LONDON, March 9 (Reuters) - Welcome to the home for real-time coverage of European equitymarkets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reachhim on Messenger to share your thoughts on market moves:julien.ponthus.thomsonreuters.com@reuters.net HAPPY BIRTHDAY BULL, ARE YOU A CUB? (1515 GMT) Quite a lot of research notes today on the anniversary of the bull market, which startedprecisely 9 years ago when Wall Street hit its lowest level during the financial crisis. Because the S&P is still below its 2018 highs after getting knocked by the Februarycorrection, there is no certainty we are actually celebrating a nine-year bull. According topermabears, this 9-year-old uncastrated male bovine could very well be a bear cub. Most analysts are optimistic though. "We do not share this concern. There is a natural tendency towards growth in the
U.S.economy. Expansions do not die of old age, but because of policy actions or major exogenousevents," writes Ed Cowart, a fund manager at Nordea, who believes growth is here to stay at themoment. According to Reuters' quarterly poll, consensus is indeed that the bull willreach 10. In an earlier post today for example, a BNP Paribas strategist said he believed thebottom of the February correction was behind us. Here's Reuters' global stocks poll http://tmsnrt.rs/2nHJiJ9 Whatever happens from here, for some equity investors, at least retrospectively, celebrationis in order. "The S&P 500 has actually outperformed all other assets in our sample, delivering a totalreturn of a whopping 389%. The Russian MICEX (+369%), Hang Seng (+271%), Nikkei (+256%), DAX(+235%) and Stoxx 600 (+226%) follow with similarly impressive returns," DB's strategist JimReid noted this morning. Random fact: the STOXX 600 is up about 143 percent since March 9 2009, which is roughly thegrowth rate of a newborn baby (50cm) till their ninth birthday (128 cm). Draw your ownconclusions - or not. Below, a photo of German celebrity polar bear cub Knut taken in March 2007. (Julien Ponthus) ***** WOEFUL WEEK FOR ADVERTISERS (1501 GMT) From ad agencies to billboard companies, it's been a difficult week for the advertisingindustry. Advertising behemoth WPP is the worst-performing on the FTSE today having been hitearlier this week (along with peer Publicis) by reports consumer giant P&G plansmassive cuts to its ad agency spending. RBS' marketing director also reportedly said the bank plans to move more advertisinginternally, and traders point to this as further weighing on the shares. (http://bit.ly/2FxqulS) All this bad news comes just a week after WPP's results, which revealed the agency struggledto keep pace with changes in advertising, caused shares to tumble more than 14 percent. The stock is near its lowest level since October 2014. "Deeper pockets competing for creative talent (at Google/Facebook, consultants and thebrands themselves), disintermediation (digital), new pricing policies (reverse auctions,zero-based budgeting) and so on, all pose secular threats that are far from played out," wroteNorthern Trust's Gary Paulin. He points out Nike has switched to a reverse auction system - in which the company collectspricing information from its agencies before updating contracts - seen as a sign that clientsare seeking the lowest bidders. Even for Nike, it seems, gone are the days of no-holds-barredmarketing spending. Billboard advertising is also under pressure: JCDecaux, the world leader inoutdoor advertising, said growth would slow in the first quarter, causing further falls in thestock which is now down 11 percent year-to-date. Overall European media stocks are intensely disliked by analysts who've been downgradingearnings for much of the past year. (Helen Reid) ***** SMALL, BUT MIGHTY (1420 GMT) Good news for small-cap investors: UBS analysts say smaller stocks are likely to continue tooutperform their larger peers in an environment of rising rates as an end to QE sidles intoview. UBS identified materials and industrials as top performers during previous tightening cycles(see their graphic below - note that they use MSCI indexes for reference). They estimate that 80percent of European small-caps are in such cyclical industries, versus 55 percent forlarge-caps.
Europe's STOXX small-cap index has risen around 95 percent since 2012, while theSTOXX large-cap index has gained 45 percent. (Kit Rees) *****
U.S. JOB REPORT SENDS EUROPEAN SHARES TO SESSION HIGH (1345 GMT) European shares went from flat to a clear upward trend, rising 0.4 percent to a sessionhigh, after the
U.S. job report showed employers beefed up their hiring in February, but wagegains, slowed, easing inflation and rate hikes fears. A Reuters analysis showed that traders continued to price-in just a one-in-four chance of afourth rate hike this year. It was the upbeat jobs data last month that fanned speculation of faster rate rises in
theUnited States, causing a rout in the bond market and hammering world equities. A jump in the hourly earnings data above the expected 2.8 percent could have cementedexpectations of four Fed hikes. (Julien Ponthus) ***** BREAKNECK RISE IN TECH STOCKS EXPECTED TO SLOW (1256 GMT) The tech leadership that has been an engine of stock markets worldwide may begin to weaken,UBS reckons, as a changing interest rate environment makes the sector relatively lessattractive. "The technology sectors - especially software and semiconductors - have been market leadersfor over three years but as rates rise and overall economic growth improves, making Tech'sstructural growth relatively less attractive, that leadership looks likely to fade," they write,closing their overweight recommendation on software. "We remain neutral as the sector should continue to see decent earnings growth, just not atthe levels it has been accustomed to over the last few years." This week, financials were the winners, drawing in
$1 billion according to BAML's Flow Show,while tech funds saw
$0.2 billion of outflows. BAML notes, however, the huge dominance of tech stocks: the
U.S. tech market cap is
$7trillion, dwarfing the whole of emerging markets (
$5.6 trillion) and the euro zone (
