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* STOXX 600 last up 0.1% in choppy trade
* Investors await signing of U.S./China trade deal
* JPMorgan tops estimates, European bank shares off lows
* UK gambling shares hit by credit card restriction
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share
your thoughts on market moves: rm://thyagaraju.adinarayan.thomsonreuters.com@reuters.net
LUXURY M&A: HUGE FIREPOWER FOR ANOTHER BUSY YEAR (1500 GMT)
LVMH's biggest ever acquisition - that of U.S. jeweller Tiffany for $16.2 billion last year
- has put shares in the world's No. 1 luxury player on a record-breaking run.
Today the stock has hit a new lifetime peak as investors continue to celebrate and there is
a sense that 2020 will be another hot year of dealmaking for the highly valued sector.
For the top 5 players alone, LVMH, Hermes, Kering, Richemont
and Swatch, UBS estimates a M&A firepower scenario of up to 95 billion euros.
"After a busy end to 2019, we are unlikely to have a break from M&A-related speculation
fuelled by the sector's strong balance sheets", say analysts at the Swiss bank.
"The continued polarisation of company performance in the sector will in our view lead to
more consolidation... That's because the 'winners' of this cycle are in an increasingly strong
financial position to buy, while the 'underperformers' following years of trying to turn their
business around may be eventually close to giving up," they add.
Here's a UBS summary of the most likely capital allocation plans among the companies they
cover.
(Danilo Masoni)
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HERE'S A PECULIAR WAY TO STOCK PICK! (1348 GMT)
There are hundreds of ways to pick stocks, from valuation models to market momentum
strategies but this one seems pretty much like a new one!
"Shares of companies that are faster to file their annual and quarterly reports command a
significant premium compared with slower-filing companies", research from NN Investment Partners
states.
While there is sadly no data provided in its press release to quantify or demonstrate the
outperformance, NN IP says its European equity team already uses the findings in its investment
process.
The method sounds weird: what could possibly lead to better performance to reporting swiftly
trading updates?
Well there's simply a chance the company is simply more efficient than its slower rivals.
Secondly, if it takes a long time writing, it can mean that last quarter's report needs a
lot of editing!
"Making changes to a report takes time (...) especially if a company is trying to manipulate
how it is perceived or highlight certain elements", Karim Bannouh, senior portfolio manager at
NN IP’s European Equity team is also quoted as saying.
(Julien Ponthus and Karin Strohecker)
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SPOOKY DOT-COM BUBBLE GHOSTS (1153 GMT)
With Wall street hitting record after record, there's an uncomfortable feeling making its
way through trading floors that this rally is turning into a melt-up and possibly the last
hurrah before the burst of a QE-fuelled bubble.
So much so that noting euphoric tech stocks, many pundits are currently drawing comparisons
with the period which preceded the collapse dot-com tech bubble in terms of price-to-sales,
enterprise value-to-EBITDA, or total market cap-to-GDP ratios.
For instance here:
The founder of NorthmanTrader, Sven Henrich, also argued in a "The Ghosts of 2000" note that
the Fed recognised to some extent its responsibility in inflating assets and quoted a Reuters
interview of Dallas Federal Reserve Bank President Robert Kaplan.
"How they can extract themselves out of the bubble they have created as the ghosts of 2000
are all around us"? Henrich asked. Find his post here: https://bit.ly/2Nmnf6L
Neil Campling, head of TMT research at Mirabaud TMT also recently noted that the percentage
of U.S. companies losing money over 12 months is close to 30%, the highest since the late 1990s
outside of post-recession periods.
A symbol of that is Tesla, which "is worth more than Ford and General Motors put together
despite only four prior quarters of profit in its 12-year life", Campling noted, adding that
about three-quarters of IPOs were made by loss-making companies in 2019.
Another simple way of assessing the rally is to have a look at the Nasdaq chart since 1996
and check whether you're getting vertigo:
(Julien Ponthus)
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BULLS OR BEARS: GOLDMAN SACHS CLIENTS ARE SPLIT (1114 GMT)
Yes they are, in the sense that their view on markets has become "even more polarised".
And perhaps that's little surprising given that, at record highs, you can feel either
euphoric or anxious.
In a poll this month with nearly 1,500 clients, the U.S. bank has detected what it calls a
"Split Sentiment".
"Sentiment remains bifurcated and became even more polarized compared to last month, with
only 16% of investors describing themselves as neutral on risk (compared to 20% in the previous
month)," GS said.
"There was a noticeable uptick in bulls (46% vs 41% last month) and a slight increase in
bears (38% vs 37% last month)," it added.
In other findings, the bank also spotted a return of favour for European stocks.
30% of respondents expect the S&P 500 to outperform this month but European indices
such as Euro STOXX 50 and the FTSE 100 are close behind at 28%.
(Danilo Masoni)
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BUBBLE OR VALUE? (1027 GMT)
After three years at the White House, Trump has completely changed his view about the stock
market.
Now he's euphoric and has turned to Twitter to brag about how the Dow's record-breaking run
has added "VALUE" to the American Business.
But back in 2015 with the U.S. index 10k points below current levels he had warned of a
"Bubble Like You've Never Seen Before".
