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LIVE MARKETS-Closing snapshot: What a recovery

·8-min read

* European shares up after big pullback on virus scare * STOXX 600 now up 0.8%, FTSE 100 up 0.4% * Wall Street recovers Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: CLOSING SNAPSHOT: WHAT A RECOVERY! (1700 GMT) After hitting a multiple-month low yesterday, European bourses bounced back and closed the day comfortably in positive territory. The pan European index had quite a ride, closing 0.9% higher after notching the biggest drop yesterday since October, and so did Britain's blue chip index, which hit its worst day in almost 2 months yesterday. Italy's shares were even more impressive as it faced its best day in more than one year, jumping 2.6%. What helped the recovery? Markets across the world overall stabilized after the head of the World Health Organisation said he was confident in China's ability to contain the coronavirus outbreak. One trader pointed to a report in a local Chinese paper signalling that Hong Kong researchers have already developed a vaccine and they only need time to test it. In terms of single stocks, Italy's Atlantia's shares jumped 6.4% on reports suggesting its highway unit Autostrade per l'Italia will likely keep its concession after the 2018 Genoa bridge collapse, which killed dozens of people. Here is your closing snapshot: (Joice Alves) ***** ABOUT THE BOE'S 50-50 CLIFFHANGER (1559 GMT) With cable just below the $1.30 mark for the first time in a week, it seems the cliffhanger about the BoE's will-it, won't-it cut rates on Thursday is only intensifying. Money markets currently show a 50.52% probability of rates being cut to 0.5% from 0.75% with grim retail data and a jump in optimism among businesses after Johnson's landslide election on both sides of the argument. So here's a snapshot giving the pros and the cons of a cut from Nomura research, which expects the BoE to go ahead. (Julien Ponthus) ***** STOCKS: WHO WILL PARTY ON BREXIT FRIDAY? (1341 GMT) Fears of the coronavirus' impact on the global economy if it spreads further across the globe have kept minds away from the single event that monopolised thoughts for almost four years: Brexit. Yet, let's forget it not that the UK is set to leave the European Union on Friday and some investors are chasing opportunities to benefit from it. Joe Healey and Tom Rosser, investment research analysts at The Share Centre, say the end of the running uncertainty theme, which cost billions to the UK shares, should restore some degree of confidence. Here's a list of sectors expected to benefit the most from Brexit, The Share Centre's courtesy: 1. Consumer discretionary, as it is a space that tends to be sensitive to economic cycles 2. Interest rates and inflation at stubbornly low levels can help consumer spending and companies like Persimmon could benefit from it 3. Information technology companies, including Sage and FDM Group, could see some gains given the various growth opportunities available in the sector 4. Healthcare/consumer staples, like Unilever and GlaxoSmithKline, for their defensive qualities and late-market cycle characteristics (Joice Alves) ***** AUTOS: "NO REASON TO GET BULLISH" (1204 GMT) If you ever though about buying into European autos lured by their cheapness, here's a UBS note that could change your mind. "There is no reason to get bullish on the sector for 2020," write analysts at Swiss bank, saying CO2 will cause the next headache for the industry, and singling out 3 main negatives. 1. Global auto sales and production look flattish at best 2. The big CO2 headwind for the OEMs is under-estimated by consensus 3. OEMs still have a cost issue (high investments & margin pressure from CO2 compliance) that will also negatively affect supplier earnings in 2020 That said (and not to mention the risk that Trump makes EU cars his next trade war target ), UBS believes cost cutting alone is unlikely to offset these negatives and anticipates consensus downgrades further down the road. Analysts have been cutting their earnings estimates for 20 months in a row. The sector is the worst perfomer in Europe YTD and has lost 17% in 2019. (Danilo Masoni) ***** HISTORY LESSONS: CRISES CAN BE BUYING OPPORTUNITIES (0926 GMT) Stocks may be in a precarious state today and more downside looks still likely, but the idea that this new China virus crisis could turn out to be a buying opportunity is bouncing around in more than one broker note. Only yesterday when the Coronavirus scare was wiping $840 billion from global equity markets, Exane suggested it could be a good time to buy into luxury stocks, for example. Today Deutsche Bank says something similar on airlines. "Near term the market will understandably remain