$4.9trillion). That empire won't fall overnight. (Helen Reid) ***** WE'VE TOUCHED THE BOTTOM (1205 GMT) Of the correction that is, believes Edmund Shing, global head of equity and derivativesstrategy at BNP Paribas. During a call with reporters, he argued that when compared with patterns of previouscorrections that occurred during a bull market, there was a case to see markets having touchedtheir low point. Here's his chart showing a bull market correction usually materialises in a W shape curve: "I think we have touched the second bottom ...I believe it will push us back to, or evenbeyond the recent highs that we saw at the beginning of the year, and that's true for the S&Pand I think it will be true also for
Europe and
Japan in particular", he says. He adds he is particularly optimistic for Euro zone equities, citing the "potent drivers" ofboth domestic and internal demand. "There's really quite a lot of scope for European companies to expand their profit margins,"he reckons, which could prove a "real boost for the euro zone equity markets". Within that segment he points out that French midcaps are particularly well positioned toprofit from the economic environment as well as the structural reforms implemented by PresidentEmmanuel Macron. (Julien Ponthus) ***** TURBULENCE IS GOOD... FOR INVESTMENT BANKING REVENUES (1016 GMT) Market turmoil since the start of the year has likely created a better environment forinvestment banks, say UBS analysts. "You wanted higher volatility and higher rates, you gotthem," they quip. Q1 guidance from CS and Barclays point to a strong start to the year, they say, after aspike in volatility punctured the sluggish trading environment many banks have blamed for slowerperformance. For equities in particular it's shaping up to be a good quarter for the banks with strongexchange volumes pointing to higher trading activity. Turbulence is less good for the investmentbanking division, however, weighing on corporate and advisory business segments. UBS also crunched the numbers on European and
U.S. banks' market share in equities over thepast years: (Helen Reid) ***** EUROPEAN SHARES CAUTIOUSLY IN THE RED (0848 GMT) European shares opened slightly lower with most sectors in the red except defensives such ashealthcare or utilities. Investors held their nerves after the announcement of
U.S. tariffs andthe focus has now turned to the
U.S. jobs report later today. German industrial output data did little to lift sentiment as did the few corporate earningspublished this morning. (Julien Ponthus) ***** HEDGE FUND SHORTING OF EUROPEAN EQUITIES AT FIVE-YEAR HIGH (0814 GMT) Despite weeks of upgrades to European earnings and positive macro newsflow, internationalhedge fund investor interest in
Europe "feels as low as it has ever been", say Morgan Stanleyanalysts, who point out a steady rise in short exposure to its highest in at least five years. The MS Prime Brokerage data on European hedge fund positioning also shows European hedgefund overall net exposure close to a five-year low at 33%. Link to graphic: http://reut.rs/2Fmti9M (Thyagaraju Adinarayan) ***** NO PANIC IN
EUROPE AS TRUMP FOLLOWS THROUGH ON TARIFFS (0748 GMT) There's a sense of disbelief among some market analysts as the announcement of new
U.S.tariffs, which had been stoking fears of a global trade war, fails to deliver the predictedsell-off. “It’s a very strange world indeed when the long anticipated confirmation of a 25% tariff onsteel and 10% on aluminium prompts stock markets to close higher”, writes Michael Hewson of CMCMarkets. Some relief too on the Korean front, with the North offering "denuclearisation" and offeringto hold the first ever
U.S.-
North Korea summit. But the main point of focus will be the
U.S. jobs report at 1330 GMT. It was the upbeat jobs data last month that fanned speculation of faster rate rises in
theUnited States, causing a rout in the bond market and hammering world equities. A jump in thehourly earnings data above the expected 2.8 percent could cement expectations of four Fed hikesin 2018. German industrial output fell unexpectedly in January, data showed on Friday, adding tosigns that factories in
Europe's largest economy are operating at a slower pace at the start ofthe year. Here's a round-up of overnight corporate news headlines:China Resources Beer in talks to acquire Heineken's
China business - sourcesShell, Blackstone eye
$10 bln bid for BHP
U.S. shale assets -Sky NewsSwiss bank Raiffeisen's chairman steps down amid probe of ex-CEO
Italy's Ferragamo rules out sale as troubles continueDaimler, Volvo Cars executives sceptical over Geely alliance plan nL5N1QP3EP]Labour union calls strike at Deutsche Telekom over payInmarsat cuts dividend to fund investment in aviation business?
France's Lagardere says future of Elle magazine "a question"
France's TF1 and Orange sign a new distribution deal on channels
UK's SIG full-year profit rises 4.3 pctBRIEF-SSAB comments on impact of
U.S. steel tariffs(Julien Ponthus, Tom Pfeiffer)***** EUROPEAN FUTURES OPEN SLIGHTLY LOWER,
U.S. JOB REPORT IN FOCUS (0715 GMT) European futures have opened slightly lower as investors, already trying to read through theconsequences of the new
U.S. steel and aluminium tariffs and a possible meeting between NorthKorean leader Kim Jong Un and Donald Trump, brace themselves for the
U.S. job report at 1330GMT. It was the upbeat jobs data last month that fanned speculation of faster rate rises in
theUnited States, causing a rout in the bond market and hammering world equities. (Julien Ponthus) ***** MORNING CALL: EUROPEAN SHARES SEEN FLAT AT THE OPEN (0616 GMT) Financial spreadbetters expect
London's FTSE to open 2 points higher,
Frankfurt's DAX 8points down and
Paris' CAC to edge down 5 points. Asian shares pared sharp early gains ahead of
U.S. payrolls data which could hasten FederalReserve rate hikes, and as some caution set in about the new entente between North Korean leaderKim Jong Un and
U.S. President Donald Trump. On the protectionism front, the mood has brightened a little after Trump pressed ahead withtariffs but offered conditional exemptions for
Canada and
Mexico, offering at least the hopethat a full-blown global trade war could be averted. (Julien Ponthus) *****
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