Check out this snapshot, courtesy of Giuseppe Sersale, portfolio manager at Anthilia, who
notes on Twitter: "It's impressive how views can change".
(Danilo Masoni)
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WOOHOO! BOOHOO IS WORTH MORE THAN MARKS & SPENCER! (0947 GMT)
Let that sink in for a while: Boohoo, the UK cloth online retailer founded less than two
decades ago is worth as much as Marks & Spencer, a British institution founded in 1884.
That seems to say all that you need to know about the state of the UK high street, doesn't
it?
Both groups are worth roughly 3.7 billion pounds each for now but the trend suggest that
Marks & Spencer won't be able to keep up with Boohoo, who targets youngsters who shop on their
mobile phones and want cheap clothing delivered quickly.
While the latter emerged like a clear winner of the 2019 Christmas shopping battle and
upgraded its full-year guidance, Marks & Spencer saw its performance over the key
festive quarter held back by waste in its food business and weak sales of menswear and gifts.
Marks & Spencer, which suffered from a series of rating downgrades, is struggling to boost
its clothing online presence and adapt to a fast changing market where consumers desert high
street shops.
On the other hand, Boohoo recently bought trendy brands such as PrettyLittleThing or Nasty
Gal and utilises high profile celebrities on social media, such as with model and actress Cara
Delevingne and pop group Little Mix, to advertise its products.
Here's a factbox with British winners and losers of the Christmas sales:
Here's a wrapup on the what the Christmas sales mean for the high street:
And here's Boohoo catching up with Marks & Spencer:
(Julien Ponthus and Thyagaraju Adinarayan)
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PROFIT TAKING? (0901 GMT)
Oops, did we just jinxed it?
Just when we said there was hardly any significant market moves over the past few days, here
comes a sharp fall for the pan-European STOXX 600, which has slid as much as 0.5%.
Traders cite the move to profit taking.
"Seems it's all a little over extended", a trader told us, pointing to a stellar rally since
the last quarter of 2019.
Though there aren't sharp moves among sectors, stocks have been gradually selling off all
this morning.
(Thyagaraju Adinarayan)
*****
OPENING SNAPSHOT: UP, FLAT, DOWN, REPEAT (0820 GMT)
Seems familiar doesn't it?
No major sectoral movers, bourses stuck in a range with moves ranging from slightly higher
to flat to slightly lower - that's roughly how stocks in Europe have moved in the past few
sessions.
Only exciting moves today are in niche sectors within the UK: gambling and construction.
UK gambling firms William Hill and GVC are taking a sharp hit after the
gambling commission said it would ban consumers from using credit cards to gamble.
Not everything is grim, UK construction stocks are partying after Grafton's
better-than-expected trading update for November and December, sending its shares 8% higher.
That's boosting shares of Travis Perkins and Howden Joinery 2%-3%.
Among others, Evonik is at the bottom of STOXX 600 after its controlling
shareholder sold a 5.2% stake at a discount.
(Thyagaraju Adinarayan)
*****
ON OUR RADAR: UK GAMBLING, BOOHOO AND TAYLOR WIMPEY (0746 GMT)
European stocks eye fresh record highs in build up to U.S. and China signing a preliminary
trade deal and as the earnings season officially kicks off with Wall Street banks JPMorgan, Citi
and Wells Fargo reporting at lunchtime.
In corporate news, UK gambling companies GVC Holdings, William Hill, Flutter
, Playtech are called 2%-3% lower by dealers after the gambling commission
said it would ban consumers from using credit cards to gamble.
Meanwhile, earnings in Europe have also started to trickle-in with Taylor Wimpey's
shares seen down 1% to 2% after the British homebuilder's in-line trading update fails to
impress investors.
Boohoo shares are seen rising 5% to 10% after the British online fashion retailer
raised its full-year outlook, a stark contrast to high street retailers.
German chemical company Evonik's shares are seen down 3%-4% after its controlling
shareholder sells a 5.2% stake in the company at a discount.
Traders call Renault shares 2% higher after the French carmaker and its partner
Nissan denied reports that their alliance was heading for a break-up.
Other earnings updates: Dialog Semi +2% after Q4 prelim sales beats; Elementis
-5% after profit warning; Suedzucker -1% after results.
(Thyagaraju Adinarayan)
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ALL'S WELL (0635 GMT)
A preliminary U.S.-China trade deal is just around the corner and that's fuelling optimism
in stock markets with spreadbetters calling European shares slightly higher.
Asia and the United States scaled yet another record peak overnight as the U.S. Treasury
Department on Monday dropped its designation of China as a currency manipulator days ahead of
the signing of 'Phase 1' trade deal between the world's two largest economies.
Financial spreadbetters IG expect London's FTSE to open flat at 7,618, Frankfurt's DAX to
open 25 points higher at 13,477 and Paris' CAC to open 5 points higher at 6,041.
In companies news, Renault shares could bounce back from multi-year lows after the
French carmaker and its partner Nissan denied reports that their alliance was heading
for a break-up.
(Thyagaraju Adinarayan)
*****
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)
