LIVE MARKETS-Cyclicals bet: Autos on a high

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 Danilo Masoni
(danilo.masoni@thomsonreuters.com) and Stefano Rebaudo (stefano.rebaudo@thomsonreuters.com) in
Milan.

CYCLICALS BET: AUTOS ON A HIGH (1038 GMT)

One sector in Europe is standing out this morning: it's autos.

While the region is showing a quite broad-based rebound, the STOXX Auto index is the
only one that has actually managed to break new ground, up over 2.3% at one point to its highest
since February 2020.

Why that? There's an ongoing "cyclicals bet", as one trader points out, and the tech rout
we've witnessed last week could add fuel to a rotation into the battered end of the market.

Autos are among the worst performers in Europe this year, down around 14%. So there's room
to catch up.

But there's also some good-looking newsflow out of Germany with a Volkswagen
executive telling Welt am Sonntag in an interview published yesterday that VW is in a position
to overtake Tesla in terms of e-car manufacturing by 2023.

That's "positive for sentiment", another trader notes.

(Danilo Masoni)

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HERE ARE THE WINNERS OF POSITIVE VACCINE NEWS (1010 GMT)

Positive vaccine developments are probably propping up market sentiment today and protecting
global stocks from the U.S. tech selloff and concerns over Softbank's derivatives exposure.

UBS has taken a deeper look and has singled out the potential impact of a Covid vaccine on
European equity markets.

Among countries, Germany is the most affected, followed by the Scandinavian markets and
France, in a ranking that fits with their broader cyclical exposure and their performance since
the market low in March, a UBS research note says.

In sectors, the deep cyclicals and the parts of the market most affected by mobility
restrictions (Transport and Energy) are most sensitive, while banks have failed to get any
benefit and have lagged behind in terms of relative performance since the market low, it adds.

Transport, Tech Hardware and Semis have all outperformed more since the market low than
their beta to vaccine news would suggest.

(Stefano Rebaudo)

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OPENING SNAPSHOT: IN POSITIVE TERRITORY, BANKS FLAT (0756 GMT)

European stocks open higher and hold their ground in positive territory despite a fresh
selloff on U.S. tech stocks on Friday continues to worry investors globally.

The STOXX 600 is up 0.9%, in what seems a straight risk-on session with cyclicals
leading gains. The auto sector leads sectoral gains up 1.9%, followed by real estate
up 1.7% and industrial goods and services up 1.4%. The euro Stoxx volatility
index is down almost 3 points at 28.7.

Spain’s banking index turns negative after opening up around 2.7%, while the
European index is flat, after last week rally on M&A negotiations between Bankia
and Caixabank.

Dechra stocks are up 5.9% after its profit beat expectations.

U.S. markets will be closed today for the Labour Day holiday.

SoftBank Group closed down 7% as the conglomerate's bets on equity derivatives tied
to listed technology companies made investors uncomfortable.

(Stefano Rebaudo)

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ON THE RADAR: VACCINE DEVELOPMENTS, AB FOODS (0641 GMT)

European stocks are set to open higher as worries about a U.S. tech selloff eased after the
Nasdaq on Friday closed lower but well above its session low with Apple scoring a tiny gain for
the day.

More news on the vaccine front with Australia expecting to receive its first batches after a
deal struck with CSL to manufacture two vaccines - one developed by rival AstraZeneca
and Oxford University, and another developed in CSL's own labs with the University of
Queensland.

Meanwhile Sanofi's chief in France said a vaccine that Sanofi is developing with
Britain's GlaxoSmithKline was likely to be priced at less than 10 euros.

Associated British Foods expects full-year profit at its Primark fashion chain to be
at least at the top end of its previously guided range after trading in its latest quarter
exceeded expectations.

Italy's Treasury wants to find a buyer for Monte dei Paschi di Siena by the end of
the year to help the bailed-out bank to clean up its remaining problem loans.

Italy is close to reaching an agreement over the future of Atlantia unit Autostrade
per l'Italia, Prime Minister Giuseppe Conte said on Saturday in an interview. Progress has been
slowed recently by difficulties in agreeing a valuation for the unit with state lender Cassa
Depositi e Prestiti (CDP), which is due to take control of Autostrade.

Ryanair boss Michael O'Leary's proposed 458,000 euro annual bonus came under fire on
Friday, as an influential investor advisory firm urged shareholders to oppose the package.

(Stefano Rebaudo)

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MORNING CALL: IN THE BLACK DESPITE U.S. TECH LOWER (0533 GMT)

European stock futures are in the black despite a new selloff in tech shares on Wall Street
on Friday and Asian stocks on their back foot worried about high valuations.

The Nasdaq on Friday closed lower but well above its session low as selling eased late in
the session, with mega-cap tech companies paring losses though only Apple managed a
tiny gain for the day.

Investors are still uncertain about whether the U.S. is staging just some profit taking or a
massive risk-off move is on its way.

Some traders said a pile of red flags was building up, while mentioning Softbank. Its shares
fell 7% following media reports that the conglomerate made big bets on equity derivatives tied
to listed tech companies.

(Stefano Rebaudo)

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