* European bourses fear new China's coronavirus
* All European indexes in negative territory
* Market indifferent to positive macro data
* Banks lead sectoral fallers as UBS disappoints
*
Welcome to the home for real-time coverage of European equity
markets brought to you by Reuters stocks reporters and anchored
today by Julien Ponthus. Reach him on Messenger to share your
thoughts on market moves:
julien.ponthus.thomsonreuters.com@reuters.net
WHAT BANK RECOVERY? SECTOR STUMBLES ON UBS (1110 GMT)
After a decade to forget many were expecting European banks
to make a come back in 2020, with ultra-cheap valuation
multiples becoming even more harder to ignore.
Bank stocks have managed to come off their relative record
lows, true, but year-to-date the sector is already down more
than 2% - the worst performers in the region.
UBS's disappointing update - which comes after better
showings from U.S. rivals - is partly to blame.
The Swiss giant missed 2019 profit and cost targets and
dialed back some of its financial goals, putting the stock on
track for its worst day in over 8 months, down more than 5%.
"This obviously sends a warning to investors if they thought
overweight European banks was a good idea," says Peter Garnry,
Head of Equity Strategy at Saxo Bank.
"Negative rates will continue to haunt European banks until
the ECB changes its mind on negative rates," he adds.
Of course it's still early days. One may also argue that
with very attractive valuations, banks might be able to catch-up
later on if macro improves further.
Bernstein strategists led by Inigo Fraser-Jenkins say they
are happy to buy banks.
"Value and banks is due a catch up given the move in
"fundamentals," they add.
(Danilo Masoni)
*****
SUPERB MACRO INDICATORS, SUPERB INDIFFERENCE (1052 GMT)
The UK employment data came in much stronger than expected
and so did German economic sentiment.
Markets reaction was muted on the equity markets even though
these indicators were seen as key for today's session.
It seems the China virus outbreak and further trade war
talks have definitely stolen the spotlight.
Talking about Germany's ZEW survey, Stephen Innes, AxiCorp
chief market strategist, wrote prior to the open that its "print
is enormous for the buy Europe argument".
Speculation about a BoE rate cut was high prior to the
release of the UK data but it's not clear yet what impact the
remarkable resilience of the UK labour market will have on the
BoE rate decision.
Here's some reading:
German investor morale jumps on export hopes
UK jobs boom returns as Bank of England considers rate cut
(Julien Ponthus)
*****
OPENING SNAPSHOT: CHINA VIRUS KNOCKS OUT KERING, LVMH (0833
GMT)
The China virus outbreak has hit European luxury shares hard
with Kering and LVMH down 3.4% and 3.3% respectively.
With its heavyweights bruised, Paris' CAC 40 is
logically the worst performer among benchmark country indexes,
losing 1.2%, while the pan-European STOXX 600 edges
down 0.9%.
In London, Burberry is down 4% with investors wondering how
luxury brands, which had been able so far to weather the Hong
Kong protests, will face that new headwind.
One notable exception in the sectoral bloodbath was German
fashion house Hugo Boss which reported better than expected
fourth-quarter sales growth and saw its shares jump over 3%.
While most of Europe's fashion stocks were clearly among the
top losers, the worst performer of the STOXX 600 was UBS after
the Swiss bank disappointed investors with its Q4 results.
Airlines were also in a tough spot because of the virus
outbreak but Easyjet was up 3.5% after the British low-cost
airline said its first-half winter performance would improve
from last year.
BA owner IAG fell 2.3%, hotel operator Intercontinental was
down 1.8% and its French peer Accor fell 1.5%.
(Julien Ponthus)
*****
TOURISM, LUXURY STOCKS BRACE FOR CHINA VIRUS; UBS
DISAPPOINTS (0747 GMT)
Airlines, hotel operators and luxury groups are among the
'usual suspects' stocks which are likely to feel the heat as the
extent of the human and economic damage from the China virus
outbreak remains unknown.
It may therefore be a tricky day for EasyJet to put out its
optimistic trading update, for German fashion house Hugo Boss to
announce better-than-expected Q4 sales growth or for Air France
to show an interest in bidding for a 49% stake in ailing
Malaysia Airlines.
Grim news for investors waiting for a recovery in the
European banking sector : UBS cut profitability targets as
Switzerland's largest bank grapples with ultra-low interest
rates and increased competition for wealthy clients.
Another update from the UK consumer with Britain's Dixons
Carphone maintains guidance after flat Christmas.
In the hot tech area, Logitech International reported a 5.9%
rise in adjusted operating income for the third quarter on
Tuesday, boosted by higher demand for its gaming and video
conferencing products.
(Julien Ponthus)
*****
FUTURES FALL AS CHINA VIRUS TRIGGERS 'RISK OFF' MODE (0708
GMT)
Futures for European indexes are falling more than expected
as fears regarding the new coronavirus in China continue to
grow.
As you can see below, losses are expected from 0.5% in
London to 0.7% in Madrid or Paris:
(Julien Ponthus)
*****
MORNING CALL: CHINA VIRUS FEARS SPREAD TO EUROPEAN BOURSES
(0619 GMT)
European bourses are set to open lower this morning as fears
regarding a deadly new coronavirus in China spread from Asian
markets to the old continent.
While losses in Europe are expected to be much lower than,
for instance, Hong Kong's 2.5% fall, the threat of a full-blown
health crisis means many investors will likely switch to
'risk-off'.
London's FTSE is expected to open 32 points lower,
Frankfurt's DAX down 31 points and Paris' CAC to open off 22
points.
(Julien Ponthus)
*****
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and
Thyagaraju Adinarayan)