LIVE MARKETS-A short-lived boost from Trump's tweets
* European shares seek floor after heavy two-day sell off
* STOXX 600 in choppy waters, now down 0.2 pct, DAX up 0.3 pct
* Siemens steals show with gas spin off and strong results
* Defensives come under pressure after gains, banks fall further
* Wall Street opens lower as investors fret over trade talks
May 8 - Welcome to the home for real-time coverage of European equity markets brought to you
by Reuters stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to
share your thoughts on market moves: rm://josephine.mason.thomsonreuters.com@reuters.net
A SHORT-LIVED BOOST FROM TRUMP'S TWEETS (1341 GMT)
A tweet from U.S. President Trump saying China is coming to the U.S. "to make a deal" has
been interpreted positively by some traders, boosting the STOXX, DAX, and U.S. futures.
A trader says the fact Trump said China is coming to *make* a deal, rather than to discuss,
was enough to boost the market.
The lift hasn't lasted long, though, as the overall tone from the U.S. leader is pretty
negative: Trump said he is "very happy" keeping the current tariffs on Chinese imports in place.
Regardless, it's clear the market remains hyper-sensitive to any trade developments.
The tweets in question:
"Personally I don't think this is a reason to buy," notes a Milan-based trader.
(Helen Reid)
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A LUXURY RENAISSANCE? (1144 GMT)
As China's stimulus measures soothe the economy, helping revive the consumption European
luxury brands depend on, those luxury companies could become more attractive to investors keen
for exposure to a Chinese recovery.
After a torrid 2018, MSCI's European luxury stocks index has surged up 23 percent since its
Jan 3 low, and earnings revisions have also been ticking up as results from luxury giants
including LVMH and Kering impress the market.
Morgan Stanley analysts upgrade Swatch and reckon there's reason to be positive on luxury.
"Q1 trading statements showed stronger than expected sales growth year-to-date for most
industry participants, and our discussions with industry contacts have been encouraging," they
write, adding that a weakening of the euro and Swiss franc vs the USD and the Yuan also helps.
Monetary and fiscal stimulus is helping consumption, they argue, pointing to Hugo Boss
comments about an acceleration of sales growth in mainland China in April after a VAT cut to 13
percent from 16 percent.
In light of the re-escalation of trade tariff rhetoric between the U.S. and China, they do,
however, give a word of warning: "there is a possibility that our incrementally more positive
view on the earnings trajectory of the European luxury goods sector could prove premature."
MS are overweight LVMH (their top pick) and Moncler, underweight Tod's, Ferragamo and Hugo
Boss, and equal weight Prada, EssilorLuxottica, Richemont, Kering, Burberry, Swatch, and Hermes.
(Helen Reid)
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CHINA HEADLINES MAKE EUROPE TRADING CHOPPY; DAX FALLS (0957 GMT)
Waters are choppy for shares here in Europe as traders continue to watch maniacally for
headlines from the Sino-U.S. trade front that could provide clues about the future of this
week's make-or-break trade talks in the United States.
The latest news that grabbed Mr Market's attention was a source based story from Reuters.
The report outlines how Beijing on Friday walked back nearly all its pledges in a
nearly 150-page draft trade deal, prompting Trump's ire in a series of tweets on Sunday, which
highlights how the U.S. President may not just be embarking on an Art-of-the-Deal-type
backtrack.
Here are the headlines and below the move they caused on the trade-sensitive German DAX
benchmark index, last trading down 0.2 percent having risen as much as 0.7 percent
earlier.
"The DAX turns lower... the situation is truly complicated," says a trader.
REMINDER: Chinese Vice Premier Liu He is due to visit Washington tomorrow and Friday for
talks in a last-ditch bid to avert a sharp increase in tariffs on Chinese goods ordered by U.S.
President Donald Trump that would go into effect at midnight on Friday.
