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.
VALUE CALLS VINDICATED IN AUGUST (1159 GMT)
The rising calls to invest in 'value' these last three months have often been met with a
fair whack of scepticism given the awful performance of that investment style in 2020 and the
irresistible surge of Fangs and tech.
Yet, trading in August has pretty much vindicated those who believed that, like they've
often done in the past, rising markets would progressively lift up cheap laggards as the
economic recovery gradually unfolds.
In its dashboard for August, S&P Dow Jones Indices shows how value in Europe outperformed
rival investment styles with a 6.3% monthly rise and a 9.7% jump over the last three months.
Year-to-date though, it's still a 29% fall, which probably means that value ain't causing
that much FOMO so far this year in comparison with say... buying a position in Apple or Tesla!
Here's the S&P Dow Jones Indices Dashboard for Europe:
More on the value theme these last few weeks:
LIVE MARKETS-Value sirens singing the blues
LIVE MARKETS-Actually, talking about value...
LIVE MARKETS-Another value call
LIVE MARKETS-Does U.S. election mean rotation towards value?
LIVE MARKETS-The value value-trap
LIVE MARKETS-Is it value stocks' time?
(Julien Ponthus)
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MORE CONCERNS ON SOUTHERN EUROPEAN BANKS (1012 GMT)
Policy response from governments and the European central bank has been strong, the EU
Recovery fund was a major milestone supporting the sector, but most Southern Europe bank shares
are already fully valued, according to some analysts.
Today Europe’s banks are down 1.7%, while the STOXX 600 index is flat with the tech sector
leading gains up 1.5%.
“We would argue the 'value' argument across some names is now is less clear-cut,” a
Jefferies research report says.
The main issue is the economic impact of the second wave of coronavirus infections which has
hit Europe as “the mid-term outlook remains challenged and, despite some pick-up in inflation
expectations, Euribor rates and futures continue to move lower,” it adds.
“While we are broadly aligned with consensus profit expectations in 2022 (on average), we
sit around 10% below consensus on 2022 pre-provision numbers which tempers our enthusiasm.”
Jefferies top picks are Intesa Sanpaolo, Caixabank and Bankia, while the
broker continues to like Unicaja.
(Stefano Rebaudo)
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STOXX 600 DOWN? BLAME THE BRITS! (0912 GMT)
There's no need to beat around the bush: if the STOXX 600 is slightly down (-0.1%) this
morning it's all because of London-listed stocks.
Quite striking how the first 32 losers on the pan-European index are ALL London-listed:
As put by AJ Bell analyst Russ Mould, the FTSE "was nursing a hangover after the Bank
Holiday" and was down over 1.3%.
"Not helping the FTSE’s cause was strength in sterling relative to the dollar, a currency
move which impacts the relative weight of the overseas earnings which dominate the index", Mould
added.
Looking at other European bourses, Germany's DAX is doing quite well, up 0.4% and Milan's
FTSE MIB is still in positive territory.
But looking at 2020 so far this year, the underperformance of the FTSE 100 is becoming a key
feature of the COVID-19 vintage.
Here's the FTSE 100 (blue) against the EURO STOXX 50 and the S&P 500:
(Julien Ponthus)
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OPENING SNAPSHOT: TECH AND HEALTH CARE SECTORS LEAD GAINS (0728 GMT)
Tech shares, particularly iPhone suppliers, are leading gains in the European stock market
after a press report that Apple Inc has asked suppliers to make at least 75 million 5G
iPhones for later this year, along with new Apple Watch models, a new iPad Air and a smaller
HomePod.
Among Apple suppliers Dialog Semi stocks are up 2.2%, STMicro shares rise
1%, Infineon shares up 1.6%.
The STOXX 600 index is up 0.7% with the tech sector up 1.5%. The healthcare sector is rising
1.2% after AstraZeneca said they could have data to ask U.S. emergency use authorization
or approval of their COVID-19 vaccines in the short term.
Risk sentiment is supported by a strong survey from China, while concerns about pandemic
trajectories continue to weigh. Travel and leisure stocks are the worst performers
sliding 1%, banks continue to lag behind, down 0.2%.
(Stefano Rebaudo)
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ON THE RADAR: ASTRAZENECA, APPLE SUPPLIERS, SUEZ
European equities are set to open higher after yesterday’s fall as a strong survey from
China propped up risk sentiment across Europe.
Apple suppliers look poised to gain on report that the world's largest company has
asked suppliers to make at least 75 million 5G iPhones for later this year. Dialog Semi
, STMicro, Infineon and other European chipmakers under spotlight.
Encouraging news on the coronavirus front as AstraZeneca, which is working with
Oxford University researchers, and Pfizer with partner BioNTech, said they
could have data by October to support U.S. emergency use authorization or approval of their
vaccines.
Meanwhile, Sanofi shares could come under pressure after the French pharma major
said its Kevzara drug trial didn't meet main goal in Covid-19 study.
In other key French moves, Suez, which saw its shares rise around 25% after
yesterday’s Veolia offer, said an unsolicited takeover approach carried "great
uncertainties" and it reiterated its confidence as an independent company.
Vivendi and activist fund Amber Capital - the two biggest shareholders in French
company Lagardere - said they would go to court over Lagardere's refusal to hold a
special shareholders meeting.
Roche received approval from the United States Food and Drug Administration for its
Cobas qualitative testing systems to confirm HIV diagnosis.
Apple suppliers
Seadrill proposed to creditors to turn over its stakes in oil services firms
Archer and Seadrill Seabras to redeem its outstanding secured notes.
Shares in Rocket Internet are up 2.6% in premarket trade after the company
announced a delisting plan.
(Stefano Rebaudo)
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MORNING CALL: IN THE BLACK BUT WITH VIRUS CONCERNS (0533 GMT)
European stock futures are in the black this morning along with their U.S. peers, but
concerns about the economic impact of the pandemic after the summer break are still in place.
China's factory activity which expanded at the fastest clip in nearly a decade in August,
bolstered by the first increase in new export orders this year, is supporting risk sentiment in
the continent after driving Asian shares in positive territory.
Expectations of long-lasting fiscal and monetary stimulus are also propping up equities, but
pandemic trajectories are expected to be the main investors focus in the fall, at least until a
vaccine is at hand.
(Stefano Rebaudo)
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Astrazeneca (AZN)
