LIVE MARKETS-Relief for semiconductors
* European shares higher
* Ericsson (Hanover: ERCB.HA - news) , ASML (Milan: ASML.MI - news) led tech stocks after results
* Banks down as Danske weighs
* Powell: Years of strong jobs, low inflation still ahead
July 18 (Reuters) - Welcome to the home for real-time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on
Messenger to share your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net
RELIEF FOR SEMICONDUCTORS (1118 GMT)
Tech weighs little on the European market but today it's providing the biggest boost to the
STOXX and most of that is due to semiconductor bellwether ASML's strong results.
But what does the update tell us about the broader semiconductor industry, recently hit by
worries over trade wars and earlier this year by concerns about peaking demand?
We asked Neil Campling, co-head Global Thematic Group at Mirabaud Securities.
"The wider context is one of relief because the trade wars were seen as potentially
disrupting the semiconductor chain and ASML is seen as the gold standard in the industry. Their
equipment is such a high expense that you may have had some expect to see more order pushouts
because of the uncertainty. So they delivered well in this uncertain macro environment and that
is leading to relief for the broader semi tape," he says.
There is, however, something to be somewhat cautious about.
"What's less clear is how tariffs may impact some end demand verticals in the second half of
the year or if the rising interest environment may crimp demand. This is why the inventory
trends and lead times will be closely watched when guidance is given by companies over the next
few weeks," he adds.
To conclude, Campling says a short term cyclical peak seems likely but the focus now is how
shallow the dip will be.
(Danilo Masoni)
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MINERS SET FOR A RESULTS-DRIVEN REVIVAL? (1010 GMT)
One of the best-performing sectors in Europe for most of the first half, miners have
suffered recently from a cocktail of trade tensions, weaker China data, a stronger dollar and
concerns around emerging markets.
But Goldman analysts remain positive on mining, expecting balance sheets to show net cash
positions by the end of 2018 / first-half 2019.
They see trade tensions as mainly a sentiment impact, reiterating the impact on growth
should be "negligible".
So, what to watch in upcoming results?
"We believe that consensus is underestimating the potential scale of returns the miners
could make, the more so as their balance sheets are now robust and free cash flows strong, with
no significant growth capex scheduled," write GS analysts.
They expect the biggest dividend upside from Glencore (Frankfurt: 8GC.F - news) , Anglo American (LSE: AAL.L - news) and
BHP Billiton (NYSE: BBL - news) .
GS' top picks globally are Glencore, First Quantum, Lundin Mining, and
Nyrstar (Berlin: 32660160.BE - news) - all exposed to metals which they're positive on (copper, zinc, thermal coal).
On free cash flow they like Glencore and Anglo American.
They also highlight valuation as a key metric, pointing out that Aurubis (IOB: 0K7F.IL - news) and Kumba
- which they rate as "sell" - trade at premiums.
Below you can see earnings revisions for Europe's mining sector have been trending higher
into the results season:
(Helen Reid)
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OPENING SNAPSHOT: EUROPE UP AS EARNINGS DOMINATE (0714 GMT)
It really is all about earnings this morning as European shares open higher, led by a strong
bounce across tech stocks as updates from Ericsson and ASML get a warm reception.
Banks are on the backfoot though as Danske Bank (LSE: 0NVC.L - news) shares take a tumble after the lender's Q2
pretax profit fell short of expectations.
Here's your opening snapshot:
(Kit Rees)
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WHAT YOU NEED TO KNOW BEFORE THE OPEN (0643 GMT)
European shares are set to open higher today, helped by currency weakness as Brexit
challenges further depress the pound and the euro surrenders to a bounce in the dollar following
the Federal Reserve Chairman's upbeat assessment of the U.S. economy.
Futures on main country benchmarks were up 0.4 percent, indicating that the pan-European
STOXX 600 index could climb back to the three-week peak hit earlier this month.
A string of good-looking earnings updates could also provide support while trade worries
ease, partly helped by yesterday's wide ranging trade deal between the EU and Japan which Credit
Suisse WM said offered some relief to markets. Among the European companies that could benefit
from the deal are exporters such as Pernod Ricard (TLO: RI-U.TI - news) , LVMH, Danone (LSE: 0KFX.L - news) and Nestle (Swiss: NESN.VX - news) .
Back to earnings, shares in ASML, Ericsson, Novartis (IOB: 0QLR.IL - news) , easyJet, Electrolux and BHP are all
seen higher following their updates, while Akzo Nobel (Amsterdam: AKZA.AS - news) is seen falling after its results fell
short of expectations.
(Danilo Masoni)
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EARLY MORNING HEADLINE ROUNDUP: EARNING UPDATES LOOKING GOOD (0553 GMT)
Today's headlines are all about earnings updates and they're looking good.
Novartis says on track for 2018 growth despite Sandoz weakness
Ericsson posts surprise profit in Q2
ASML Q2 sales ahead of estimates, sees stronger H2
Software AG Q2 sales in line, slight beat on profit
Akzo Nobel misses Q2 core earnings, sales forecasts
Swedbank Q2 net profit beats forecast
Handelsbanken profit narrowly beats forecast, to guide on savings in Q3
Swatch Group expects further growth in H2 after H1 net jumps 67 pct
BHP posts record annual iron ore output, beats Q4 f'csts
Ryanair cancels 1 pct of flights on Friday as strike crisis deepens
Iraqi police disperse protesters outside Zubair oilfield as unrest grows
(Danilo Masoni)
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MORNING CALL: EUROPEAN SHARES GAINING FURTHER ON UPBEAT FED (0530 GMT)
European shares are set to open higher, building on gains scored in afternoon trading
yesterday after the U.S. Federal Reserve Chairman's upbeat assessment of the economy
lifted the dollar, boosting sentiment. Jerome Powell will continue his testimony
today.
"Another bullish update with Powell once again talking up the strength of the US economy
could see the dollar extend its gains from Tuesday's session," said Jasper Lawler at London
Capital Group.
Financial spreadbetters expect London's FTSE to open 35-40 points higher, while Frankfurt's
DAX is set to open 52-54 points higher and Paris' CAC 14-16 points higher.
Over in Asia, shares followed Wall Street higher as the bullish outlook from the head of
the U.S. central bank buoyed the dollar, lifted Tokyo shares to a one-month top and sent gold to
a one-year trough.
(Danilo Masoni)
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