LIVE MARKETS-Can markets bottom when the recession just begins?

* Markets unfazed by PMI weak data

* STOXX up 5%, FTSE gains 4%
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 Thyagaraju Adinarayan
(thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and
Julien Ponthus (julien.ponthus@thomsonreuters.com) in London.

CAN MARKETS BOTTOM WHEN THE RECESSION JUST BEGINS? (1215 GMT)

The PMIs this morning were brutal and showed European economies were set for an
unprecedented shock. The worrying thing, of course, is that while we brace for the incoming
recession, we don't know how massive it will be.

In this light, it seems tricky to call whether shares are priced for what's to come.

But with stock markets down a whopping 33% since the February highs, there's a lot of number
crushing going to determine whether we have hit a bottom.

"Our indicators suggest ‘almost’," Jefferies analysts believe, adding that "only credit
spreads have yet to fall in line".

They suggest looking into companies loaded with cash and strong credit rating as "the first
place to look for ideas" and upgraded the S&P 500 to "bullish" within their global asset
allocation.

Here's their valuation indicator:

See also:

Coronavirus smashes UK economy with unprecedented force

Euro zone business activity collapses in March as coronavirus spreads

Surveys show coronavirus pandemic savaging global economy

(Julien Ponthus)

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WHEN CUTTING THE DIVIDEND ISN'T ENOUGH (1121 GMT)

Every morning brings a fresh batch of dividend cuts or cancellations, and today is no
exception with Dunelm or Redrow just to name a few.

While cutting the pay-out is necessary to face challenging times, it will not always be
enough.

Here's a sobering comment from Richard Morawetz, a vice president and senior credit officer
at Moody’s.

"Where the exposure is modest, a dividend cut may be sufficient to offset the impact but in
the most affected sectors such as airlines or cruise lines where ratings are now typically on
review for downgrade, a dividend cut alone is unlikely to be sufficient to mitigate the stress
to the business’s profile".

(Julien Ponthus)

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WHERE'S YOUR ETF NOW? (1050 GMT)

The longest bull market in history was a nightmare for active managers struggling to stock
pick their way to compete with ETFs' stellar returns and low fees.

Now that we're set in a bear market, portfolio managers will be quick to claim that they
actually have a hedge.

"Quality active managers significantly beat the broad market in down months and especially
in the worst four market crises over the past twenty-five years", StyleAnalytics wrote in the
press release of a research note.

Here's their chart which shows that "the median manager underperforms the Russell 1000 46%
of the time in up markets and outperforms the Russell 1000 51% of the time in up markets".

(Julien Ponthus)

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EUROPE'S FEAR INDEX: YOU WILL LOVE THAT CURVE (1001 GMT)

Europe's fear index (Euro STOXX 50 volatility) has gone down to where it was on
March 11 and its curve, as you can see below, is somewhat reassuring considering the market
turmoil of these last two weeks.

Same goes for the its American peer, the VIX, which is also back down to March 13 highs.

Here's the curve's lovely shape:

(Julien Ponthus)

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NO MARKET REACTION TO EURO ZONE PMI DATA (0935 GMT)

Markets were looking forward for today’s euro zone and UK PMI figures as those are the first
indicators of the impact of COVID-19.

"Flash PMIs set to act as foretaste of economic tsunami to come," wrote earlier today
Michael Hewson, chief market analyst at CMC Markets UK.

The new PMI figures confirmed that a market deterioration is widely expected given the
progressive lockdowns that are being implemented around the world. Manufacturing numbers are bad
but the data pointed to services taking a even bigger hit in the bloc.

Yet, we had no reaction from investors as it was highly expected. And the Stoxx index
continues its upward path, up 4%.

"The PMI plummeted in March, of course it did. Only a foolish optimist would have expected
otherwise during the current supply and demand shock that the economy is facing," writes ING.

(Joice Alves)

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RISK-ON TRADES FUEL RALLY, BLOC'S PMI DATA AWAITED (0834 GMT)

Risk-on trades across the board with mining, oil, tech and autos fuelling 3.5% to 5% gains
in all European indices. CAC 40 is among the underperformers this morning as flash PMIs
for France pointed to services taking a major hit.

Among single stocks, France's Biomérieux as expected is topping the charts after
it won approval from the FDA for its product aimed at testing for coronavirus. Chipmaker
Infineon takes second place rising the tech wave this morning.

London stocks ITV, Sainsbury's, WH Smith and Bellway are
among the top fallers after PM Johnson ordered Britons to stay at home to halt the spread of
coronavirus.

(Thyagaraju Adinarayan)

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FUTURES HOLD ONTO GAINS, FLASH PMIS IN FOCUS (0750 GMT)

Stock futures are still pointing to gains after Monday's rout, taking cues from Asia, which
rallied as China's Hubei province where the coronavirus pandemic originated planned to lift
travel restrictions.

Pointing to the ping-pong action in markets, Deutsche Bank's Jim Reid says "markets are
continuing to bounce up on the latest policy announcements and then sliding back down as the
economic reality of the situation re-emerges."

One of the economic reality the market faces today is in the form of flash PMIs which will
later in the morning show us the first major reading into the economic damage from coronavirus.

In the corporate world, Pernod Ricard sees 20% hit to operating profit due to the
slump in business caused by the global coronavirus crisis. Nordex meanwhile is seen
rising after the German wind turbine maker forecast higher profits.

In the UK, the country's biggest building materials group Travis Perkins said it
will be closing all its businesses as the country goes into a lockdown amid the coronavirus
outbreak.

Among coronavirus gainers, France's Biomérieux is in spotlight after the
healthcare company won approval from the FDA for its product aimed at testing for coronavirus.

(Thyagaraju Adinarayan)

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MORNING CALL: UP FOR NOW (0643 GMT)

European stocks are seen opening more than 5% higher this morning after yesterday's selloff
in a typical bounce back as fresh wave of stimulus and monetary packages from across the world
are stemming further losses.

"Everyone is still trying to figure out where equity market positioning is after the
collapse in an attempt to formulate some short-term reversion strategy," said Stephen Innes
Chief Global Markets Strategist at AxiCorp.

"As anything beyond 48 hours, in the absence of a medical cure, is an eternity in these risk
markets, but ultimately, it's a massive challenge to unscramble this egg."

Things to watch out for: flash PMI for the euro-zone and the UK, the data for France will
come in at 0815 GMT.

(Thyagaraju Adinarayan)

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(Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)