LIVE MARKETS-French banks called Europe's GFC winners as Q1 kicks in
* European shares fall
* Fed leaves interest rates unchanged
May 3 (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
FRENCH BANKS CALLED EUROPE'S GFC WINNERS AS Q1 KICKS IN (1210 GMT)
"French banks have suffered much less than their European competitors from the 2008
financial crisis and the sovereign debt crisis of 2011," a study published by France's central
bank states as the country's listed lenders start publishing Q1 results tomorrow.
You can see in the chart below (from the Banque de France research) how French banks' return
on equity (blue line) overtook that of their European peers (green line) between the beginning
and the end of the decade (circled in red):
The French regulator also notes that the banks it oversees were able to increase their
balance sheet and lower costs more than their competitors throughout the period.
The change of fortunes of pre-financial crisis powerhouses was clearly exposed last week
when Deutsche Bank (IOB: 0H7D.IL - news) vowed to retreat to Europe and end its nightmare on Wall Street after three
expensive decades struggling to become a global investment bank.
You can see below how French banks beat the Euro zone banking index over the last decade:
Overall, betting on European banks as a proxy for the #Euroboom economic recovery has been a
disappointment with the sector underperforming the broader STOXXE in 2017 and in 2018.
European lenders are still (desperately?) waiting for monetary normalisation and the higher
interest rates necessary to boost their profits.
In the meantime, there's little spark expected from the Q1 vintage which Jefferies said it
sees as a "transitional quarter for French banks".
UBS (LSE: 0QNR.L - news) analyst Lorraine Quoirez, who is hoping for an "easier Q2" believes Q1 could be "the
toughest quarter of the year" with retail revenues only expected to improve later in 2018 and
investment banks profits hit by negative dollar swings.
BNP Paribas (LSE: 0HB5.L - news) and Société Générale publish their Q1 results tomorrow while Natixis (LSE: 0IHK.L - news) and Crédit
Agricole will report earnings on May 9 and 15 respectively.
Here's a link to Banque de France's research note but it is unfortunately only available in
French at the moment: https://bit.ly/2HLiEKV
(Julien Ponthus)
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FTSE OUT OF THE RED AS WEAK DATA HITS POUND AGAIN (0913 GMT)
The British blue-chip index is the only major European benchmark trading in positive
territory but that is yet again thanks to a little help from its sterling friend.
Weak data from Britain's services sector has probably given a final blow to any remaining
expectations of a Bank of England interest rate rise next week, and that's definitely bad news
for the pound.
"Following the blow dealt by last week’s GDP figures, markets are unlikely to be mollified
by today’s Services PMI," said Dean Turner, UBS Wealth Management economist.
It took about half an hour for traders to make up their mind completely but after a few
bounces up and down, the pound is reaching the session's low and entering negative territory
while the FTSE is doing exactly the opposite, now up 0.1 pct.
Here's how things unfolded:
(Julien Ponthus and Helen Reid)
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OPENING SNAPSHOT: EUROPE IN THE RED, RESULTS DISAPPOINTMENTS BITE (0721 GMT)
European stocks are following in Asian markets' footsteps, falling as trade tensions trigger
anxiety once again. The Trump administration was reported to be considering executive action to
restrict some Chinese companies' ability to sell telecoms equipment in the United States.
The STOXX 600 is down 0.2 percent, while the FTSE is holding flat.
Financials and consumer staples are the worst-performing sectors, while results are pulling
some stocks sharply down.
Bpost (EUREX: BPO.EX - news) is the standout loser, down 10 percent, alongside Schibsted (-5.9%) and Smith & Nephew (Frankfurt: 502816 - news)
(-6.6%) which all reported results lagging expectations.
Logitech on the other hand is rising 7.8 percent after its fourth-quarter results beat
expectations.
M&A activity is also a driver. Germany's Vonovia (Milan: VNA.MI - news) is down 2.1 percent at the bottom
of the DAX after the firm made a $1 billion offer for Swedish real estate company Victoria Park (LSE: 0QIC.L - news)
. The acquisition target is, for its part, rising 8 percent on the news.
(Helen Reid)
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WHAT YOU NEED TO KNOW BEFORE EUROPE OPENS (0651 GMT)
European shares are expected to open slightly lower in another busy day for earnings
releases and weighed down by a bounce in the euro from near 4-month lows against the dollar
after the Fed delivered no hawkish surprises in yesterday's policy statement.
Futures are trading down 0.2-0.4 percent.
Even (Taiwan OTC: 6436.TWO - news) though the euro has started to weaken in the last couple of weeks, its strength has
weighed on company results during the first quarter.
