* STOXX 600, DAX climb
* Tech jumps after STMicro results
* ECB keeps policy unchanged
Jan 24 - Welcome to the home for real-time coverage of European equity markets brought to
you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to
share your thoughts on market moves: email@example.com
CLOSING SNAPSHOT: GLOOMY MACRO, DOVISH ECB, HAPPY STOCKS (1654 GMT)
As far as macro goes, this was clearly a bad day for the euro zone with PMIs showing
sluggish at best growth for the start of 2019. Draghi acknowledging the slowdown and downside
risks isn't much of a positive to say the least.
Anyhow, European stocks ended the day 25 beeps in the black and U.S. Commerce Secretary Ross
saying the trade war is far from solved didn't even spoil the party.
As a trader told us during afternoon trading, markets were very resilient today.
ECB: IS ROSS STEALING THE SHOW FROM DRAGHI? (1420 GMT)
There was a "disturbance of the force" (as Obi-Wan Kenobi would say) shortly after 1330 GMT
on European and U.S. equity markets and while we first thought that was attributable to Draghi
saying risks had moved on the downside for Europe, that's probably not the case.
According to two traders, it's much more likely it was U.S. Commerce Secretary Wilbur Ross
saying a resolution on trade with China is still "miles and miles" away which triggered the fall
in equity indexes.
The fact that the FTSE 250, U.S. futures and the Euro STOXX felt at the exact same time does
make the case for Ross stealing the show from Draghi.
On a general note though, given the gloomy PMIs this morning, the head of the ECB
acknowledging risks on the downside and the U.S. government saying no end to the trade war in
sight, the pan-European STOXX 600 could sure be doing worse than reducing their gains to flat.
However, euro zone bank stocks were clearly bruised by the lack of announcement from
Draghi on a hoped-for TLTRO/LTRO programme. The index is now down 0.7 percent and the worst
sectoral performer in Europe as interest rate rises look ever more elusive.
(Julien Ponthus and Helen Reid)
CARMIGNAC "LIKES" TECH GIANTS FACEBOOK AND JD.COM (1327 GMT)
While tech has gone out of fashion for many investors as fears of tighter regulation and
proof of slowing economic growth dented performance towards the end of last year, some are
sticking to their guns or even going into some of the highest-profile tech stocks for the first
Among them is Carmignac, in the news after founder Edouard Carmignac stood down yesterday
from running their flagship Patrimoine fund, having suffered billions of euros in outflows last
year over bad bets on Europe's recovery and Argentine financial stocks.
Head of Equity David Older is now at the helm with fixed income head Rose Ouahba, and he's
betting on tech to turn things around.
about the company and signs penetration gains had hit a ceiling at 2.2 billion users.
Advertisers tell Carmignac they find no better platform for targeted advertising and
Instagram could become a leading platform for apparel purchases.
"This is something that Facebook has been building the infrastructure for quite quietly,"
Older says. "This idea of going to a nine-story department store wandering around to find
something that appeals to you is very archaic."
Turning to Chinese e-commerce giant JD.com, Older said the company was set to rebound
from a major correction last year as it began to reap the gains from a massive, but expensive
build-out of its logistics network, which he said should allow them to fill orders in one day
for most of the country.
"At the end of the year in December we built up a position in the stock and we think it
could be good performer for 2019," Older said. "We believe in 2019 they are going to be able to
start to show operating leverage, combining 20 percent plus revenue growth with a stabilisation
in investment which will result in margin expansion."
As you can see below, 2019 earnings expectations for worldwide technology stocks have fallen
off a cliff, having had two very strong years in 2017 and 2018:
(Leigh Thomas and Helen Reid)
ECB STATEMENT: SPOT THE DIFFERENCE? (1258 GMT)
The ECB just published its statement and there just ain't much to talk about as it is very,
very, very similar to the last one except maybe for the date and the fact that there's no need
to repeat that QE ended last year.
Understandably, little reaction on the trade floor and little expected at least until the
presser at 1330 GMT.
Heave a look:
(Ritvik Carvalho and Julien Ponthus)
ECB NORMALISATION AND MARKET GLOOM: COINCIDENCE? I THINK NOT...(1232 GMT)
Less than 15 minutes to go before the ECB announcement and one thought:
Many are the investors who believe monetary normalisation and the end of QE has been a key
factor in the market gloom of the second half of 2018.
"It can’t be a coincidence that markets in Europe topped out in the middle of last year at
precisely the time the ECB started talking about the prospect of looking at implementing an exit
policy, of ending QE and then raising rates".
Looking at the chart below, one would be tempted to use the famous quote from The
Incredibles and say: "Coincidence, I think not!"
(Julien Ponthus and Helen Reid)
THE RALLY'S OVER - GO LOW (VOL) (1055 GMT)
markets have risen since then, they're now closing that call, saying sentiment levels have
returned to neutral.
They now say investors should back Low Volatility stocks - which tend to oscillate less than
the market - in these uncertain times.
"Our outlook for equity markets this year is one which should suit Low Volatility – low
returns, increased volatility and a slowing cycle," Bernstein's quantitative strategy team, led
by Sarah McCarthy, writes.
Low Volatility stocks are generally cheaper than high volatility stocks globally and within
sectors, they find. Low Vol has been de-rating for the past two years as investors flocked to
Momentum plays instead.
Interestingly, Bernstein recommends putting this trade on within sectors as it removes the
sector bias which occurs when screening for low volatility across the market (which currently
skews to financials and utilities on a global level, and consumer staples in Europe).
As you can see below, Low Volatility tends to move inversely to the market:
"THE SHORT ON EUROPE MAY BE OVER BUT..." (1034 GMT)
... but it's still too early to go long.
than 70 individual investors in North America.
