LONDON, April 4 (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 MOVE INTO DEFENSIVES PAYING OFF (1436 GMT) Even though today's fresh trade jitters have sparked a broad risk-off move across financialmarkets, some sectors in
Europe are resisting: utilities, food and beverage andtelecoms are all trading in positive territory. That appears to support recent calls by some investors and strategists to favour a movetowards defensive positioning, worried that trade tariffs and fading economic momentum couldhurt stocks in companies most exposed to the economic cycle as well as richly valued sectorslike tech. Indeed if you look at this chart showing sectoral performances since
U.S. inflation worriessparked this year's first big sell-off, you can see how "defensive" plays, especially utilities,have clearly outperformed cyclicals and tech. (Danilo Masoni) ***** TRADE WARS: WHICH EUROPEAN STOCKS COULD BENEFIT FROM THE US/
CHINA ROW? (1359 GMT) There are two conflicting schools of thought on trade wars. There's the Trump view, "Tradewars are good, and easy to win", and the more consensual take that "nobody wins", as put byInternational Monetary Fund chief Christine Lagarde. But could a third party, like
Europe, see its companies get a boost in the lucrative Chinesemarket at the expense of their American competitors? "The answer is yes, but not in all sectors", Societe Generale's European equity strategistRoland Kaloyan told us a couple of hours after
China hit back against the Trump administrationwith a list of duties on key
U.S. imports including soybeans, planes, cars, beef and chemicals. "The most intuitive sector is aeronautics", he agreed as
China's new tariff list appears totarget a number of Boeing plane models which could potentially be replaced by itsEuropean archrival Airbus. The list of European winners is potentially quite long as it is also likely that Chinesecompanies and consumers would favour non-
U.S. firms when they tender contracts or chosesuppliers for instance for telecom equipment, semiconductors, automatisation machines, software,chemicals etc. Kaloyan said he was less convinced for sectors such as luxury goods as Chinese consumers maybe reluctant to switch their favourite
U.S. whiskey brand for a French Cognac. He stressed however that the potential gains that European listed companies could take fromthe standoff between the
U.S. and
China is likely to be offset by pain on financial markets ifglobal trade was indeed to suffer. The gain for European companies is therefore likely to be relative to their
U.S.competitors, rather than an absolute boost in their share price. As a strategist, Kaloyan could not give any specific names of European companies. Here ishowever our non-exhaustive list of prime suspects: Airbus, Infineon, ABB, Siemens, Volvo, SAP,Nokia, BASF. Here's a useful "Factbox":
China's list of 106 U.S. imports facing extra tariffs (Julien Ponthus and Danilo Masoni) ***** MID-SESSION SNAPSHOT: STOXX AT LOWS (1102 GMT) At nearly halfway through the trading session European shares have extended their morninglosses, sending the pan-European STOXX 600 benchmark at a fresh day low, down as much as 1.2percent. Meanwhile,
U.S. stock index futures were down more than 1.5 percent as
China unveiledadditional tariffs of 25 percent on 106 U.S. goods including soybeans, autos chemicals and sometypes of aircraft products. (Danilo Masoni) ***** TARIFFS ON
U.S. AIRCRAFT HIT BOEING, BOOST AIRBUS (0958 GMT) International institutions have been arguing that trade wars are hard to win, easy to lose -countering Trump's tweets asserting the opposite. But there may be some winners from the bilateral
U.S.-
China tariff war: one that tradershave been playing today is Airbus.
China's tariffs include duties on
U.S. planes, which doesn't bode well for Boeing. The
U.S. planemaker's shares are trading down around 5 percent pre-market while its Europeanpeer Airbus is down 0.5 percent - slightly outperforming the CAC 40 and many other
Europe-listedtransnational industrial groups. (Helen Reid) **** TRADE WARS: WHAT'S THE DAMAGE? (0900 GMT) After the latest development in
U.S.-
China trade tensions, with
Beijing announcingadditional tariffs on
$50 billion of
U.S. goods, BNP Paribas Asset Management strategists detailtwo possible scenarios: a multilateral trade war and a bilateral
U.S.-
China trade war. Under the multilateral trade war scenario, they expect: - equity indices to fall by around 15-20% - multinationals and tech companies hit the hardest - fixed-income markets to be bid up from flight to quality - Yen and Swiss franc to benefit too, while EM FX depreciates If events develop into a
U.S.-
China trade war, they see similar moves in FX markets, but asharper move in equities: - global equity markets to fall by between 30 and 50% - tech, multinationals and commodity producers worst-performing They also warn "such a shock is likely to trigger further pressures in the Eurodollar marketwhich could seriously disrupt banking and financial flows." The trillion-dollar question will be what
China might then do with its 1.2 trillion in
U.S.Treasuries. BNPPAM emphasise the probability of a full-blown trade war is still low, but "the prospectof increasing trade tensions... is likely to require higher risk premiums for a wide range ofassets". (Helen Reid) ***** OPENING SNAPSHOT: A MEEK START FOR EUROPEAN SHARES (0730 GMT) European shares have pulled into negative territory after a broadly flat open as cyclicalstocks such as financials and miners weigh, while tech is the biggest sectoral faller. Among individual stock movers, shares in ad firm WPP are down around 3 percent afterthe company said that it was going to probe an allegation of personal misconduct against itschief executive, Martin Sorrell, who denied wrongdoing. Aside from that, Q1 results are boosting shares in German IT-leasing specialist Grenke. So it's pretty quiet. Let's see what the release of March flash inflation figures for theEuro zone brings later on in the session. Here's your opening snapshot: (Kit Rees) ***** WHAT'S ON OUR RADAR FOR THE EUROPEAN OPEN (0638 GMT) There’s no clear direction set yet for the open as investors need to decide whether theyshould or shouldn't worry about an escalation in the trade war saga or whether FANGs and techstocks are finally set for a beating. On the latter, the successful listing of Spotify is definitely seen as good news and therewere encouraging headlines for the sector: the largest American business lobby group came to thedefense of Amazon after a multi-day Twitter attack by Trump, Samsung is set to forecast a near50 percent jump in quarterly profit and Tesla's share price rose after the company denied itneeds to raise fresh capital. Here are a few headlines which might have an impact: * Ad group WPP to probe alleged misconduct by CEO Sorrell, who rejects accusations * Swiss Re says SoftBank stake won't exceed 10 pct, talks at early stage *
UK's Topps Tiles Q2 sales dip on colder weather, softer market * LafargeHolcim says Schmidheiny to step down from board * Smith & Nephew names Namal Nawana new CEO *
UK shop prices fall at fastest pace in over a year - BRC *
U.S. unveils tariffs on
$50 bln worth of Chinese imports * Strong economy, discounts boost automakers
U.S. March sales * Spotify shares jump in record-setting direct listing (Julien Ponthus and Kit Rees) ***** FUTURES FOR EUROPEAN BOURSES GO SIDEWAYS (0614 GMT) It seems European bourses are set to open sideways this morning as there still isn't anyclear directional trend. FTSE and IBEX futures are slightly down, while DAX and CAC futures are in positiveterritory: (Julien Ponthus) ***** MORNING CALL: NO CLEAR DIRECTION SEEN AT THE OPEN YET (0515 GMT) Good morning and welcome to Live Markets. Financial spreadbetters expect
London's FTSE to open 8 points lower but are slightly moreoptimistic for
Frankfurt's DAX and
Paris' CAC, which are seen opening 25 points and 5 pointshigher respectively. Asian shares faltered overnight as simmering fears of a Sino-
U.S. trade war overshadowed abounce on Wall Street and left investors reluctant to take positions in anything. (Julien Ponthus) *****
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