UK markets closed

LIVE MARKETS-Mass U.S. layoffs meet placid market reaction

* STOXX 600 down 1.3%

* U.S. stimulus rally fades away

* U.S. weekly jobless claims surge to record 3.28m Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London.



MASS U.S. LAYOFFS MEET PLACID MARKET REACTION (1310 GMT)

The data looked horrible and it was: the coronavirus epidemic has triggered mass layoffs on a scale which totally dwarfs the previous record.

Initial claims for unemployment benefits rose to 3.28 million last week, that's close to 5 times more than in 1982, and over 3 times more than the Reuters consensus.

Yet, stock markets in Europe welcomed the news ticking a tad higher and cutting some losses.

Yes, it could have been worse with economists' estimates ranging as high as 4 million but the muted market reaction in these times of extreme volatility is quite puzzling.

You can see below how the STOXX 600 ( and most other European benchmarks have similar curves) cut some losses after the data was released.

U.S. futures also reacted similarly.


(Julien Ponthus)

****



BRACING FOR "GARGOYLESQUE" U.S. JOB DATA (1026 GMT)

You know you're in a heavy news cycle when a 2 trillion U.S. stimulus package is yesterday's news. Yep, all eyes now are on the U.S. job data to be released at 12h30 GMT.

Just to give you an idea of the uncertainty we're facing, the Reuters poll ranges from 250,000 to 4 million unemployment claims.

The wide range of estimates (...) show that we lack historical references to really understand the impact of this unique and probably massive crisis hitting the economy wrote Christopher Dembik, head of macro analysis at Saxo Bank.

"The previous record was just a little under 700,000 in 1982 when the United States was going through the recession caused by the Fed’s contractionary monetary policy", he writes, adding we are set for "a number of job destruction we have never experienced in a period of peace".

AJ Bell investment director Russ Mould makes the point that "a spike in claims across the border in Canada to nearly one million suggests they could be gargoylesque".

What to make of these numbers?

"If we see a number above 2 million, markets will start clamouring for the next government or central bank bailout", was the take of Jasper Lawler, Head of Research at LCG.

Here's Saxo Bank's chart on previous unemployment jumps.


(Julien Ponthus)

*****

OPENING SNAPSHOT: DEEP RECESSION FEARS (0837 GMT)

European bourses open in red territory as the fast-spreading coronavirus and fears of a deep recession overshadowed optmisim from a record $2 trillion U.S. fiscal stimulus package.

The pan-European STOXX 600 index is down 2% with the oil and gas sector leading the losses, falling 4%.

German shares were hit by a survey, which showed consumer morale in the country fell sharply.

In the UK, after posting the biggest two-day percentage gain ever, the blue-chip index dropped 3%.

In terms of single stocks, quite a few names are down 7-9% including Euronext, Carnival and Virgin Money. Euronext shares slide after Spain's market regulator had authorized a bid by Swiss exchange SIX to buy the Madrid stock market operator BME.

ABN Amro shares meanwhile are getting hammered it suffered $200 million clearing loss in coronavirus turmoil.

On a brighter note, Italy's Leornardo is outperfoming most European shares, up more than 4%, after the defence group said it is extending its training services.


(Joice Alves)

*****



ON OUR RADAR: CORONAVIRUS LOCKDOWNS HIT HARD (0742 GMT)

Futures are pointing to losses at the open, bringing the two-day rally to an end as investors are worried about the upcoming a spike in jobless clasims in the U.S. and devastating European data on consumer confidence in Germany.

Looking at specific sectors, airlines in the UK - easyJet, IAG-owned British Airways and Virgin Atlantic - are seeking tax breaks to help the industry survive the pandemic.

Yesterday, Boris Johnson said the govt was in talks with the aviation industry about how best to support the sector. Another airline, Norwegian Air asked creditors to forego payments for 3 months.

In the healthcare space, another company is forming partnership as the world desperate searches for Covid-19 treatments. Novartis said it is joining forces with life sciences companies to accelerate the development, manufacture and delivery of vaccines and diagnostics.

In Italy, Eni said it is cutting its capital spending by a quarter this year, and more next.


(Joice Alves)

******

GOODBYE TWO-DAY RALLY (0635 GMT)

What a difference a night can make! Futures are pointing to a open in the red for European bourses as the two-day global equities rally runs out of steam on a spike in U.S. jobless claim.

Financial spreadbetters at IG expect London's FTSE to open 126 points lower at 5,562, Frankfurt's DAX to open 167 points lower at 9,707 and Paris' CAC to open 61 points lower at 4,372.

Early today, investors across the region will be watching a series of data coming from the UK or the euro zone including monthly numbers on retail sales and business/ consumer sentiment.

Meantime, oil prices is suffering on the prospect of rapidly dwindling demand due to coronavirus travel bans and lockdowns.


(Joice Alves)

*****

(Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)

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