March 14 - Welcome to the home for real time coverage of European equity markets brought to
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"THE ONLY IRREVERSIBLE THING IN LIFE IS DEATH, NOT A CURRENCY" (1647 GMT)
Aspiring Italian prime minister and right-wing leader Matteo Salvini said just that,
reiterating his party's position that the euro is a "flawed currency".
The quote mimics the words used by his compatriot and European Central Bank President Mario
Draghi, who has repeatedly said that the euro is instead an "irreversible" currency.
Salvini's remarks sent Italian bonds and stocks down, making the FTSE MIB index the
biggest loser among top European country benchmarks, down 0.9 percent at the close.
Is Italy's uncertain election outcome that saw a big surge in anti-establishment parties
starting to bite?
In this snapshot a March 10 tweet from Salvini where the leader of Italy's League party
shows nostalgia for when ice creams were priced in the old Lira currency.
MORRISONS MIGHT BE FEELING "CONFIDENT", BUT INVESTORS ARE NOT (1544 GMT)
Morrisons' shares have just touched a session low, down 5.5 percent and among the biggest
fallers on the STOXX. But traders thought that they would rise - so why the negative market
reaction when the grocer's management team said that they were "confident that a broader,
stronger Morrisons will continue to grow"?
There are a number of reasons that analysts have pointed out, one being the fact that the
special dividend is being viewed as a "solitary offering", as put by Henry Croft, research
analyst at Accendo Markets.
Another focus is on cash flow. Ken Odeluga, market analyst at City Index, used the example
In light of this, Odeluga highlighted that Morrisons' FCF generation has almost halved to
350 million pounds from 2016/17's 670 million pounds, the quality of which he says is also
According to TR data, the average analyst recommendation for MRW is a hold. So for now, it
looks like investors want something more.
Investors are still digesting Just Eat's announcement of investment in delivery after
its profit warning last week, and the sell-side - still overwhelmingly positive on the stock -
is beginning to make some cautious noises about the delivery model and the sector at large.
"Just Eat's investments in delivery in the UK and Australia are unlikely to deliver positive
returns over the medium term," say Macquarie analysts.
They add that, in an increasingly competitive environment, Delivery Hero could
have the upper hand: it has around 75 percent of exposure to emerging markets, where competition
is more limited.
"Delivery Hero is best positioned for profits in the delivery market, with greater scale,
experience and established brands," they write.
Furthermore, Macquarie speculates that intensified competition could lower regulatory risks
around mergers and increase the likelihood of a deal between Delivery Hero and Takeaway.Com
As you can see below, Delivery Hero has easily outpaced Just Eat and Takeaway.com in the
months since its listing:
ADIDAS SEEN FROM THE STREET (1515 GMT)
and on track for their biggest one-day gain in nearly 10 years - a remarkable performance for a
company with a market cap of 35 billion euros.
But is the reaction proportionate to what adidas has announced in its solid update?
"No. Things are overdone," a Frankfurt-based trader says.
"There were some shorts ahead of FY18 outlook, which was expected to be weak. That did not
materialize. Shorts must be covered," he adds.
Still the numbers and the big buyback are a nice surprise.
the maximum permitted under the AGM authorisation, while Baader Bank Helvea says its outlook was
convincing and above expectations. Neither, however, made changes to their price targets.
ALL QUIET ON THE RUSSIAN FRONT... OF M&A (1320 GMT)
The Russian economy seems to have engaged in a spectacular pull-back from cross-border M&A,
Soviet-era nerve toxin was used to attack a Russian ex-spy in the UK.
A few days ahead of Sunday's Russian presidential election, our Deals Intelligence team took
a look at how the Russian M&A industry has performed since President Putin’s election in 2012.
Main takeaway is that Russia's resurgence as a key player on the world stage has been
matched by a total withdrawal in international M&A.
"Russian outbound M&A at its second lowest level since 1999 with only 5 million dollars.
Outbound M&A activity was still at zero in YTD 2017; a scenario that hasn't been seen in Russia
since prior to 1998," Thomson Reuters analysts wrote.
As you can see below, foreign investors seems to be on the back foot too, with inbound M&A
down 87 percent year-to-date.
