LIVE MARKETS-What you need to know before the open
May 14 - 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: helen.reid.thomsonreuters.com@reuters.net
WHAT YOU NEED TO KNOW BEFORE THE OPEN (0649 GMT)
European stock futures are pointing up, tracking Asian markets higher as U.S.-China tensions
show signs of easing ahead of a second round of trade talks.
Investors were shrugging off the progress in talks between Italy’s 5-Star Movement and
League. SocGen (Paris: FR0000130809 - news) analysts admits this was their “worst-case scenario” a couple of months ago but
now that it’s materializing, they are focusing on the fact a weaker government would find it
harder to push through fiscal policies they see as counterproductive. Italy’s FTSE MIB is one of
the best-performing equity indices worldwide year-to-date as the market focuses on a stronger
economy.
Results are still coming in with 75 percent of MSCI Europe companies having reported
first-quarter earnings thus far. Energy is easily leading the way with 10.5 percent earnings
growth, while overall earnings growth is flat. Revisions for second-quarter earnings are
trending higher, though, an indication investors think the worst may be over for European
corporates pressured by, among other things, a strong currency.
M&A continues to be a major driver, with China Three Gorges the latest foreign investor
snapping up a European company, buying up Portuguese energy firm EDP. EDP is set to gain 3 to 10
percent at the open.
British serviced office provider IWG (LSE: IWG.L - news) received takeover approaches from three rival suitors
on Friday after the close, potentially plunging it into a bidding war. Its shares are seen up 10
to 20 percent today. AccorHotels meanwhile sealed another deal to buy a foreign hotel chain.
(Helen Reid)
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EUROPEAN STOCK FUTURES UP AS ITALY GOVERNMENT TALKS FAIL TO SHAKE THE MARKET (0614 GMT)
Talks between Italy's anti-establishment 5-Star and the far-right League to form a
government don't seem to have investors too worried, with futures pointing to gains across
Europe's major benchmarks.
Italy's FTSE MIB has been one of the best-performing equity indices worldwide this year,
Goldman Sachs (NYSE: GS-PB - news) analysts note, while most of its European counterparts are flat.
"We think it is unlikely that investors will perceive Italian political developments as a
systemic threat to euro area institutions or growth, in the near term," they write.
Here's your snapshot:
(Helen Reid)
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EARLY MORNING EUROPEAN HEADLINE ROUND-UP (0553 GMT)
Analysts are getting their heads round the progress in Italian government talks. "A Five
Star/League coalition government is taking shape," note SocGen analysts. "This was our
worst-case scenario three months ago. However, this government is unlikely to have enough
political and fiscal room for manoeuvre to deliver a large fiscal slippage, as indicated in the
two platforms."
But there's also plenty of results and other company news to keep traders and investors busy
today.
In what could be a big step for the nascent technology underlying cryptocurrencies, banks
HSBC and ING say they've performed the world's first trade finance transaction using
blockchain.
In other news, results and M&A - both inbound and outbound:
France's AccorHotels strikes deal to buy Chile (Stuttgart: 704599.SG - news) hotel group Atton
ABN Amro Q1 profit falls 3 pct on loan impairments
Innogy's Npower grows operating profit in Q1
K+S Q1 core profit rises 7 pct on rising volumes
HelloFresh Raises 2018 Revenue Growth Outlook
Bayer CFO sees lower Monsanto (Hamburg: 1132157.HM - news) synergies after divestments -Boersen-Zeitung
Ryanair target Laudamotion dumps Zurich flights due to plane shortage
China Three Gorges launches $10.8 bln bid for Portuguese power firm EDP
(Helen Reid)
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MORNING CALL: EUROPEAN STOCKS TO RISE ON FADING TRADE TENSIONS (0536 GMT)
European stocks are set to follow the Asian trend up this morning after last week ended on a
high. Progress in talks between Italy's Five Star and League towards forming a government don't
seem to have overly shaken the market, with the euro hardly moved.
Asian shares rose to near two-month highs on hopes U.S.-China trade tensions were thawing
after Trump pledged to help ZTE Corp (Xetra: A0M4ZP - news) "get back into business, fast" ahead of a second round of
trade talks between officials this week.
Italy's 5-Star Movement and far-right League called the head of state on Sunday to report on
their progress towards naming a prime minister. The two have been trying to find an independent
figure without allegiance to either party to rule the government.
Germany's DAX - which is very exposed to China and trade - is called up 29 points at 13,030,
the CAC 40 is seen opening 10 points higher at 5,552, and the FTSE 100 is expected to open 1
point lower at 7,723 points.
(Helen Reid)
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(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus and Kit Rees)