And their view may really tip the balance for Europe as U.S. is "the key swing net buyer of
European equities", UBS says.
While valuations now look attractive to investors across the pond, the macro backdrop,
exposure to a slowdown in emerging markets and Brexit remain a reason of concern.
"Many saw Europe as cheap (particularly the banks), but were looking for catalysts," UBS
adds, listing four potential triggers:
* stabilisation in Eurozone PMIs
* improved China data
* détente between the US and China over trade
* more clarity around Brexit
After some euphoric buying in the first half of 2017 in connection to the French elections
U.S. investors have unwound their net buying, as you can see in the charts below.
OPENING SNAPSHOT: CHIPS AHOY! (0857 GMT)
European shares are eking out small gains in early deals after yesterday's lacklustre
session, as STMicro provided some much-needed cheer among the chipmakers after reporting
better-than-expected profit margins.
since Dec. 4 in early deals.
WHAT'S ON THE RADAR FOR THE OPEN (0749 GMT)
European stocks are set to inch higher in subdued trading as investors awaited an ECB
meeting at which Mario Draghi’s comments on Europe’s sharp slowdown will be carefully dissected.
Results will keep trading active, though, with STMicro, Tod’s, and Fevertree among those
Italian fashion group Tod's is seen falling 3-5 percent after it reported a fall in
like-for-like sales as the luxury sector suffers from slowing economic growth in Europe and
China. Tod's blamed a worsening of performance in Italy and the rest of Europe.
Chipmaker STMicro said it expected first-quarter sales to fall by 21 percent, cementing a
chipmakers delaying orders. Its better-than-expected Q4 margin should help the stock rise by 1
percent, though, traders said.
Panalpina is called 3 to 5 percent lower after Kuehne & Nagel said a takeover offer from
AIM investor darling Fevertree, which produces premium mixers, is seen jumping 5-10 percent
after saying it expects its full-year revenue to be almost 40 percent higher, driven by strong
demand in the UK.
seen rising around 1 percent, traders said, after daily Frankfurter Allgemeine Zeitung reported
Germany's government is in talks with representatives of Commerzbank and private equity firm
Cerberus on a potential merger between Deutsche Bank and Commerzbank.
Finance Minister Olaf Scholz and Deputy Minister Joerg Kukies had held a number of meetings
on the issue over the last months, the paper reported.
EUROPEAN FUTURES EDGE HIGHER (0714 GMT)
Futures for the FTSE 100 and euro zone benchmarks are inching higher, indicating stocks will
make an attempt at gains this morning, but how long they will hold onto them is unclear given
the myriad worries stalking investors at the moment and an ECB meeting which could be eventful.
"Expect a focus on forward guidance and reinvestment/expansion plans of the LTRO/TLTROs,"
writes Chris Bailey, European strategist at Raymond James.
"Tone all-important here as the market is currently continuing to push out the date of an
ECB rate rise."
UK results are starting to come in with AIM darling Fevertree in focus as well as, among
EUROPEAN HEADLINES TO WATCH: STMICRO, TOD'S, GJENSIDIGE (0652 GMT)
It's the first bumper Thursday of Europe's earnings season today and there's no shortage of
preparations and emissions lawsuits.
The chipmaker will be particularly closely watched after the tech sector came out of favour
late last year as the U.S.-China trade war ramped up a clash over technology and IP. STMicro
said it saw Q1 sales falling by about 21 percent, joining peers predicting a slowdown.
Italian fashion group Tod's reported a fall in like-for-like sales as the luxury sector
suffers from slowing economic growth in Europe and China. Tod's blamed a worsening of
performance in Italy and the rest of Europe.
Norwegian insurer Gjensidige said its 2018 was "significantly impacted by extraordinary
weather conditions" and that even when adjusting for these, it was "not satisfied" with its
We'll see the next step in the Carlos Ghosn saga today with Renault's board meeting to pick
Airbus adds to a long list of companies sounding the alarm about a no-deal Brexit, with
Chief Executive Tom Enders warning in a video released on the planemaker's website that it could
shift future wing-building out of Britain in the absence of a smooth exit.
And lawyers suing Fiat Chryself in a U.S. case over excess emissions are seeking more than
Here's your sweep of headlines:
Airbus CEO sees 'harmful decisions' for British presence in a no-deal Brexit
Renault board meets to choose successor to Ghosn
Lawyers suing Fiat Chrysler in U.S. diesel case seek over $100 mln
Tod's like-for-like sales fall 3 pct in 2018
STMicro sees Q1 net revenues sink by 21 pct from previous quarter
Activist target Pernod boosts board independence with new role
Denmark's DSV to keep hunting big targets after Panalpina - CEO
Elior Group Q1 Consolidated Revenue Increases To 1.75 Billion Euros
SUBDUED TRADING TO CONTINUE AS INVESTORS EYE ECB (0618 GMT)
Spreadbetters don't expect any fireworks this morning from European shares, but a slew of
earnings reports will keep trading busy at least at the stock level.
Today's ECB meeting is also eyed as a potential catalyst for markets which have seen subdued
trading the past few days.
"The first ECB meeting of the year (today) is unlikely to lead to any material changes to
assessment should move further to the downside."
"The state of the economy is of immediate concern for the ECB at the start of the year,"
Asian shares were subdued overnight as political uncertainty in the United States and
worries about weakening global economic growth left investors wary of riskier assets.
Frankfurt's DAX to open 9 points lower at 11,062 and Paris' CAC to open 2 points lower at 4,838.
(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus and Josephine Mason)