concerned about what impact the coronavirus will have on passenger numbers and its ability to distort global travel patterns as the virus spreads beyond China," they say. "However, in the medium term, history tells us that there is scope for relatively quick share price recovery back to pre-crisis levels for the European network airlines," they add. During the cases of Ebola and H1N1, the network carriers recovered back to pre-crisis levels over an 18-21 day period after trough levels, they noted. Crucially, investors will now need to spot when Peak Coronavirus happens and that's all but easy. (Danilo Masoni) **** LAST MEOW? It took just a little more than an hour for the technical rebound to morph into a dead cat bounce with the STOXX 600 turning flat. There was very little conviction this morning that European bourses would be able to stay in positive territory given the gloom over global markets. "Arguably somewhat arbitrarily, especially given the Asian losses overnight, the European markets tried to rebound at the start of the session", wrote Connor Campbell at Spreadex. As this blog post was being written, the STOXX 600 is now just slightly back in the black, but again, the trend seems very fragile. Here's the session so far: (Julien Ponthus) ***** CORONAVIRUS: $834 BILLION WIPED OUT IN ONE DAY! (0903 GMT) As the death toll from Coronavirus surges to 106, here's a chart showing the damage to global stock markets yesterday: (Thyagaraju Adinarayan) ***** OPENING SNAPSHOT: A DEAD CAT BOUNCE? (0840 GMT) European stocks opened slightly higher after yesterday's sell-off that saw about $200 billion wiped off companies' market value as anxious investors struggle to quantify the economic damage from China's fast-spreading deadly virus. There's little conviction though on the market and this feels very much like a technical rebound or a dead cat bounce. Anyhow, among today's fallers, SAP is sliding 1.5% after analysts point to slowing cloud revenue growth and Spain's Bankia is down 2% after its surprise Q4 loss, according to a trader. Edenred (+5%) is the top gainer on the STOXX 600 after broker Oddo upgraded it to "buy". Swedbank is rallying 4% on Q4 profit beat. Here's your opening snapshot: (Thyagaraju Adinarayan) ***** ON OUR RADAR: SAP, TULLOW, LUXURY STOCKS (0752 GMT) Stock futures point to tentative gains with bourses attempting to bounce back from Monday's swoon as investors reassess concerns over the economic damage from the deadly China virus. With the death toll from Coronavirus crossing 100, focus will still remain in key China-exposed stocks in the luxury goods and mining sectors. Luxury stocks Swatch and Richemont could see some relief after December Swiss watch exports data showed 5.8% year-on-year growth. Apple component suppliers STMicro, Dialog, AMS, among others in the spotlight after a Nikkei report that Coronavirus outbreak may disrupt iPhone production ramp up plans. In the UK, Tullow Oil is seen up 3% to 5% after the company's top shareholder raises stake to 9.7% from 7.1%. In earnings, SAP's shares are seen falling 2%-3% in early trade after the German software provider's in-line fail to impress investors. Philips is seen down 3% by traders after Dutch health tech company reported Q4 comparable sales below estimates. Other movers: Prysmian seen down as regulator Ofgem to open investigation into Western Link cable; Airbus seen up 1% agrees to settle corruption probes; SSAB seen down 3% after Q4 earnins miss Headlines to digest: SAP's new leadership duo delivers in-line results, lifts guidance Airbus agrees to settle corruption probes with France, Britain, U.S. Philips to sell domestic appliances business Renault board meeting Tuesday to seal De Meo's CEO nomination -report (Thyagaraju Adinarayan) ***** MORNING CALL: BOUNCE OFF MONDAY'S SWOON (0634 GMT) European stocks are seen attempting a slight bounce back after yesterday's sharp sell-off as investors continue to assess the extent of the economic damage stemming from the fast-spreading deadly China virus. Financial spreadbetters IG expect London's FTSE to open flat at 7,412, Frankfurt's DAX to open 27 points higher at 13,204 and Paris' CAC to open 12 points higher at 5,836. "With coronavirus worries on the rise, the market continues to struggle with the unenviable task of factoring in absolute terms its implied economic devastation," says Stephen Innes, chief market strategist at AxiCorp. "Given that China has rapidly increased its role in the global supply chains, the market continues to price in the worst case, negative growth shock scenarios." Meanwhile, it's a busy earnings day in Europe with SAP, LVMH, Swedbank , among others reporting results today. (Thyagaraju Adinarayan) ***** (Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)