LIVE MARKETS-"A more complicated macro environment lies ahead"
* European stocks hit 3-week high
* Hiscox (Swiss: 27373019.SW - news) , Bank of Ireland (EUREX: 1269463.EX - news) fall after results
Feb 26 (Reuters) - Welcome to the home for real-time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on
Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net
"A MORE COMPLICATED MACRO ENVIRONMENT LIES AHEAD" (1034 GMT)
This is the view from Deutsche Bank (IOB: 0H7D.IL - news) 's strategists, who expect rates and bond yields to
continue rising given that the Fed is tightening in the U.S. and the ECB is nearing the end of
QE.
"An era of higher rates and yields won't be without risks and will bring higher vol and more
regular risk sell-offs, but we'd argue that central banks shouldn't fight it at the front end,"
Deutsche Bank strategists say in a note.
"If they do, they'll risk keeping policy too loose and asset prices will get even more
expensive and dangerous bubbles will likely form."
Worth (Shenzhen: 300483.SZ - news) bearing in mind in a busy week of speeches from central bankers...
(Kit Rees)
*****
OPENING SNAPSHOT: UP AND AWAY (0815 GMT)
While it's not the busiest of opens, it is at least positive, with the STOXX 600 up at a
three-week high.
Consumer staples are leading the gainers along with miners (particularly steelmakers) and
oil and gas stocks.
A number of stocks are down on the back of earnings, namely insurer Hiscox and Bank
of Ireland (Other OTC: IRLD - news) , while semiconductor maker AMS (IOB: 0QWC.IL - news) has dropped after launching a 600
million euro convertible bond.
Here's your opening snapshot:
(Kit Rees)
*****
ON THE RADAR: FOCUS SHIFTING FROM EARNINGS TO MACRO AND POLITICS (0752 GMT)
The focus is gradually shifting from the earnings season to central bankers this week with
speeches from Coeure and Draghi today, Powell tomorrow and Carney on Friday.
From that stage politicians will take over for a few days with May’s Friday Brexit speech,
the SPD members’ vote on the “GroKo” coalition, and of course the Italian general election on
Sunday.
In the meantime, the earnings season may have passed its peak but there is still some good
old fashioned M&A to keep traders busy today as futures show that European markets seem set to
follow the pace of their Asian peers and open about 0.5 percent up.
Deutsche Bank will definitely be one of the session’s most-watched stocks after it announced
that it will list its asset management unit, a move which must sadden a lot of rivals and M&A
bankers who could have benefited from a sale.
Still in M&A and still in Germany, Daimler (IOB: 0NXX.IL - news) will also be in the spotlight after the chairman
of Geely Automobile Holdings said he had built a $9 billion stake in the German group.
In Italy, the project to create a joint venture between Telecom Italia (Amsterdam: TI6.AS - news) and the pay-TV arm of
its biggest shareholder, French media group Vivendi (LSE: 0IIF.L - news) , is an "uphill struggle" but the project is
not dead, a source familiar with the matter said.
In terms of earnings, PostNL (Swiss: PN6.SW - news) seems set to fall at the open after its results and Bank of
Ireland, the most exposed Irish lender to the British property market, restored its dividend and
its profit in line with year ago.
The Steinhoff saga continues with South Africa's Independent Regulatory Board for Auditors
saying it would pursue further lines of investigation.
(Julien Ponthus)
*****
LOOKING FOR "SUNKEN TREASURE" AMONG CONSUMER STAPLES (0743 GMT)
Analysts at Jefferies are taking stock of "the most volatile earnings seasons in Euro
staples in recent memory", given that it's a sector which has been under pressure from the rise
in bond yields.
Jefferies say that earnings misses have been punished "severely", and single out British
American Tobacco, Diageo (LSE: DGE.L - news) , Heineken (LSE: 0O26.L - news) and Unilever (NYSE: UL - news) as their key
picks.
Sluggish growth on the topline and negative fx guidance surprises are some of the issues
Jefferies identify staples have faced, pointing to an average 3 percent decline for every 1
percent EPS downgrade, though the sector remains at a premium to the Eurostoxx.
"We have identified a number of names within consumer staples that have structural topline
growth opportunities, visibility on margin improvement, strong FCF generation, balance sheet
strength and reasonable dividend yields," analysts at Jefferies say in a note.
(Kit Rees)
*****
EUROPE'S EARLY MORNING HEADLINE ROUND-UP (0724 GMT)
Daimler in $2 bln China investment with BAIC as Geely swoops
Deutsche Bank announces listing of asset management arm DWS
Carmaker PSA, Malaysia's Naza sign deal to produce PSA cars for Asia
VW's profitability may take a hit from electric vehicle shift
Britain vows to cap "rip off" energy prices for millions with new law
UK's Bunzl (LSE: BNZL.L - news) 's 2017 profit jumps on help from deals, growth in America
Fiat Chrysler will ditch diesel from its cars by 2022 - FT
Primark-owner AB Foods first-half profit held back by sugar
Underwriter Hiscox's FY profit slumps
Zurich Insurance (IOB: 0QP2.IL - news) buys QBE's Latam business for $409 mln
Nokia CEO sees big 5G rollouts nearly a year ahead of schedule
Geox (LSE: 0KHH.L - news) to keep up the pace in 2018 after return to profit growth
(Tom Pfeiffer)
*****
UP IT IS, FUTURES SHOW (0709 GMT)
Futures are confirming earlier indications from financial spreadbetters: European markets
are set to open in positive territory this morning:
(Julien Ponthus)
*****
MORNING CALL: EUROPE SEEN OPENING HIGHER (0628 GMT)
European shares look set to rise at the open on Monday after ending a second week in
positive territory following the 6 month-low hit in the wake of the heavy sell-off early
February.
In Asia shares made guarded gains as investors braced for an event-packed week headlined by
U.S. inflation data and the first House testimony by the new head of the Federal Reserve.
Financial spreadbetters expect London's FTSE to open 32 points higher at 7276.8 points,
Frankfurt's DAX 81 points higher at 12564.9 points and Paris' CAC 23 points higher at 5339.9
points.
****
(Julien Ponthus)