INVESTOR SENTIMENT REFLECTS BREXIT VOTING PATTERNS (1156 GMT)
Turns out the Leave/Remain divide still runs deep... even seeping into investors' equity
Investors based in London, which had the highest Remain vote, are the most positive on Euro
zone equities, a Lloyds bank survey shows. They're also among the least enthusiastic about UK
The North, meanwhile, which had the third highest Leave vote in the UK, has the strongest
positive sentiment towards UK equities. Investors in Scotland are the most pessimistic about UK
equities, having voted overwhelmingly Remain.
"It could reflect political leanings but it’s more likely that investors are simply keeping
a close eye on how the negotiations unfold and what impact these will have regionally," says
Markus Stadlmann, chief investment officer at Lloyds Bank Private Banking.
Sentiment across all equity markets is much higher compared to last year, except for UK
shares which have seen sentiment tumble 17.7 percent from March 2017.
Here's the regional breakdown:
LOOK UP! CASH COMING FROM AEROSPACE (1145 GMT)
UBS believes the European Aerospace and Defence industry is poised to deliver solid free
cash flow growth and that could further underpin share prices in the sector, which has
already risen 15 percent over the last year, comfortably beating the broader marker.
"FY17 results saw better than expected cash generation across the space, and we see scope
for further improvement 2018-20e to drive share-price outperformance," analysts at the Swiss
investment bank says in a note, raising their FCF estimates for Airbus and saying they
On top of that UBS sees "improving mid-term growth prospects". They say the civil cycle
remains robust with Airbus expecting deliveries to increase to around 800 deliveries in 2018
NARRATIVE SHIFTS FROM "#EUROBOOM" TO "PEAK GROWTH" (1134 GMT)
Slowly but surely, the narrative that the Euro zone could somewhat have reached "peak
growth" continues to grow this morning with data showing the Euro zone industrial production was
weaker than expected in January.
"While January may have been a weak month, the recovery of production still maintains a
relatively strong pace. The question is whether this pace can be sustained in 2018 as well," ask
ING analysts in a note commenting on the statistics.
"Although still signalling strong growth, the somewhat weaker PMI data in February begs the
question whether the acceleration of production might stop before it properly started", the bank
While 2017 was all about the #Euroboom, the first quarter of this year is more about
economists pointing to a loss of economic momentum.
Here's a blog post from January where Sebastian Raedler, head of European equity strategy at
IF YOU CAN'T HEDGE SHARES WITH BONDS, GO WARREN BUFFETT (1021 GMT)
One of the answer is good old-fashioned value investing (Warren Buffett style), Societe
Generale argued in a global asset allocation note, where it reflects on the state of markets
"now that volatility tourists (retail money invested in VIX products) have gone back home".
Gone are the days when bonds were a cheap and effective hedge against sell-offs in the
equity markets, the French bank says, adding that "recent events show not only some instability,
but a higher correlation between equity and bond prices".
trend which is here to stay and advise "concentrating equity exposure in the value style (euro
Here's a link to Wikipedia's 'Value Investing' : http://bit.ly/2paGGU6 and here are Socgen's
calls to address correlation between equity and credit:
OPENING SNAPSHOT: EARNINGS SHINE THROUGH TIMID START (0817 GMT)
European shares are pulling higher from a negative open, but the real action is on the
single-stock level where results are spurring some decent-sized moves.
A strong showing from the miners is also helping prop up the market thanks to some solid
industrial production figures out of China.
A decline among energy stocks and industrials is pulling the market lower, however, as
Here's your opening snapshot:
MORE APPETITE FOR SUPERMARKET STOCKS? (0758 GMT)
Food retail is a tough area at best, given the threat posed by online giant Amazon. If you
look at a chart of how the UK grocers have performed over the past year, one thing stands out -
Ocado is the best performer. So online is key.
Today's results from Morrisons though could give investors something to cheer about.
MRW beat forecasts and announced a special divi, thanks to wholesale and an online push (the
results mention initiatives such as a store-pick online service and 'Morrisons at Amazon').
"Today's release points to considerable self-help still available to drive future earnings
gains," analysts at Jefferies analysts say in a note.
