SAF.L Share News (SAF)

March 14 - Welcome to the home for real time coverage of European equity markets brought toyou by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger toshare your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net CLOSING SNAPSHOT: WALL STREET'S TRADE WAR FEAR SOURS THE MOOD (1710 GMT) And they were doing so well! European shares gave up their gains and crossed the finish linein negative territory as trade war fears (again!) spooked Wall Street and soured the moodglobally. Here's your closing snapshot, good evening! (Julien Ponthus) ***** "THE ONLY IRREVERSIBLE THING IN LIFE IS DEATH, NOT A CURRENCY" (1647 GMT) Aspiring Italian prime minister and right-wing leader Matteo Salvini said just that,reiterating his party's position that the euro is a "flawed currency". The quote mimics the words used by his compatriot and European Central Bank President MarioDraghi, who has repeatedly said that the euro is instead an "irreversible" currency. Salvini's remarks sent Italian bonds and stocks down, making the FTSE MIB index thebiggest loser among top European country benchmarks, down 0.9 percent at the close. Is Italy's uncertain election outcome that saw a big surge in anti-establishment partiesstarting to bite? In this snapshot a March 10 tweet from Salvini where the leader of Italy's League partyshows nostalgia for when ice creams were priced in the old Lira currency. (Danilo Masoni) ***** MORRISONS MIGHT BE FEELING "CONFIDENT", BUT INVESTORS ARE NOT (1544 GMT) Morrisons' shares have just touched a session low, down 5.5 percent and among the biggestfallers on the STOXX. But traders thought that they would rise - so why the negative marketreaction when the grocer's management team said that they were "confident that a broader,stronger Morrisons will continue to grow"? There are a number of reasons that analysts have pointed out, one being the fact that thespecial dividend is being viewed as a "solitary offering", as put by Henry Croft, researchanalyst at Accendo Markets. Another focus is on cash flow. Ken Odeluga, market analyst at City Index, used the exampleof Tesco's use of free cash flow during its 2014-15 "crisis", which "helped put the brakes" onits decline. In light of this, Odeluga highlighted that Morrisons' FCF generation has almost halved to350 million pounds from 2016/17's 670 million pounds, the quality of which he says is alsoquestionable. According to TR data, the average analyst recommendation for MRW is a hold. So for now, itlooks like investors want something more. (Kit Rees) ***** JUST EAT: DELIVERING UNCERTAINTY (1541 GMT) Investors are still digesting Just Eat's announcement of investment in delivery afterits profit warning last week, and the sell-side - still overwhelmingly positive on the stock -is beginning to make some cautious noises about the delivery model and the sector at large. "Just Eat's investments in delivery in the UK and Australia are unlikely to deliver positivereturns over the medium term," say Macquarie analysts. They add that, in an increasingly competitive environment, Delivery Hero couldhave the upper hand: it has around 75 percent of exposure to emerging markets, where competitionis more limited. "Delivery Hero is best positioned for profits in the delivery market, with greater scale,experience and established brands," they write. Furthermore, Macquarie speculates that intensified competition could lower regulatory risksaround mergers and increase the likelihood of a deal between Delivery Hero and Takeaway.Com in Germany. As you can see below, Delivery Hero has easily outpaced Just Eat and Takeaway.com in themonths since its listing: (Helen Reid) ***** ADIDAS SEEN FROM THE STREET (1515 GMT) Shares in the German sportswear maker are the biggest gainers in Europe today, up 12 percentand on track for their biggest one-day gain in nearly 10 years - a remarkable performance for acompany with a market cap of 35 billion euros. But is the reaction proportionate to what adidas has announced in its solid update? "No. Things are overdone," a Frankfurt-based trader says. "There were some shorts ahead of FY18 outlook, which was expected to be weak. That did notmaterialize. Shorts must be covered," he adds. Still the numbers and the big buyback are a nice surprise. UBS highlights that its buyback represents almost 9 percent of the company's share capital,the maximum permitted under the AGM authorisation, while Baader Bank Helvea says its outlook wasconvincing and above expectations. Neither, however, made changes to their price targets. (Danilo Masoni) ***** ALL QUIET ON THE RUSSIAN FRONT... OF M&A (1320 GMT) The Russian economy seems to have engaged in a spectacular pull-back from cross-border M&A,Thomson Reuters data shows today as Britain and the Kremlin enter a showdown about how aSoviet-era nerve toxin was used to attack a Russian ex-spy in the UK. A few days ahead of Sunday's Russian presidential election, our Deals Intelligence team tooka look at how the Russian M&A industry has performed since President Putin’s election in 2012. Main takeaway is that Russia's resurgence as a key player on the world stage has beenmatched by a total withdrawal in international M&A. "Russian outbound M&A at its second lowest level since 1999 with only 5 million dollars.Outbound M&A activity was still at zero in YTD 2017; a scenario that hasn't been seen in Russiasince prior to 1998," Thomson Reuters analysts wrote. As you can see below, foreign investors seems to be on