(Danilo Masoni)
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A REPEAT OF DECEMBER? FASTEN YOUR SEATBELTS! (0905 GMT)
It's been a rollercoaster ride for global markets over the past few days as investors remain
on edge after Trump's flurry of tweets on Sunday that has shaken confidence in the U.S.-China
trade talks.
That confidence has been one of the main drivers in the months-long rally across global
stock markets.
With uncertainty back in full force, UBS Global Wealth Management CIO Mark Haefele says
clients should be prepared for "potentially significant volatility ahead" and hold onto their
hats.
"If investors don't think they can stomach it, it would be better to reduce risk, or hedge
positions, now. My biggest fear for our clients today is that we see a repeat of December, with
too many selling out at the bottom and not getting back in again in time for the rally."
What if the talks break down and Washington slaps higher tariffs on more Chinese imports
later this week?
In a worst-case scenario, Haefele warns that U.S. stocks could fall 10-15 percent from their
peak and Chinese stocks could sell off by 15-20 percent. Europe, with its exposure to China, is
unlikely to be unscathed either.
(Thyagaraju Adinarayan)
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MORE ON EARNINGS (0853 GMT)
More signs that Q1 earnings in Europe are improving: Refinitiv I/B/E/S has revised upwards
its Q1 earnings forecast for the first time since late February.
Analysts on average now expect Q1 earnings per share for STOXX 600-listed companies to fall
3 percent, up sharply from a drop of 4.2 percent last week, according to the latest I/B/E/S data
from Refinitiv released last night. That compares with 4.3 percent growth a year ago.
As in previous blogs and stories, this highlights just how low expectations were heading
into the results season. Also see last week's blog: Europe's rallying but analysts are still
cutting Q1 estimates.
Still, the cheerier-than-expected results may help shore up confidence as investors continue
to fret about the U.S.-China trade conflict.
Consensus for the MSCI Europe continues to improve too, with a 4.6 percent drop expected in
Europe, up from a 4.8 percent decline last week, although the region's still on track for the
slowest pace of earnings growth in three years as this chart shows:
(Josephine Mason)
MEANWHILE, EARNINGS CONTINUE TO BEAT... (0814 GMT)
Trade angst and Brexit uncertainty are helping stocks start May on a backfoot but corporate
profits continue to beat expectations, and that points to a return of earnings momentum, a
welcome development for investors even though the bar had been lowered quite a bit.
Here's the latest take on the European earning season from Morgan Stanley.
"1Q has seen the strongest breadth of earnings beats in two years, but much of this reflects
earnings expectations coming down dramatically ahead of results. Earnings are tracking down 5%
year-on-year in 1Q, but we see increasing signs of stabilisation in FY19 estimates," they say.
A similar trend of earnings stabilisation has also been detected for world stocks, as we
pointed out in this blog yesterday: Wanna bet: world stocks at record highs by summer 2020?
Also see our story from last week that checks in on earnings halfway through the season:
ANALYSIS-Half-time: Europe Inc scores to avert Q1 disaster, hopes of a rebound rise
(Danilo Masoni)
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OPENING SNAPSHOT: TRADE TENSIONS PRESSURE EUROPE AGAIN (0725 GMT)
Pan European STOXX 600 index is under pressure in early deals hitting the April 1
lows touched yesterday as investors continue to fret about escalating tensions between China and
the U.S. and the threat of more tariffs on Chinese imports as the world's top two economies
embark on last-ditch talks to salvage trade spat.
The insurance index is the worst performing sector, down 0.8 percent, dragged lower
by Munich Re which is down nearly 2 percent after reporting a drop in net profits due to higher
claims.
Star performer is Germany's DAX, up 0.2 percent and outperforming its peers, as Siemens
leads the charge higher after better-than-expected results and announcing plans to spin off its
struggling gas and power business followed by Wirecard which is up 2.6 percent after its
results.
Top three fallers on the STOXX 600 - Lufthansa, Siltronic and Hochtief - are all ex-div.
