Last checked at 
* Choppy STOXX roughly flat
* Kering, Next shine
* BASF, autos weigh
* Waiting for the Fed
* U.S. stimulus angst
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.
REASSESSING RISK FOR A FAAG' Q2 REALITY CHECK (1012 GMT)
Given the massive outperformance of Facebook, Apple, Amazon and Google this year, investors
heavily exposed to the U.S. tech sector would be excused for feeling slightly nervous ahead of
their incoming Q2 trading updates today and tomorrow.
"After the significant outperformance of growth stocks in general, many investors'
portfolios may be heavily skewed toward recent outperforming stocks", UBS analysts wrote in
their Daily Europe note.
"In addition, investors that have too much exposure to these growth stocks could be at risk
if value stocks start to assume market leadership", they add, making clear however, they don't
believe tech is in bubble territory yet.
So, what to do?
Well, UBS doesn't call to sell FAANGS but rather to make sure portfolios are properly
diversified to take into account the fact they might be more risky than they appear.
Hence, reducing some exposure on some individual stocks might be a good idea.
Their advice is to "seek alternative long-term growth prospects within tech" such in the 5G
space, smartphones, payments and digital advertising.
Anyhow, you can see below how massive the FAANG outperformance as been:
(Julien Ponthus)
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A FINE MORNING FOR FRENCH STOCKS (0828 GMT)
The bourse of Paris is outshining its peers this morning with a flurry of French companies
posting better than expected results.
Boosted by heavyweight luxury group Kering and its 60 billion market cap, the CAC 40 is up
close to 0.8% while the broader European market is up a meagre 0.1%.
The French index closed -0.2% yesterday, hit by a selloff in luxury stocks while the STOXX
600 ended comfortably in the black.
As you can see below, 5 out of the 10 biggest rise of the STOXX 600 are posted by French
companies with Spie, Sopra, Schneider and Cap Gemini up well over 3%.
Within the CAC 40, blue chips like L'Oreal, Sanofi, Danone or Carrefour are also helping
keeping the index afloat.
Just a dozen companies are in the red:
(Julien Ponthus)
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OPENING SNAPSHOT: RETAIL BOOST VS CHEMICAL DRAG (0732 GMT)
The European retail sector, +1.2%, is having quite a good morning with the UK's Next surging
close to 10% after better than expected Q2 sales and some optimism for the rest of the year.
It's not the only stock lifting the retail index as France's luxury Kering, with a 5% rise,
is also rewarded for its Q2 results. And it's not only fancy Gucci bags that are in fashion,
French supermarket operator Carrefour is also up 1.4%.
On the other side of the fence, BASF is dragging the chemical sector (-0.8%) down after an
underwhelming trading update and is losing 4.6%.
All in all, the STOXX 600 with a 0.1% dip is doing actually better than what futures were
pointing to about two hours ago.
Among other stocks that stand out this morning are France's SPIE, up 9% after uplifting
results, packaging group Smurfit Kappa jumping 5% also on Q2.
Big losers include Network International, the worst fall of the STOXX 600 with a 10% drop
after placing shares, ASM International down 7% on a grim Q3 guidance and British builder Taylor
Wimpey losing 6.6% as it expects to complete 40% fewer homes in 2002.
(Julien Ponthus)
*****
ON THE RADAR: SANOFI, KERING AND MUDDY OUTLOOKS (0645 GMT)
It's quite a task this morning to scan across the flurry of Q2 results and pick what will
grab the market's attention but there seems to be quite a familiar pattern shaping out with
healthcare and tech sending an upbeat message while it's quite muddy for other sectors.
So let's start with the good news: France's pharma giant Sanofi raises its 2020 outlook
after strong Q2 numbers and Apple supplier AMS expects Q3 revenues to grow around 20% versus the
second quarter as demand from smartphone makers remains strong despite the pandemic.
So, tech and healthcare check.
On a less rosy note, the banking sector, which has been one of the most battered industry
since the coronavirus market crash, doesn't have only good news this morning.
While there's some good performance in investment banking amid a surge in trading, there's a
lot of writedowns with Spain's Santander saying it booked impairments worth 12.6 billion euros
in the quarter due to the economic deterioration caused by COVID-19.
Barclays also set aside a higher than expected 1.6 billion pounds to cover a possible rise
in loan losses while Deutsche Bank said that it increased provisions for credit losses to 761
million euros, up from 161 million a year ago.
So loan losses for banks, check.
And remember yesterday how the results of LVMH hit the luxury sector? Well its rival
Kering reported after market close that Q2 sales plunged by 43.7% and that it could not provide
a forecast for the second half of the year despite an encouraging recovery in Asia.
The set of results seems better than expected though and Kering shares are seen rising at
the open, helping the CAC 40 with potentially some help from Sanofi.
And that muddy outlook is precisely one of the worrying message conveyed by this morning's
Q2 batch: many CEOs aren't predicting the V-shaped recovery hoped by many investors.
Take BASF: the German chemicals group said it still could not provide guidance for full-year
sales and earnings due to uncertainty over the economic fallout.
On that subject, Puma for instance said it expected a gradual recovery and growth to come
back in 2021 which is, better than global airlines which believe it would take until 2024 - a
year longer than previously expected - for passenger traffic to return to pre-crisis levels.
Another example of extreme difficulty to predict future earnings is French TV group TF1
withdrawing its guidance for 2021 and dropping its 2019 dividend as cancelled advertising
campaigns bite.
Still in France, electrical equipment group Schneider Electric forecast a drop in its 2020
revenue and core profit margin, due to the uncertainty over notably a possible second wave of
lockdowns.
(Julien Ponthus)
*****
MORNING CALL: NEGATIVE SENTIMENT AMID EARNINGS GALORE (0534 GMT)
European stocks are heading towards a negative open this morning as worries about a new U.S.
stimulus package dent sentiment ahead of the Fed's policy review.
Today's is also one of the biggest days for Europe's second-quarter earnings and a few big
misses on Wall Street during the last session, like industrial conglomerate 3M Co and
McDonald's, dented sentiment.
Futures for European blue chips, Germany's DAX and London's FTSE are all down about 0.5%.
(Julien Ponthus)
*****
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