the back foot too, with inbound M&Adown 87 percent year-to-date. (Julien Ponthus) ***** INVESTOR SENTIMENT REFLECTS BREXIT VOTING PATTERNS (1156 GMT) Turns out the Leave/Remain divide still runs deep... even seeping into investors' equitypreferences! Investors based in London, which had the highest Remain vote, are the most positive on Eurozone equities, a Lloyds bank survey shows. They're also among the least enthusiastic about UKequities. The North, meanwhile, which had the third highest Leave vote in the UK, has the strongestpositive sentiment towards UK equities. Investors in Scotland are the most pessimistic about UKequities, having voted overwhelmingly Remain. "It could reflect political leanings but it’s more likely that investors are simply keepinga close eye on how the negotiations unfold and what impact these will have regionally," saysMarkus Stadlmann, chief investment officer at Lloyds Bank Private Banking. Sentiment across all equity markets is much higher compared to last year, except for UKshares which have seen sentiment tumble 17.7 percent from March 2017. Here's the regional breakdown: (Helen Reid) ***** LOOK UP! CASH COMING FROM AEROSPACE (1145 GMT) UBS believes the European Aerospace and Defence industry is poised to deliver solid freecash flow growth and that could further underpin share prices in the sector, which hasalready risen 15 percent over the last year, comfortably beating the broader marker. "FY17 results saw better than expected cash generation across the space, and we see scopefor further improvement 2018-20e to drive share-price outperformance," analysts at the Swissinvestment bank says in a note, raising their FCF estimates for Airbus and saying theyare increasingly confident Rolls Royce will deliver. On top of that UBS sees "improving mid-term growth prospects". They say the civil cycleremains robust with Airbus expecting deliveries to increase to around 800 deliveries in 2018from 718 in 2017. They're also remaining positive on the aftermarket, citing Safran'sgrowth guidance, but are cautious on suppliers like Meggitt given price pressure fromOEMs. (Danilo Masoni) ***** NARRATIVE SHIFTS FROM "#EUROBOOM" TO "PEAK GROWTH" (1134 GMT) Slowly but surely, the narrative that the Euro zone could somewhat have reached "peakgrowth" continues to grow this morning with data showing the Euro zone industrial production wasweaker than expected in January. "While January may have been a weak month, the recovery of production still maintains arelatively strong pace. The question is whether this pace can be sustained in 2018 as well," askING analysts in a note commenting on the statistics. "Although still signalling strong growth, the somewhat weaker PMI data in February begs thequestion whether the acceleration of production might stop before it properly started", the bankadded. While 2017 was all about the #Euroboom, the first quarter of this year is more abouteconomists pointing to a loss of economic momentum. Here's a blog post from January where Sebastian Raedler, head of European equity strategy atDeutsche Bank made that case and explained how it would impact the STOXX600: (Julien Ponthus) ***** IF YOU CAN'T HEDGE SHARES WITH BONDS, GO WARREN BUFFETT (1021 GMT) One of the answer is good old-fashioned value investing (Warren Buffett style), SocieteGenerale argued in a global asset allocation note, where it reflects on the state of markets"now that volatility tourists (retail money invested in VIX products) have gone back home". Gone are the days when bonds were a cheap and effective hedge against sell-offs in theequity markets, the French bank says, adding that "recent events show not only some instability,but a higher correlation between equity and bond prices". And that's not about to end, according to SocGen's analysts for whom this constitutes atrend which is here to stay and advise "concentrating equity exposure in the value style (euroarea, Japan". Here's a link to Wikipedia's 'Value Investing' : http://bit.ly/2paGGU6 and here are Socgen'scalls to address correlation between equity and credit: (Julien Ponthus) ***** OPENING SNAPSHOT: EARNINGS SHINE THROUGH TIMID START (0817 GMT) European shares are pulling higher from a negative open, but the real action is on thesingle-stock level where results are spurring some decent-sized moves. Adidas is currently the biggest gainer after its results and share buyback announced, whilenews of Prudential's demerger has sent its shares up around 5 percent. A strong showing from the miners is also helping prop up the market thanks to some solidindustrial production figures out of China. A decline among energy stocks and industrials is pulling the market lower, however, asresults knock shares in chemicals firm Brenntag and postal services provider Bpost. Here's your opening snapshot: (Kit Rees) ***** MORE APPETITE FOR SUPERMARKET STOCKS? (0758 GMT) Food retail is a tough area at best, given the threat posed by online giant Amazon. If youlook at a chart of how the UK grocers have performed over the past year, one thing stands out -Ocado is the best performer. So online is key. Today's results from Morrisons though could give investors something to cheer about.MRW beat forecasts and announced a special divi, thanks to wholesale and an online push (theresults mention initiatives such as a store-pick online service and 'Morrisons at Amazon'). "Today's release points to considerable self-help still available to drive future earningsgains," analysts at