Today, Bayer (IOB: 0P6S.IL - news) shares are seen falling 1-2 percent after the group cut its full year guidance,
blaming the strong currency. Adverse FX also led to a 2 percent revenue drop at healthcare group
Fresenius (Swiss: FRE-EUR.SW - news) (down 1 percent premarket) and resulted in a lower-than-expected core profit for
Belgian chemicals group Solvay (down 1-2 percent premarket).
Shares (Berlin: DI6.BE - news) in chipmaker Infineon (Xetra: 623100 - news) , utility Veolia and sports goods maker adidas, however, are
seen rising at the open following strong updates, while a big sales miss at Fingerprint could
lead its shares to decline around 10 percent.
Overall, first quarter earnings for the MSCI EMU index are seen up 2.5 percent in euro terms
or 14.6 percent in dollar terms, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data.
In the UK, Rolls-Royce confirmed its profit forecast, while miner Glencore (Frankfurt: 8GC.F - news) predicted trading
profit at upper end of forecast range.
(Danilo Masoni)
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UK HEADLINES: GLENCORE, ROLLS-ROYCE AND M&A (0626 GMT)
Results from companies including Rolls-Royce, Glencore, and Smith & Nephew will drive the UK
market today.
There's also more inbound M&A with France's Fonciere des Regions (LSE: 0J6V.L - news) buying a portfolio of UK
hotels from Starwood Capital for $1.1 billion.
Here are some of the headlines to watch:
Rolls-Royce sticks to profit forecast, working on engine repair solution
Fonciere des Regions buys UK hotels portfolio from Starwood worth $1.1 bln
Glencore expects trading profit at upper end of forecast range
Smith & Nephew downgrades outlook after weak Q1
(Helen Reid)
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EUROPEAN STOCK FUTURES DIP AS EURO REBOUNDS (0616 GMT)
Top European stock index futures have opened slightly lower, trading between flat and a fall
of 0.3 percent, as the dollar fell back and weakened against the euro after the Federal Reserve
delivered no hawkish surprises in yesterday's statement where it left interest rates unchanged.
"Initial market reaction saw the US dollar slip back sharply, on the basis that markets had
expected a much more hawkish tilt given recent inflation readings," said Michael Hewson, Chief (Taiwan OTC: 3345.TWO - news)
Market Analyst at CMC Markets UK.
"This was always likely to be optimistic, given the previous reluctance to pre-commit. There
was nothing in yesterday’s statement to undermine the prospect that rates won’t rise next month,
as Fed officials remained non-committal as to whether we could get 3 or 4 rate rises this year,"
he added.
Here's your snapshot:
(Danilo Masoni)
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EARLY MORNING HEADLINE ROUNDUP: EARNINGS DOMINATE (0556 GMT)
Bayer cuts full-year guidance on strong euro
Fresenius Q1 net income slips 2 pct on strong euro
Solvay Q1 results hit by currency impact, fixed costs
Infineon nudges up revenue guidance as earnings improve
Siemens Healthineers posts 4 pct Q2 sales rise
Fingerprint Cards (LSE: 0RGY.L - news) sees "some" market stabilization ahead as Q1 lags
Geberit (IOB: 0QQ2.IL - news) sees higher raw materials prices in Q2
Utility Veolia's Q1 revenues rise 3.7 pct, boosted by new services
Novartis (IOB: 0QLR.IL - news) biosimilar cancer drug hits U.S. regulatory bump
Vonovia to make $1 bln offer for Sweden's Victoria Park
Ceva Logistics prices IPO at 27.50 Swiss francs per share
UBS seeks regulatory nod for 51 pct controlling stake in China JV
Sprint's outgoing CEO says scepticism over T-Mobile merger is expected
Poorest U.S. consumers seen hit hard by T-Mobile, Sprint merger
Fresenius alleges 'blatant fraud' at U.S. drugmaker Akorn
Societe Generale (Swiss: 519928.SW - news) ready to pay up to $1 bln to end U.S. probes- Bloomberg
Chairman of En+ says actively working on reducing Deripaska stake
French utility EDF (Paris: FR0010242511 - news) says received 24-hour strike notice
L'Oreal snaps up South Korean cosmetics firm Nanda
Germany confident Eurofighter supplier issue can be resolved soon
(Danilo Masoni)
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MORNING CALL: EUROPEAN SHARES SEEN LOWER (0527 GMT)
European shares are seen opening slightly lower this morning in another busy day for
earnings releases and following losses in Asia and Wall Street overnight.
Financial spreadbetters expect London's FTSE to open 21 points lower at 7,522, Frankfurt's
DAX to open 36 points lower at 12,767 and Paris' CAC to open 24 points lower at 5,505.
While in Asia shares were weighed down by waning hopes for real progress in Sino (Dusseldorf: 1205802.DU - news) -U.S. trade
talks, U.S. stocks fell after the Federal Reserve left interest rates steady and said inflation
had "moved close" to its target.
(Danilo Masoni)
*****