"Earnings visibility and income support are key to our Buy. Both appear well underpinned
after the finals," Jefferies add.
Traders are calling Morrison's shares 2 percent higher today. And on a positive note, all of
the UK supermarkets are outperforming the FTSE 100 so far this year.
WHAT TO WATCH FOR THE EUROPEAN OPEN (0752 GMT)
European shares are set to follow Asia’s lead and fall further on Wednesday, with futures
down 0.1 to 0.3 percent, after jitters over world trade were reignited by President Trump’s
threats of tariffs on Chinese imports, and investors continue to digest political uncertainty
after Trump fired his Secretary of State.
strategists wrote in a note.
Better-than-expected Chinese industrial production figures boosted metals prices and should
help mining stocks gain on Wednesday, though concerns on trade could cap gains.
and Adidas reported. The German sportswear company is seen up as much as 6 percent at the open
after it announced a large share buyback and increased its profit forecast for 2020.
Investors are also likely to cheer Morrisons after the UK’s no.4 grocer beat forecasts and
announced a special dividend.
M&A news includes Prudential’s plan to spin off its UK and European business from
Also in focus will be stocks with Russia exposure in case of market reaction after a war of
words between Britain and Russia escalated overnight when Russia did not respond to a British
ultimatum for an explanation of the nerve agent attack in Salisbury.
BRIEF-Bpost Sees Recurring EBITDA In Range Of EUR 560-600 Million In 2018
Drugmaker Hikma posts lower-than-expected 2017 profit
COMPANY NEWS HEADLINES: MORNING ROUND-UP (0739 GMT)
Prudential to spin off UK and European business in radical break-up
Morrisons pays special dividend after profit rises 11 pct
Adidas forecasts slower sales and profit growth for 2018
Adidas to buy back up to 9 pct of share capital
Zara owner Inditex full-year profit up 7 pct
Italy's Atlantia and ACS reach agreement over joint control of Abertis
American Tower, KKR are bidders for Altice NV's towers-Bloomberg
Raiffeisen proposes dividend of 0.62 eur/shr
Clas Ohlson Q3 operating profit falls
IHG acquires 51% stake in Regent Hotels & Resorts
FUTURES POINT TO NEGATIVE OPEN (0713 GMT)
Futures are down across the board, indicating European stocks aren't going to have an easy
reprieve after yesterday's falls, as fresh tariff threats add to uncertainty over trade.
Retailers are front and centre of results this morning, with Adidas and Inditex reporting.
The German sports fashion company is seen gaining 3 percent in pre-market indications after it
forecast sales and profit growth would continue in 2018, albeit at a slower pace.
Inditex meanwhile reported a seven percent jump in annual profit, despite negative headwinds
from a strong euro.
Meanwhile M&A could also be a mover after Atlantia and ACS reached an agreement overnight
over joint control of Abertis.
INVESTORS SEE SEVERE BREXIT DELAYS (0650 GMT)
Fewer than 20 percent of investors now expect a transition deal to be agreed before the
Almost two thirds of those surveyed expect an agreement to be delayed to the October EU summit
Barclays analysts say the EU's draft treaty "brought the issue of the Irish border back to
the fore and the importance of resolving it before transition talks can begin, in order to avoid
talks stagnating later." Hence investors' increasing doubts an agreement can be hashed out in
Looking further ahead, only 13 percent expect an agreement to be reached before the March
2019 deadline. A large minority of investors, 24 percent, expect the UK and EU to fail to agree
the outline before the transition period ends.
MORNING CALL: TARIFF JITTERS TO SPREAD TO EUROPEAN SHARES (0624 GMT)
Good morning and welcome to Live Markets.
European stocks are called to decline further today as the latest protectionist policy push
creates more uncertainty and pessimism over world trade.
Asian shares reversed overnight as investors digested the threat of new U.S. tariffs on
Chinese imports and President Trump's move to fire his Secretary of State, which had already
sent Europe and Wall Street skidding.
Trump is seeking to impose tariffs on up to $60 billion of Chinese imports, targeting the
technology and telecoms sectors in particular.
Spreadbetters call the DAX 79 points lower at 12,143, the CAC 40 down 27 points at 5,215,
and the FTSE 100 27 points lower at 7,112.