Jefferies analysts say in a note. "Earnings visibility and income support are key to our Buy. Both appear well underpinnedafter the finals," Jefferies add. Traders are calling Morrison's shares 2 percent higher today. And on a positive note, all ofthe UK supermarkets are outperforming the FTSE 100 so far this year. (Kit Rees) ***** WHAT TO WATCH FOR THE EUROPEAN OPEN (0752 GMT) European shares are set to follow Asia’s lead and fall further on Wednesday, with futuresdown 0.1 to 0.3 percent, after jitters over world trade were reignited by President Trump’sthreats of tariffs on Chinese imports, and investors continue to digest political uncertaintyafter Trump fired his Secretary of State. "Even before this latest firing, the turnover rate among high-level staff and cabinetmembers had been higher than under any other president in the past 40 years," UniCreditstrategists wrote in a note. Better-than-expected Chinese industrial production figures boosted metals prices and shouldhelp mining stocks gain on Wednesday, though concerns on trade could cap gains. As earnings continued to come through, retailers will be a focus after Zara owner Inditexand Adidas reported. The German sportswear company is seen up as much as 6 percent at the openafter it announced a large share buyback and increased its profit forecast for 2020. Investors are also likely to cheer Morrisons after the UK’s no.4 grocer beat forecasts andannounced a special dividend. M&A news includes Prudential’s plan to spin off its UK and European business frominternational businesses, and news that Atlantia and ACS have reached an agreement over theirjoint control of Abertis. Quite a range of pre-market calls for Prudential, seen up 2 to10 percent. Also in focus will be stocks with Russia exposure in case of market reaction after a war ofwords between Britain and Russia escalated overnight when Russia did not respond to a Britishultimatum for an explanation of the nerve agent attack in Salisbury. Additional headlines: Australia picks Rheinmetall as preferred supplier for $2.5 bln contract (beats BAE) BRIEF-Bpost Sees Recurring EBITDA In Range Of EUR 560-600 Million In 2018 Drugmaker Hikma posts lower-than-expected 2017 profit (Helen Reid) ***** COMPANY NEWS HEADLINES: MORNING ROUND-UP (0739 GMT)Prudential to spin off UK and European business in radical break-upMorrisons pays special dividend after profit rises 11 pct?Adidas forecasts slower sales and profit growth for 2018Adidas to buy back up to 9 pct of share capitalZara owner Inditex full-year profit up 7 pctBritain's Balfour Beatty's annual profit almost triplesItaly's Atlantia and ACS reach agreement over joint control of AbertisAir France rejects wage demands as another strike loomsSocGen in exclusive talks to buy Commerzbank's EMC unit -Handelsblatt??American Tower, KKR are bidders for Altice NV's towers-BloombergItaly's Snam raises investment, profit targets to 2021Raiffeisen proposes dividend of 0.62 eur/shrClas Ohlson Q3 operating profit fallsMEDIA-Tesla treasurer and VP of finance leaves the company - BloombergIHG acquires 51% stake in Regent Hotels & Resorts (Tom Pfeiffer) ***** FUTURES POINT TO NEGATIVE OPEN (0713 GMT) Futures are down across the board, indicating European stocks aren't going to have an easyreprieve after yesterday's falls, as fresh tariff threats add to uncertainty over trade. Retailers are front and centre of results this morning, with Adidas and Inditex reporting.The German sports fashion company is seen gaining 3 percent in pre-market indications after itforecast sales and profit growth would continue in 2018, albeit at a slower pace. Inditex meanwhile reported a seven percent jump in annual profit, despite negative headwindsfrom a strong euro. Meanwhile M&A could also be a mover after Atlantia and ACS reached an agreement overnightover joint control of Abertis. (Helen Reid) ***** INVESTORS SEE SEVERE BREXIT DELAYS (0650 GMT) Fewer than 20 percent of investors now expect a transition deal to be agreed before theMarch EU summit, according to Barclays' monthly Brexit investor survey conducted last week.Almost two thirds of those surveyed expect an agreement to be delayed to the October EU summitor beyond. Barclays analysts say the EU's draft treaty "brought the issue of the Irish border back tothe fore and the importance of resolving it before transition talks can begin, in order to avoidtalks stagnating later." Hence investors' increasing doubts an agreement can be hashed out intime. Looking further ahead, only 13 percent expect an agreement to be reached before the March2019 deadline. A large minority of investors, 24 percent, expect the UK and EU to fail to agreethe outline before the transition period ends. (Helen Reid) ***** MORNING CALL: TARIFF JITTERS TO SPREAD TO EUROPEAN SHARES (0624 GMT) Good morning and welcome to Live Markets. European stocks are called to decline further today as the latest protectionist policy pushcreates more uncertainty and pessimism over world trade. Asian shares reversed overnight as investors digested the threat of new U.S. tariffs onChinese imports and President Trump's move to fire his Secretary of State, which had alreadysent Europe and Wall Street skidding. Trump is seeking to impose tariffs on up to $60 billion of Chinese imports, targeting thetechnology and telecoms sectors in particular. Spreadbetters call the DAX 79 points lower at 12,143, the CAC 40 down 27 points at 5,215,and the FTSE 100 27 points lower at 7,112. (Helen Reid) *****