LIVE MARKETS-Closing snapshot: trade wars are also good when they don't happen
* European shares advance
* China's Xi speech soothes jitters over trade tensions
* Autos rise after Xi pledges to cut import tariffs
* LVMH supported by solid update
LONDON, April 10 (Reuters) - Welcome to the home for real-time coverage of European equity
markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach
him on Messenger to share your thoughts on market moves:
danilo.masoni.thomsonreuters.com@reuters.net
CLOSING SNAPSHOT: TRADE WARS ARE ALSO GOOD WHEN THEY DON'T HAPPEN (1606 GMT)
European shares surfed the global trade war relief rally and the STOXX 600 closed up 0.83
percent with gains widespread among sectors and across European bourses. Basic materials, cars,
oil and gas are clear winners alongside luxury thanks to LVMH.
Let's see if this lasts until tomorrow. Have a good evening!
(Julien Ponthus)
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LOSING MOMENTUM DOESN'T MEAN LOSING THE PLOT (1343 GMT)
Yes, there might be a slight loss of economic momentum, particularly in the euro zone, but
that doesn't mean the big picture of "global synchronised growth" is over, the chief global
strategist at HSBC Asset Management just told us.
"The risk of recession remains very low," Joe Little argued, saying a number of "benign"
factors, such as the euro strength, seasonal effects and a temporary moderation of growth can
explain a possible loss of momentum but that his bank still takes the view that the global
economy is in a "balanced expansion".
There should be a little bit more inflation down the road but clearly no "dramatic
weakness", he said.
At this stage of the cycle, HSBC AM is therefore still positive on Euro zone and Japanese
equities because of the attractiveness of their price-earnings ratios relative to their American
peers. Little believes a tactical bias towards cyclical shares is still warranted, in particular
financials, while it's worth moving a bit away from tech.
(Julien Ponthus)
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NOWOTNY MAKES EURO ZONE STOCKS WOBBLE (1234 GMT)
Comments from Ewald Nowotny on the possible increase in the euro zone deposit rate have
caused some action on markets in Europe, sending the euro to a fresh day's high against the
dollar.
On the stock market the reaction was less linear.
On one hand, banks - which benefit from policy tightening - got a boost to hit a fresh
session high, up as much as 0.6 percent, but on the other, telecoms, utilities, and real estate
- which tend to be inversely correlated to higher interest rates - all moved close to fresh
lows.
That resulted in a wobble for the euro zone STOXX index, which briefly reduced
gains before slightly recovering.
Nowotny, one of the longest-serving ECB policymakers, said the European Central Bank could
stagger the process of raising euro zone interest rates by first lifting its sub-zero deposit
rate back toward positive territory.
"I would have no problem with moving from -0.4 percent to -0.2 percent as a first step," he
said.
(Danilo Masoni)
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MIDSESSION SNAPSHOT: STOXX STAYS HIGHER (1127 GMT)
Around half way through the trading session, European shares are holding on to their earlier
gains with the pan-regional STOXX 600 benchmark rising around 0.6 percent, helped by a
combination of some good earnings reports, M&A news and easing trade war jitters.
While U.S. futures were also pointing to a strong start, in this snapshot you
can see where we stand in Europe at the moment.
(Danilo Masoni)
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SEEING SIGNS OF STRESS (1103 GMT)
The return of volatility to markets has got some investors wondering whether this could be
signalling a change in regime. Jupiter Asset Management's James Clunie, head of strategy,
absolute return, believes that this could indeed be the case and says that around half of their
indicators are showing signs of stress.
"Increased volatility is not a reliable indicator of change on its own," says Jupiter's
Clunie in a note.
"We need to see evidence of stress across several indicators. Looking at our dashboard of
indicators of potential stress in markets, something unusual does appear to be happening."
Jupiter's stress indicators which are in "red" territory include:
1. A collapse of fringe bubbles (not just bitcoin) such as short-volatility ETFs, FAANG
stocks coming under pressure
2. Liquidity indicators
3. Hong Kong dollar
Clunie considers the turbulence in "glamour" stocks such as the FAANGs an "amber" signal,
given that it is still too early to tell whether a change in sentiment towards them will be
sustained, and he also puts turbulence indices in the "amber" category.
On the positive side, IPO, high yield bond and squeeze ETFs are not showing signs of stress,
says Clunie.
(Kit Rees)
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TEMPTED BY DEFENSIVES (0956 GMT)
Hartwig Kos, portfolio manager at SYZ Wealth Management, is turning a bit less bullish on
cyclicals and while he still likes banks - a key cyclical play due to their link to the global
business cycle - he believes it's time to start looking elsewhere.
""While we still like this segment as an investment theme, some of the initial investment
rationale has softened somewhat: banks are not as cheap as they were in the past, yields have
risen to quite an extent over the last few years already and while the business cycle remains
robust, the trajectory is more likely down than up from here," he writes in a monthly asset
view.
"Although it is still too early to become constructive on defensive sectors, we are starting
to see value in areas such as pharmaceuticals and telecommunications, which have suffered
substantially during this period of rising yields," he adds.
(Danilo Masoni)
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OPENING SNAPSHOT: EUROPEAN SHARES BOUNCE (0712 GMT)
A recovery in mining stocks, led by Anglo American and Glencore, has
boosted European shares into positive territory at the open, with M&A and results firmly in
focus.
Shares in LVMH are up around 5 percent after its Q1 sales update, while TGS Nopec
is the biggest gainer early on after reporting higher-than-expected Q1 revenue.
Bayer's shares have climbed around 5 percent following a report that the U.S. has
approved its deal with Monsanto, and Ingenico is up around 8.7 percent after U.S. peer
Verifone agreed to be taken private.
