* European shares up 0.5%
* Solid updates lift ASML, Heineken, Roche
* Juventus hammered on Super League doubts
* Nasdaq futures down 0.2%
April 21 - Welcome to the home for real-time coverage of
markets brought to you by Reuters reporters. You can share your
thoughts with us at markets.research@thomsonreuters.com
EUROPEAN MAJORS: EMISSION TARGETS WON'T HURT CASH FLOWS(1139
GMT)
Unlike their peers in the U.S., European energy majors have
accelerated plans to reduce emissions with investors wondering
how that will impact their balance sheets.
Achieving the intermediate 2030 emission targets will not
hinder their “cash flow generation ability and leverage to oil
prices,” Credit Suisse says after recalling that ENI,
RDS, BP, Equinor, Repsol, and
Total have set ambitious emission targets.
They will generally be able to meet their emission targets
“by increasing renewables capacity and reducing sales of
third-party products without materially scaling down upstream
operations,” CS analysts argue in a research note.
“We generally do not see significant risks of material Capex
hikes, as long as companies do not upgrade their emissions goals
further,” they add.
Last but not least, “most have near, medium and long term
milestones and targets (related to their emission reduction
plans), on which executives’ remuneration are linked.”
(Stefano Rebaudo)
*****
EUROPEAN AIRLINES THAT CAN SURVIVE ANOTHER YEAR OF COVID
(1101 GMT)
With much of Europe locked down, for airlines the first
quarter was very similar to the end of last year, perhaps in
terms of capacity, even a tad worse as more travel restrictions
were introduced.
Even if balance sheets remain stretched, Barclays analysts
say they expect liquidity positions to be robust for some
European airlines as they have tapped into equity and debt
markets over the past few months.
It retains a preference for low cost airlines Ryanair
(OW) and Wizz Air (OW), and remains cautious on
Lufthansa (UW).
Moody's also said the above airlines, together with BA-owner
International Consolidated Airlines Group, are in good
conditions "to bridge to a more sustained passenger traffic
recovery."
Moody's calculated those four airlines have between 450 and
650 days of liquidity on hand at current cash burn rates.
Barclays sees revenues reducing by 80% yoy on average in Q1,
while labour support schemes and restructuring efforts will
limit the damage.
"Financial performance and cash burn will likely be better,
helped by self-help cost initiatives, lower fuel overhedging
outflows and lower ticket refunds," Barclays says.
The outlook for the summer remains dire.
A surge in infections, slow vaccinations are putting the
summer at risk, Moody's says.
As a result, it has lowered its expectations for a recovery
in air travel across Europe during the summer.
(Joice Alves)
*****
WHAT THE ECB WANTS (0949 GMT)
Investors have been wondering for weeks about what the ECB
targets are, and they still have a mixed view about it.
Some think the central bank focuses on real interest rates.
Still, a BofA survey with 76 fund managers from the U.K.,
Continental Europe, Asia, and the U.S. says central banks'
objectives are unclear.
The tables below show respondents do not have a clear idea
on the meaning of ECB's mantra "preserving financial conditions"
and on its targets for the change in the pace of the Pandemic
Emergency Purchase Programme (PEPP).
According to Unicredit, with the real overnight indexed swap
(OIS) rate at 1.4-1.5% financial conditions are "reasonably
balanced."
Meanwhile, ING analysts recently said recently that "the
debate about the ECB's reaction function has spotlighted real
rates as a key metric (among a range of other indicators) to
assess how supportive monetary policy is."
So, we should not expect much in terms of dovish messages or
measures as real rates are close to their all-time lows at -140
bps, they added.
(Stefano Rebaudo)
*****
STOXX 600 BOUNCES BACK (0734 GMT)
Europe has started the day in bounce-back mode with the
STOXX 600 recovering part of the 1.9% drop yesterday when
investors took profit out of the recent rally to record highs.
The earnings season continues to be top focus and the
biggest movers on the pan-European index, last up 0.6%, are
companies that reported their latest updates.
All in all, the balance seems to be positive. Heavyweights
ASML, Heineken and Roche are between
1.2% and 4.6% after well-received Q1 results.
Temenos fell as strong results failed to impress,
while worries over competition from Uber in Germany sent food
delivery company Just Eat Takeaway down 4.7%.
Heavily shorted Juventus fell 11% after the
English football clubs left the Super League, leaving the
controversial project in doubt.
(Danilo Masoni)
****
SELL THE NEWS? (0652 GMT)
Will earnings season be a "sell the news" event?
It's early to say but signs are there that strong
first-quarter results may not be enough to stop investors from
taking profit on European and U.S. equity markets at record
peaks.
Europe's STOXX 600 saw its worst day this year on
Tuesday, falling 1.9%, even as Europe Inc kicked off a season
that's expected to deliver 61% profit growth, its biggest surge
in over 9 years.
Wall Street too fell overnight amid second thoughts on U.S.
banks' apparently stellar earnings last week. And dip buyers are
not showing up in mass this morning.
Germany's DAX futures were last up 0.4% while S&P
derivatives were flat and Asian stock markets fell. An India-led
rise in COVID-19 cases and equity valuation metrics well above
long-term averages help explain the short-term caution.
Meantime Q1 soundings continue to support hopes the world
will swiftly recover from the COVID-19 downturn: chip firm ASML
upped its full-year forecast, earnings at telco supplier
Ericsson beat forecasts, paint maker Akzo's profit jumped 43%,
and carmaker Hyundai is set to report a nearly three-fold profit
surge.
Soccer stocks are in focus as Europe's breakaway Super
League project was left in tatters after all English clubs quit,
although Italy's Juventus said the project was going ahead.
Juventus shares fell 3.9% on German platform Lang & Schwarz.
Manchester United shares fell 6% in New York trade overnight.
Elsewhere, oil prices fell from one-month highs and gold
eyed 7-week highs as risk aversion returned. U.S. 10-year bond
yields were near 6-week closing lows ahead of an auction of
20-year Treasuries. The Fed is committed to limiting any
overshoot in inflation, Fed Chair Powell was reported saying.
Key developments that should provide more direction to
markets on Wednesday:
* UK inflation rises to 0.7% in March vs 0.4% in Feb.
* BOE Governor Andrew Bailey and Deputy governor Dave
Ramsden to
speak
* Bank of Canada interest rate announcement - 1400 GMT
* Russia's Putin state of nation address
* Netflix subscriber growth slows after pandemic boom,
shares fall
11%
* Bain Capital weighing bid to take Toshiba private -sources
* U.S. 20-year Treasury auction
* U.S. corporates: Nasdaq, Halliburton, Whirlpool, Verizon
* European corporates: Accor, Deutsche Boerse, Carrefour,
Heineken, Akso Nobel, Roche, Svenska Handelsbanken
(Danilo Masoni)
*****
EUROPEAN SHARES SEEN EDGING UP AFTER SELL-OFF (0517 GMT)
European shares are seen opening slightly higher after of
suffering their worst day of the year as investors took profit
from the rally to record highs despite positive soundings from
the earnings season.
Futures on the EuroSTOXX50, FTSE and DAX indices were last
trading between flat and a rise of 0.2%, while U.S. futures
pointed to tech-led declines of as much as 0.5%.
Over in Asia stocks fell too as concerns about a resurgence
of coronavirus cases in some countries emerged again.
(Danilo Masoni)
*****
BP (BP.)
