LIVE MARKETS-Opening snapshot: Sea of red at the open
Dec (Shanghai: 600875.SS - news) 5 - 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
OPENING SNAPSHOT: SEA OF RED AT THE OPEN (0839 GMT)
European shares are sharply lower in early deals, with all the major bourses down between
0.9 to 1.3 percent with heavyweight financials leading the falls, taking their lead from Wall
Street's losses overnight.
A warning from Schlumberger (IOB: 0CT7.IL - news) over U.S. revenues overnight is hurting Weir and Rotork (Frankfurt: RO41.F - news) in early
deals while Hargreaves is among the STOXX 600 fallers after a Morgan Stanley (Xetra: 885836 - news) downgrade.
Thomas Cook (Frankfurt: A0MR3W - news) is staging a small rebound from the 60-percent drop in its shares over the past
week following its profit warning, but its bonds have hit a record low after Moody's downgraded
its rating deeper into junk status on Tuesday evening amid growing worries about the travel
operator's debts.
(Josephine Mason)
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WHAT'S ON THE RADAR: THOMAS COOK DOWNGRADE, RYANAIR, AND BREXIT CONTINGENCY PLANS (0744 GMT)
European stocks are set to sink after Wall Street took a pummelling with investors alarmed
by the inversion of part of the U.S. yield curve and signs the G20 trade war truce isn’t all it
was cracked up to be – just two of the many “Grinches” analysts say are stealing investors’
Christmas.
Stock futures for European benchmarks are down 0.9 to 1.1 percent.
German carmakers Daimler (IOB: 0NXX.IL - news) , Volkswagen (IOB: 0P6N.IL - news) , and BMW (EUREX: BMWE.EX - news) could move after the auto executives’ meeting
at the White House.
President Trump asked them to increase investments in the U.S., something the executives
said they planned to do but wouldn’t be able to if the administration went ahead with threatened
tariffs.
Outside trade-related moves, on the corporate front Shire (Xetra: S7E.DE - news) could get a boost after Takeda
shareholders approved the takeover of the London-listed pharma company. Shares (Berlin: DI6.BE - news) were indicating
up 4-5 percent, traders said.
Zurich Insurance (IOB: 0QP2.IL - news) sounded a confident note, saying it's set to meet its 2017-2019 targets
thanks to cost savings.
Thomas Cook shares, however, could sink further, having hit a 6-year low on Tuesday, after
Moody’s downgraded its rating on the company to B2 from B1, citing its leverage and saying the
tour operator’s weakened cash position – from 1.4 billion pounds in 2017 to 1 billion at the end
of fiscal 2018 – make it weaker.
More companies have begun contingency planning for a no-deal Brexit, and fashion retailer
Joules Group (LSE: JOUL.L - news) was the latest to announce its plan: creating a third-party distribution facility
located outside the EU and speeding up its 2019 spring-summer collection.
Shares in budget airline Ryanair could also be hit by Britain’s aviation authority saying it
would take action to force the company to pay compensation to customers affected by strikes this
summer.
More bad news for retailers after Sweden's Clas Ohlson (LSE: 0GQE.L - news) said it would close its loss-making
stores in Britain and Germany. Its shares were seen opening 3-5 percent lower. A warning about
slower revenues in the United States from Schlumberger overnight may hurt Weir, traders said.
(Helen Reid)
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FUTURES DROP AS GRINCHES TAKE HOLD (0718 GMT)
Futures are down sharply across Europe's benchmarks, with the DAX falling the most - down
1.1 percent - as the market's worries about the yield curve and trade take hold.
(Helen Reid)
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HEADLINES TO WATCH: GERMAN AUTOS, SHIRE, ZURICH INSURANCE (0655 GMT)
For Europe, German carmakers' shares could move after their meeting with the White House,
during which Trump pressed the senior executives to expand their investments in the U.S. -
something which the carmakers said they planned to do, but would be unable to if the
administration imposed new tariffs.
Shire could get a boost after Takeda shareholders approved the takeover of the London-listed
pharma company.
Zurich Insurance sounded a confident note, saying it's set to meet its 2017-2019 targets
thanks to cost savings.
Takeda shareholders give nod for $59 bln Shire acquisition
White House presses German automakers to expand U.S. investments
Air France (Paris: FR0000031122 - news) strike leader defeated in boost for new CEO
Volkswagen may use Ford's U.S. plants to build cars, deepening alliance
Zurich Insurance says on track to meet 2019 targets
Roche's Tecentriq wins speedy U.S. review in small cell lung cancer
Italian PM says can change "a few little things" on budget
China's BAIC stock sinks on report Daimler may raise joint venture stake
HSBC China securities JV to quadruple China research coverage
Swedish retailer Clas Ohlson to close stores in UK, Germany
Nissan panel puts off selection of nominee to succeed Ghosn -source
UK car sales fell around 3 pct in November - preliminary data
(Helen Reid)
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"CHRISTMAS HAS BEEN STOLEN BY THE GRINCHES" (0642 GMT)
Though there's still a couple of weeks of trading to go until the Christmas lull, investors'
hopes of an early "Santa rally" have been pretty much dashed by the yield curve grabbing the
spotlight, as well as doubts over how "wonderful" and "warm" the Trump-Xi dinner last Saturday (Shenzhen: 002291.SZ - news)
really was.
"Christmas has been well and truly stolen by the Grinches," writes Rabobank's senior
strategist Michael Every, who counts five:
- President Trump, whose post-G20 tweet calling himself a "Tariff Man" hasn't comforted
nervy investors. A task force set up by Trump also wants to give the U.S. Postal Service the
right to hike rates for packages, a move that could hurt Amazon and other big online retailers
- Chinese President Xi, whose government has said comparatively little with officials
telling Reuters they were "waiting for the leaders to return" before publicising details
- Brexit: Prime Minister Theresa May suffered embarrassing defeats as her government was
found in contempt of parliament, and a group of Conservative lawmakers won a challenge to hand
more power to the Commons if her deal is voted down
- Europe: Macron's tug-of-war with the "gilets jaunes" may not be over as the movement
hasn't welcomed his U-turn on fuel taxes, demanding a full cancellation
- The yield curve: "We are in single digits on U.S. 2s-10s and at this rate could be in what
is traditional recession warning territory by the end of the week, let alone by Xmas," says
Every
(Helen Reid)
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SELLING TO CONTINUE AFTER WALL STREET SUFFERS SHARP FALLS (0623 GMT)
European stocks are set to fall further this morning after Wall Street lost more than 3
percent as the bond market sent anxiety-provoking signs about economic growth and investors
stayed nervy about global trade.
The spread between 2-year and 10-year Treasury yields is at its flattest level in more than
a decade, and edging closer to an inversion, seen as a signal of an impending recession.
Asian stocks slid across the board on Wednesday, dragged down by Wall Street's tumble as
sharp declines in long-term U.S. Treasury yields and resurgent trade concerns stoked investor
worries about global economic growth.
Financial spreadbetters IG (Frankfurt: A0EARV - news) expect London's FTSE to open 72 points lower at 6,951,
Frankfurt's DAX to open 150 points lower at 11,186 and Paris' CAC to open 59 points lower at
4,954.
(Helen Reid)
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(Reporting by Helen Reid, Danilo Masoni, Julien Ponthus)