The STOXX 600 is up 0.7 percent, Germany's DAX has jumped 1.3 percent and Britain's FTSE 100
is up 0.5 percent.
(Kit Rees)
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WHAT YOU NEED TO KNOW BEFORE EUROPE'S OPEN (0640 GMT)
The calming effect of Xi's speech is expected to spread over to Europe with futures on main
regional stock benchmarks pointing to gains of 0.7 to 1.2 percent.
Earnings are slowly coming back into focus although early season's releases appear to be
mixed. Shares in Givaudan are expected to fall 1 to 2 percent after its first-quarter sales
growth missed expectations, while LVMH could get a boost, up 4 to 5 percent pre-market, after
undiminished appetite from Chinese consumers helped it post a better-than-expected rise in Q1
sales, prompting a few target prices upgrades. LVMH results could also provide support to other
luxury names.
According to Thomson Reuters data, STOXX 600 earnings are expected to rise 3.4 percent in
the first quarter and sales up 1.1 percent with growth mainly driven by energy companies. Q1
earnings for the S&P are seen up 18.5 percent.
In M&A, Bayer is up nearly 3 percent in pre-market trade on a report it has reached a deal
with the U.S. for approval to buy Monsanto, clearing the last major obstacle to the merger.
Back to Xi's speech, automakers could bounce after the Chinese President said this year his
country will considerably reduce auto import tariffs.
Other stock movers: Glencore says Glasenberg has resigned from his position as Rusal
director and says Rusal contracts are not financially material; Insurer AXA to restructure Swiss
unit, resulting in one-off H1 negative hit; Telecom Italia to take legal action over auditors'
April AGM decision; U.S. FDA restricts sale of Bayer's Essure birth control device; Danske
Bank's head of Baltic Business Banking exits; L'Oreal picked as preferred bidder for stake in
S.Korea's Nanda - Korea Economic Daily; Deutsche becomes Premier Oil's 3rd biggest shareholder
at 5.2 pct.
(Danilo Masoni)
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LVMH KICKS OFF LUXURY REPORTING SEASON IN EUROPE (0632 GMT)
The luxury sector is sure to be in focus this morning following LVMH's Q1 results
which came through after the close yesterday.
The French luxury group posted a better-than-expected rise in Q1 sales with 13 percent
organic growth, with demand from Chinese consumers robust.
One premarket indication sees LVMH's shares opening 4 to 5 percent higher, with positive
readacross for Gucci-owner Kering, Richemont and Swatch and Hugo Boss
.
And early on analysts seem to be pretty upbeat about LVMH's results, with Berenberg analysts
calling it "an impressive start to luxury's earnings season" and Raymond James analysts
highlighting "outstanding Q1 sales growth".
Analysts at Jefferies also said that the stronger-than-expected update from LVMH's wine &
spirits division pointed to a strong reporting season for European spirits, especially for Asia.
LVMH's wine & spirits division saw organic revenue growth of 10 percent in Q1.
(Kit Rees)
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DAX FUTURES UP MORE THAN 1 PERCENT (0604 GMT)
European stock index futures have opened higher with those on the exporter-heavy DAX up more
than 1 percent after Chinese President Xi Jinping helped soothe investor jitters over an
escalating U.S.-China trade row. Futures on other European benchmarks were up 0.6-0.7 percent.
"This year, we will considerably reduce auto import tariffs, and at the same time reduce
import tariffs on some other products," Xi said at the Chinese Boao Forum for Asia in Hainan
province.
For an analyst view on Xi's speech, click here
(Danilo Masoni)
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EARLY MORNING HEADLINES ROUNDUP (0548 GMT)
Bayer bid to buy Monsanto wins U.S. DoJ approval- WSJ
Vuitton owner LVMH posts sales surge in boost to luxury sector
Insurer AXA to restructure Swiss unit, resulting in one-off H1 negative hit
Givaudan Q1 sales rise 5.4 pct, helped by new contracts
Telecom Italia to take legal action over auditors' April AGM decision
Italian fund association will not present slate for Telecom Italia board vote
U.S. FDA restricts sale of Bayer's Essure birth control device
Danske Bank's head of Baltic Business Banking exits
ANALYSIS-Deutsche Bank's new CEO takes sober look at 'ugly' investment bank
L'Oreal picked as preferred bidder for stake in S.Korea's Nanda - Korea Economic Daily
Deutsche becomes Premier Oil's 3rd biggest shareholder at 5.2 pct
EU to explore counter-measures to U.S. aluminium tariffs-trade body
Allianz makes $120 mln investment in African infrastructure - FT
France's EDF March nuclear power production up 4.1 percent
MEDIA-Santander is said to be seeking exit from Astaldi loan exposure- Bloomberg
Total Port Arthur refinery plans to restart gasoline unit by wkend -sources
UBS suspends access to research data for some external providers
Britain's Drax could close coal plants ahead of 2025 deadline
(Danilo Masoni)
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MORNING CALL: EUROPE SEEN UP (0518 GMT)
European shares are expected to open higher today after stocks in Asia gained following a
speech from Chinese President Xi Jinping which helped soothe investor jitters over an escalating
U.S.-China trade row. The STOXX 600 eged up 0.1 percent in the previous session.
Xi, speaking at the Boao Forum for Asia, said that China will take measures to sharply widen
market access for foreign investors, raise the foreign ownership limit in the automobile sector
and protect intellectual property of foreign firms.
Financial spreadbetters expect London's FTSE to open 46 points higher at 7,240, Frankfurt's
DAX to open 109 points higher at 12,371 and Paris' CAC to open 47 points higher at 5,311.
Reports that the FBI raided the offices and home of U.S. President Donald Trump's personal
lawyer Michael Cohen reduced gains on Wall Street overnight, but Xi's speech pushed
US futures back higher in Asian trading.
(Danilo Masoni)
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