN Amro Q4 net profit misses on low
interest and rising impairments. But there are also positive news: French asset manager Amundi
reported a 36.5% rise in 4Q.
On a separate note, there are quite a few people moves under the spotlight: Clariant
CFO Patrick Jany is exiting for a new job at shipping company Maersk, Heineken
CEO Jean-Francois van Boxmeer will step down in the summer and be replaced by the head
of the company's Asia-Pacific region. Thyssenkrupp appointed Bernhard Osburg to
succeed Premal Desai as Chairman of the Executive Board of Thyssenkrupp Steel Europe.
Financial spreadbetters at IG expect London's FTSE to open 13 points higher at 7,512,
Frankfurt's DAX to open 19 points higher at 13,647, and Paris' CAC to open 4 points higher at
6,058.
(Joice Alves)
*****
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)
