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LIVE MARKETS-Reading through Lagarde's poker-face Berlin speech

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: rm://


Reading through Lagarde's Monday speech in Berlin for policy clues was no easy task, not least because it officially wasn't about monetary policy.

But while analysts such as UBS's Paul Donovan complained that "investors may need to change where they look for guidance", others believe that Lagarde, actually, did say something.

For her first official speech, the ex-IMF French chief chose to honour none other than Wolfgang Schaeuble, a monetary hawk who embodies, at least for a good chunk of the European left, Germany's hardcore orthodoxy on all things monetary and fiscal.

The obvious signal was that the new French ECB chief is willing to work with hawks and doves from all geographies.

But add to the choice of praising Schaeuble - Super Mario's nemesis - to expectations of an impending review of the bank's policy framework, and the temptation is strong to draw some sort of conclusion.

Speculation is growing that as a way to build consensus on monetary policy across the euro zone, Lagarde could seek to gradually bring back interest rates to zero in exchange for Germany to engage (at last!) in fiscal stimulus.

Georg Schuh, DWS' EMEA CIO, told the Reuters Global Investment Outlook 2020 Summit that a rate hike was a distinct probability.

"In the first year the probability is 25%", he believes, adding the chance of tightening goes up to 50% in 4 years.

Needless to say, markets have not priced such a move which would completely upset fixed-income earnings expectations and have equity analysts scramble to reassess risk premiums.

Neil Mellor, a strategist at BNY Mellon notes that there is undoubtedly some pressure for the (ECB) Bank to be given a lower inflation target more suited to the 'new normal' low inflationary world".

A new normal of say 1% or 1.5% would limit the need for massive monetary stimulus and thus to antagonise further Dutch and German bankers and pensioners.

But be careful what you wish for!

"The ECB critics who are currently calling and hoping that the ECB under Christine Lagarde will lower its 2% inflation target, in order to allow for faster interest rate hikes, should think twice", ING economists write, arguing you can't have your toast buttered on both sides.

If inflation expectations are lowered to say 1%, it means that the euro zone's limits on deficits and debt, set at 3% and 60% of GDP respectively, would need to be reviewed to allow sufficient fiscal stimulus.

"Either lower the inflation target and allow for looser fiscal rules or increase the inflation target to accommodate for lower structural real GDP growth", ING concludes.

The other option of course is not to open that can of worms.

Some reading:

Germany's Schaeuble calls on Lagarde to respect ECB's "limited mandate"

In first speech as ECB president, Lagarde lauds key critic

LIVE MARKETS-Knot's anti QE rant fuels uncomfortable bubble questions

(Julien Ponthus and Karin Strohecker)



Well it took investors just a bit of time to determine what to make of SocGen's Q3 results but it's now crystal clear: they're good!

Shares in the French bank are up 3.4% and lifting the whole sector to a 1% rise.

This could be a straight fourth day up for European lenders, so maybe the value trade we were talking about yesterday is at play? -- see our blog -- Value in banks?

Anyhow lenders are posting the best sectoral performance by far after retail, up 0.5%, boosted by the UK's Marks and Spencer and Dutch supermarket operator Ahold Delhaize which reported better than expected results.

Main losers are car makers with a 0.6% fall. It's a typical gauge of investors' sentiment on the trade war, so that's telling us something perhaps, but BMW's Q3 results doing little to cheer up the sector with a 0.5% retreat.

Overall, European stocks have titled to positive territory at the exception of the FTSE, which is still struggling but now close to lifting itself up out of the red.

Here's your opening snapshot:

(Julien Ponthus)



Futures are currently trading just slightly in the red but beware: today's big batch of Q3 is bound to trigger sharp moves at the open.

One of the most spectacular hit could come from the UK high street. Mall operator Intu Properties is seen falling between 10% and 30% after it said raising equity was an option as it expects lower rental income with more stores closing down.

That comes with Mothercare set to close all its British stores, and M&S posting profit down 17% on weak clothing sales.

Shares in struggling Norwegian Air will also be closely watched after it managed to raise $272 million.

Looking at today's Q3 action just a reminder that the latest data from Refinitiv shows that earnings expectations for the STOXX 600 have improved for the first time since late August, a sign that will rejoice investors betting on Europe bottoming up.

Anyhow: In the banking sector, SocGen was a miss with restructuring costs denting Q3 results and is indicated down 2%.

Germany GmbH is providing a lot of the Q3 headlines with Adidas and its sales picking up, BMW’s operating profit jumping 33% and Wirecard reporting a 43% gain in third-quarter core profits. Note however that shares in the German payment company are down in pre-open trading in Frankfurt.

Here are a few big headlines:

UK mall operator Intu forecasts lower annual rental income

Shares in Germany's Wirecard fall in pre-open trading in Frankfurt

Adidas sales pick up pace as Europe back to growth

SocGen's restructuring dents Q3 results but lifts capital buffer

Britain's AstraZeneca to distribute Sun Pharma cancer drugs in China

Ahold reports higher Q3 earnings on strong U.S. business

Struggling Norwegian Air raises $272 million from share sale, bond issue

Andritz Q3 core profit down due to Schuler restructuring

BMW Q3 operating profit up 33% as higher margin SUV sales take off


European bourses are expected to open slightly in the red this morning after Wall Street and Asia pulled back in the absence of more news from the trade war front.

According to IG, financial spreadbetters expect London's FTSE to open 17 points lower, Frankfurt's DAX down 22 points and Paris' CAC to lose 7 points.

Sentiment could of course change quickly at the open given the amount of Q3 releases due before the bells rings across the continent's trading floors.

Adidas, Alstom, Axel Springer, BMW, Delhaize and Wirecard are among the corporates about to take the stage.

There's also a big batch of euro zone services PMI which will be closely watched given the hopes that the macro gloom is clearing up.

(Julien Ponthus)


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