* European shares rise slightly
* STOXX set for fourth week of gains in a row
April 20 (Reuters) - Welcome to the home for real-time coverage of European equity markets
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QUALITY STREET: LOW VOL PICKS (1007 GMT)
Talking of dips, as stock market volatility has now calmed down from February's spike,
says the premium for low vol stocks has dropped to a decade low - the fastest fall in 20 years
(see chart below).
"This suggests above average optimism priced in to higher vol stocks. Lagged quality stocks
make sense today in their own right, or additionally, as a hedge against any downward shifts in
sentiment," say UBS' strategists.
So which stocks have made the cut for UBS? At the top of their screen of high quality stocks
lower quality stocks that have outperformed.
THE CASE FOR BUYING THE DIP IN A "PEAK GROWTH" WORLD (0948 GMT)
The important word in "peak growth", is "growth", not "peak", or so Citi analysts seem to
argue in a note where they make the case for buying into dips even if economic activity is
fading from recent highs.
economic indicators is key in setting the tone for equity markets, Citi analysts looked at the
issue and came back with a different finding.
Citi makes an important point, however, that when PMIs are above 50 but in a downward trend,
earnings per share continue to grow, but at a higher pace than shares.
"This is what we expect to happen in 2018 – global EPS up 13 percent, global equities up 5
percent," Citi analysts said.
The Macro Tourist newsletter makes a similar point saying that while tax cuts in the U.S.
can help boost EPS, investors can still wake up with a bad surprise if PE ratios retreat at the
has been sinking. The 1-yr forward P/E multiple was almost 19 in the days before the tax cut
announcement. That same measure is now sitting below 17", it said about the S&P 500.
"All I can say is don't hold out for peak P/E multiples. They probably hit their high right
before the tax cut", the newsletter argued.
Pushing aside markets, the big picture still seems to be that the world's economy is in good
shape according to this chart from Citi:
COMMODITIES SLIDE, TELECOMS GLIDE (0719 GMT)
percent as metals prices slide back.
ruled out a bid for the company), is pushing the European benchmark down 0.2 percent, while the
FTSE 100 gains 0.5 percent thanks to a weaker pound.
Telecoms stocks however are enjoying stellar gains. Telia is up 7.2 percent after results,
and Ericsson nabs the top spot on the STOXX, jumping 14.5 percent after its earnings and margin
beat expectations, boosting investors' confidence about its restructuring. Rival Nokia
is also being pushed up by Ericsson's strong performance.
Chipmaker ASM International is losing 9.4 percent after its earnings fell,
poor performers yesterday.
And Reckitt Benckiser is down 4.5 percent, hitting its lowest since August 2015,
after its results.
BEFORE THE BELL: WHAT YOU NEED TO KNOW (0649 GMT)
European shares are expected to open without clear direction today as investors digest a
flurry of earnings updates, although the FTSE could see extra support after comments from the
Bank of England governor dampened expectations for a rate hike in May.
Futures are trading between a 0.1 percent fall and a rise of 0.3 percent.
The rally in commodity prices has softened and that will likely lead to some profit-taking
among mining stocks, seen down 0.5 percent in pre-market, although their spectacular gains this
week have put the pan-European STOXX 600 index on course for its fourth straight week of gains.
Results released this morning could give some support to the broader market with a smaller
than expected loss at Ericsson seen pushing its shares up as much as 10 percent at the open,
while in the battered telecoms sector, Telia is seen rising after it announced a welcome share
buyback plan as Q1 core earnings slightly topped market expectations.
percent after its quarterly sales growth missed estimates, further stressing gloomy prospects
for consumer goods makers.
EARNINGS THE "CIRCUIT BREAKER"? (0636 GMT)
It's going to be another results-dominated trading day today, and looking more broadly than
the individual stock level this earnings season is certainly expected by many brokers to bring
greater certainty to a stock market which has been faltering.
As Deutsche Bank puts it, "we see the recent correction as overdone, and the first quarter
earnings season could act as the needed circuit breaker." Remains to be seen if earnings will be
strong enough to do so.
Here are a few more headlines:
Britain's Reckitt Q1 sales growth misses estimates (shares seen down 1-2%)
British regulators to fine Barclays CEO, monitor whistleblowing programme
Royal Mail CEO Moya Greene to retire; Rico Back to take over
Ceva Logistics aiming for May 4 floatation
FTSE FUTURES UP AS CARNEY WEAKENS POUND (0602)
European stock index futures have opened little changed, although futures on the
internationally-exposed FTSE were edging up, by 0.3 percent, supported by weakness in
In Asian trading, the British currency flirted with two-week lows against the dollar
following comments from the Bank of England Governor Mark Carney dampened widespread
expectations for an interest rate hike in May.
"Dovish comments by governor Carney in an interview published after yesterday's close throw
some serious doubts on the prospect of a BoE May hike," ING rate strategists say.
Here's your futures snapshot:
EARLY MORNING HEADLINE ROUND-UP (0548 GMT)
It's again a quite heavy day for earning updates with number of companies ranging from
Ericsson to Telia having already released their results. Here are some of the headlines that
have caught our attention:
Ericsson posts smaller Q1 loss than expected
SSAB Q1 profit lags forecast after production problems
Auto parts group Faurecia posts higher Q1 sales
Telia Q1 core profit just beats forecast
Southwest challenged engine maker over speed of safety checks
Italy's Pop Bari sets aggressive bad loan target -sources
And here are our main market stories so far:
Asia tech shares spooked by phone warning, oil near highs
Tobacco and tech drag on Wall St; yields boost banks
Nikkei flat as tech sector losses offset financials rally
Bump in long-dated yields ends two weeks of curve flattening
Gold slips as U.S. rate rise hopes, easing global tensions weigh
London aluminium, nickel slide as sanctions rally fades
Oil close to late-2014 highs on supply cuts, strong demand
MORNING CALL: EUROPEAN SHARES SEEN LITTLE CHANGED (0519 GMT)
European shares are seen opening little changed this morning although the rally in commodity
prices may allow the STOXX 600 index score its fourth straight week of gains. The
pan-European benchmark is up 0.7 percent so far this week.
Financial spreadbetters expect London's FTSE to open 21 points higher at 7,350, Frankfurt's
DAX to open 7 points lower at 12,561 and Paris' CAC to open 3 points higher at 5,395.
Over in Asia, shares slipped as a warning on smartphone demand from the world's largest
contract chipmaker slugged the tech sector, while high oil prices stirred inflation fears and
undermined sovereign bonds.