(Josephine Mason)
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EUROPEAN FUTURES SIGNAL SUBDUED OPEN (0632 GMT)
European futures are indicating a subdued open this morning after the pan-European STOXX 600
hit more than one-month lows yesterday as investors continue to fret about renewed tensions
between China and the United States over their prolonged trade spat as the world's top economies
embark on last-ditch talks to salvage a deal.
China's trade data for April was a bit of mixed bag with higher imports bolster some
confidence about domestic demand, although falling exports may stir concerns about U.S. trade
deficit.
In data closer to home, German industrial output rose unexpectedly in March, offering a
glimmer of hope for Europe's biggest economy.
There's plenty of earnings and dealmaking to keep investors occupied as well.
Siemens may steal the show after saying it will spin off its gas and power business, which
has dragged on the engineering firm's performance with the rise of renewable power, as the
German industrial giant announced better-than-expected Q2 profit from its industrial business.
Its shares are up 2.4 percent in early Frankfurt trade.
Munich Re has reported a drop in net profits due to higher claims, sending its shares down 2
percent in early trade, while Italy's biggest insurer Generali says it is looking at small and
medium-sized insurance companies in Europe to strengthen its presence in the region.
Elsewhere in financial services, Commerzbank has reported a 54 percent drop in Q1 net profit
blaming a higher tax burden, but the result was better than expected and the bank forecast
higher underlying revenues for 2019.
Another big mover in early trade is Wirecard which is up 2.2 percent after raising its 2019
outlook, as the German payments company shook off allegations of fraud and false accounting to
post a 40.7 percent increase in core profits in the first quarter.
Imperial Brands may get a lift after standing by its FY forecast and delivering higher
half-year results. Supermarket operator Ahold Delhaize said higher Q1 net income was lifted by
upbeat growth in online sales and the Netherlands, but reiterated 2019 margins will be slightly
lower than last year.
After better than expected results from U.S. chip equipment maker Qorvo overnight,
semiconductors will remain in focus amid a slew of recent results. Underscoring industry
concerns about sluggish global demand, Toyota Motor has forecast lower growth in operating
profit for the current year on an expected drop in revenue and weaker vehicle sales in Japan and
North America.
Here's the early harvest of headlines:
Siemens spins off struggling gas and power in smart digital shift
Siemens posts stronger than expected industrial profit
Mortgage litigation claims could hit Spanish bank results - Bank of Spain
Commerzbank Q1 net profit falls on higher tax burden
Scandal-hit Steinhoff posts $4 bln operating loss for fiscal 2017
Ahold Q1 earnings rise, roughly in line with estimates
Deutsche Bank to ISS: "We have improved our risk system"
Ex-Danske CEO Borgen charged over money laundering case -report
Generali targeting European small and medium insurers
German prosecutors aim to fine UBS over alleged help in client tax evasion
Osram posts 56 pct drop in EBITDA in Q2, cites challenging environment
Wirecard lifts 2019 guidance after strong Q1
Munich Re Q1 net profit down 23 percent on higher claims
Here's your snapshot:
(Josephine Mason)
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EUROPE ON THE BACKFOOT AGAIN (0518 GMT)
With April's gains wiped off the STOXX 600 in just four days of trading this month,
worries about the tense U.S.-China trade talks and the U.S. threat of more tariffs on Chinese
imports are expected to inflict more pressure on European stocks this morning.
Asia markets have tracked losses on Wall Street overnight, falling back sharply as investors
digest China's latest trade data for April, which was a bit of a mixed bag.
Financial spreadbetters IG expect London's FTSE to open 9 points lower at 7,251, Frankfurt's
DAX to open 6 points lower at 12,087, and Paris' CAC to open 3 points lower at 5,392.
(Josephine Mason)
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(Reporting by Danilo Masoni, Helen Reid, Josephine Mason and Thyagaraju Adinarayan)