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 Joice Alves (joice.alves@thomsonreuters.com)
and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.
STOXX EARNINGS: AN EVER ELUSIVE V-SHAPED RECOVERY (1009 GMT)
There are some mixed signals in Refinitiv's latest batch of STOXX 600 earnings expectations.
Good news first: anticipations of Q2 profits have stabilised at a fall of -51.9% versus
-52.7% last week. It's not much of a trend reversal but it's the first time in a while that
there's actually an improvement.
Being optimistic, one could very well imagine that expectations are bottoming out for the
quarter worst impacted by lockdowns in Europe.
Now, for the less rosy data, Q3 and Q4 stand at -38.4% and -18.8% respectively and that's
slightly worse that the -37.6% and -18% from Refinitiv June 9 report.
So, not much of V-shaped recovery in the making eh?
Well looking forward, there are mixed signals coming in: the rebound in the first quarter of
2021 has improved a tad to 35.9% (+1.7%) while it faded for Q2 2020 at 62.2% (-1.9%).
Fair to say that visibility on European corporate profits remains fairly weak and that there
is no surge in fundamentals to justify any exuberance moving forward.
Here's the June 16 data:
And here's last week's:
(Julien Ponthus)
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COVID-19 IN MENA REGION HITS OIL SERVICES PROVIDERS (0909 GMT)
While Europe seems to be getting off the hook with the number of coronavirus cases falling,
in some other parts of the world the pandemic has not yet fully reached its peak and it is
disrupting supply chain and delaying new projects.
This is true for MENA countries Iraq, Oman and Saudi Arabia, where the virus outspread is
putting pressure also on European oilfield services providers.
While Kuwait appears to be through the peak of coronavirus cases, Iraq has recently seen a
surge, Oman is hitting new highs, Qatar is at a plateau and Saud Arabia is staging a new rise,
according to data cited by Credit Suisse.
The MENA region is a risk for "current project execution," according to Credit Suisse. It
adds that the most exposed companies to Middle East are Petrofac and Saipem
Contract awards were in May below the $100 million threshold for a third consecutive month,
compared with $801 million in May 2019, CS says in a note, citing the most recent Middle East
Energy Digest.
(Stefano Rebaudo)
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OPENING SNAPSHOT: IN THE BLACK, STRONG RESULTS SUPPORT (0748 GMT)
European stocks are in the black supported by strong results, but still cautious as
investors sentiment continues to swing between risk appetite and aversion.
Fears of a second wave of infections weigh after worrying news from China, but it's also
true that Europe continues to show a fall in cases, while big corporations start seeing the
impact of lockdowns easing.
Europe's Stoxx 600 index is up 0.7%, with real estate leading the gains up 1.5%. Among
cyclicals, basic materials stocks are in the red, while travel and leisure are up 0.9% and banks
up 1.2%, after Deutsche Bank said a recession could help accelerate mergers and acquisitions in
the sector in Europe.
In the corporate front, Boohoo shares are up 10% after the company said it sees annual
results above expectations as first-quarter revenue jumped by 45%.
Other companies in positive territory after results include Kingfisher, SSE and
PostNL.
(Stefano Rebaudo)
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ON THE RADAR: BANKS, LUFTHANSA, WILLIAM HILL, BOOHOO (0647 GMT)
European futures reverse early losses and are now in positive territory as investors remain
uncertain as they see signs of economic recovery but fears of a second wave of COVID-19
infections continue to weigh on market sentiment.
On the corporate front the impact of the pandemic but also of the easing in lockdowns is in
the spotlight.
HSBC is resuming a massive redundancy plan it had put on ice following the outbreak
of coronavirus and will cut 35,000 jobs over the medium term.
A recession could help accelerate mergers and acquisitions in the bank sector in Europe, the
head of Deutsche Bank's wealth management business said in a newspaper interview.
Boohoo sees annual results above expectations after first-quarter revenue jumped 45%, and
buys Oasis and Warehouse.
British bookmaker William Hill launched an issue of shares worth up to 20% of its
share capital as it posted a slight improvement in total net revenue growth helped by the return
of horse racing and the German Bundesliga.
Kingfisher underlying sales increased 21.8% year-on-year in its second quarter so far to
June 13 as its stores across Europe emerged from coronavirus lockdowns.
Dutch postal and parcel services provider PostNL sees its full-year normalised
operating profit "strongly" above the previous guidance.
Norwegian Air will resume flights on 76 routes that were halted during the novel
coronavirus outbreak and bring back into service 12 of its mothballed aircraft.
Bayer AG will scrap a nearly $1 billion project to produce the chemical dicamba
in the U. S., but said the move is unrelated to a federal court decision that blocked sales of
weed killers based on the product.
Shares in Lufthansa are up 1.5% after German investor Heinz Hermann Thiele has
raised his stake in the company, which this month agreed to a state bailout, to more than 15%
from 10%, he told newspaper Frankfurter Allgemeine Zeitung in an interview.
Volkswagen will pay a 48% premium to buy out the minority shareholders of
premium division Audi.
Companies are also assessing the impact of a possible escalating in tensions with China.
Deutsche Telekom has sketched out a scenario that foresees a 3 billion euro hit to costs should
Chinese suppliers be excluded from its German 5G network, Handelsblatt reports citing an
internal document.
(Stefano Rebaudo)
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MORNING CALL: VIRUS STILL WEIGHS, BUT NO CLEAR DIRECTION
European futures are slightly in the red after yesterday's jump as fears of a coronavirus
resurgence keep weighing.
Geopolitics added to concerns with Indian reporting 20 of its soldiers being killed in
clashes with Chinese troops and fresh tensions between North and South Korea.
Market sentiment has been swinging between risk appetite and aversion in the last few days
and doesn't seem ready to take a clear direction yet.
Asian stocks fell overnight while Wall Street ended about 2% higher after retail sales
jumped by a record 17.7% in May.
(Stefano Rebaudo)
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