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LIVE MARKETS-UK down, Switzerland up

Fri, 28th Aug 2020 12:25

* European stocks slide as heavyweight tech drags

* Amigo shares surge 30% after better-than-hoped Q1 results

* EZ sentiment recovers for fourth straight month
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 Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.

UK DOWN, SWITZERLAND UP (1118 GMT)

One way to look at how businesses have evolved in different countries across Europe is to
look at how the country composition of the MSCI Europe has changed in a decade.

In that regard, the biggest country changes have come from Switzerland and the UK.

Britain remains the largest country in the regional index but saw the largest decline in its
relative weighting and it now accounts for 22% of MSCI, from 31% in 2010.

Switzerland had the largest increase in its weighting over the last decade.

See the table below:

Another interesting fact is the strong performance of Denmark, which is now larger than
Spain and Italy, while a decade ago it was 4-5x smaller!

(Joice Alves)

******

NO MOOD BOOST FOR EUROPEAN STOCKS (1050 GMT)

The fact that euro zone sentiment continued to improve in August failed to provide any mood
boost for the bloc's stock markets which have been stuck in a somewhat subdued trading dynamic
for most of the morning.

Actually for what it's worth, the trend seems to be getting just a tad worse as you can see
below:

But given Abe's resignation and yesterday's heavy Fed policy news, it is understandable
that traders aren't focusing too much on that indicator.

There's also the feeling that the V-shaped recovery narrative has lost momentum and that the
road ahead now seems quite bumpy indeed.

Peter Vanden Houte, ING Chief Economist for Belgium and Luxembourg says he's not among those
expecting a double-dip recession but cautions that while there's "still strong growth momentum",
the pace of the recovery should slow down after Q3.

"This is likely to slow down quite rapidly to more moderate growth figures, meaning that the
year will likely end with a GDP level that is still about 6% lower than in the fourth quarter of
2019".

That's probably enough to curb any remaining enthusiasm out there.

Some reading on today's indicators:

Euro zone sentiment recovers for fourth straight month in August

Finland's Q2 GDP shrinks 4.5% Q/Q - Statistics Finland

French savings surged, profits plunge in record Q2 GDP slump

Weaker German consumer morale casts some doubt on strong recovery

Austrian economy contracted by 10.4% in second quarter - Wifo

Irish retail sales post annual growth of 6.4% in July

(Julien Ponthus)

*****

OPENING SNAPSHOT: CHOPPY END OF AUGUST (0745 GMT)

European bourses opened higher but soon turned negative in a thin Friday trade, ahead of a
British long bank holiday weekend.

The pan-European index is down 0.9%, but still on track for its best month since April, with
tech and retailers among the top draggers. Britain's blue chip index fell 0.6%.

Among smaller UK companies, there is one exciting movement with Amigo shares
surging 30% in earlier trade as the company reported better-than-expected Q1 profits. Shares are
now up 16%.

Thyssenkrupp shares fell 6.2% to the bottom of the STOXX 600, with a trader
pointing to downgrade by Morgan Stanley.

Here is a snapshot of monthly percentage changes over the past two years for the STOXX 600
index.

(Joice Alves)

******

ON THE RADAR: M&S, NORVEGIAN AIR, GREGGS (0640 GMT)

Amid the Fed's new strategy to lift employment and its increased tolerance for higher
inflation, European bourses are seen in positive territory putting the STOXX 600 index on track
for its best month since April.

In this last week of August, which feels a bit like the end of summer, the corporate
newsflow is thin. As Monday is a bank holiday in the UK, Marks & Spencer will make the first
deliveries through its new online food shopping joint venture with Ocado on Tuesday.
The online move is the 136-year-old mainstay of Britain's shopping streets attempt to offset
problems at its pandemic-hit clothing business.

Norwegian Air still needs more cash in order to weather the COVID-19 pandemic, it
said as it reported a deep loss in 1H2020.

In the M&A front, infrastructure fund Macquarie is preparing a binding offer for Enel's ENEI
50% stake in broadband joint venture Open Fiber, Italian daily Il Sole 24 Ore reported.

Staying in Italy, state-owned bank Monte Dei Paschi di Siena said last evening it
received a conditional green light from the ECB for its bad loan clean-up plan.

Meantime in Leeds, Greggs depot was forced to close after a coronavirus outbreak, according
to media reports.

(Joice Alves)

******

MORNING CALL: INFLATION AND VACCINE PLANS (0540 GMT)

European bourses are seen higher this morning after the Fed's aggressive new strategy to
lift employment and an increased tolerance for higher inflation.

Speaking at the Jackson Hole symposium, which was held virtually this year, Fed's Jerome
Powell said the central bank will seek to achieve 2% inflation on average, so that periods of
super-low inflation would likely be followed by an effort to lift inflation "moderately above 2%
for some time".

Meantime, EZ inflation data and consumer sentiment figures for August will be out this
morning, helping investors to get a better picture of how things are going as countries eased
most of their coronavirus restriction measures.

Talking about the pandemic, a coronavirus vaccine sounds more real today after the European
Commission made a 336 million euro downpayment to British drug maker AstraZeneca to secure at
least 300 million doses of its potential COVID-19 vaccine, a spokesman said on Thursday.

Financial spreadbetters at IG expect Frankfurt's DAX to open 84 points higher at 13,180 and
Paris' CAC to open 27 points higher at 5,043.

(Joice Alves)

*****
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