* European shares turn higher, STOXX 600 at session high
* Asian shares dip on growth, trade worries
* But Carrefour shares boosted after Q4 update
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
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U.S. GOVERNMENT SHUTDOWN: AN UNLIKELY BOOST FOR THE ECONOMY AND STOCKS?? (1536 GMT)
The longest government shutdown in U.S. history, which entered its second month today, has
helped fuel the surprisingly strong global equity rally this month.
the budget, that's not an argument that would necessarily make much sense.
Take the 17-day shutdown in October 2013: S&P estimate it shaved at least 0.6 percent off
GDP that quarter.
But Edward Park, deputy chief investment officer at Brooks MacDonald Asset Management, makes
the case that it's been a major factor behind the rally that's put the S&P 500 on track for its
best month since March 2016 and helped recoup some of the losses from December's torrid rout.
The argument goes that during the shutdown, the government's ability to issue debt is
severely restricted as it gets close to hitting the debt ceiling. That means, it's drawing
instead on its own cash funds, which totalled around $350 billion heading into the shutdown.
That has acted as a short-term economic stimulus and a boost to stocks.
"This effectively means money is being put into the economy without debt being issued," says
Park in a note.
It has also offset a drop in Fed bond purchases this month, which would normally hurt
liquidity and with it equity prices.
Once the shutdown ends and this stimulus disappears though, equities will be once again
exposed to the liquidity concerns that have spooked markets as the Fed tightens fiscal policy.
Last month, when the Fed's purchases slumped sharply November, the S&P 500 had its worst month
in a decade.
Park reckons there are only four months - February, May, August and November - when the U.S.
central bank will make significant bond purchases this year. When the value of treasuries
maturing in a month exceeds $30 billion, the Fed reinvests its proceeds by buying treasuries to
avoid tightening liquidity too quickly.
With all that in mind, Park advises selling into any rally because he believes the gains are
technically driven rather than based on fundamentals, such as a recovery in economic and
Aside from fresh liquidity worries, any widespread break in the tactic of recent years to
buy the dips will further undermine the gains so far this year.
EUROPEAN SHARES TURN AROUND, DAX BOUNCES FROM 11K SUPPORT (1303 GMT)
European shares have progressively erased their losses and now that U.S. futures point to a
positive open on Wall Street, the STOXX 600 benchmark is trading at a fresh session high, up
around 0.4 percent, while the DAX is moving comfortably above the key 11,000-points mark.
The trade-exposed auto sector remains the biggest loser even though it's off lows, while
among financials (JPMorgan AM said it saw opportunities there) are driving the move
Stephane Ekolo, equity strategist at Tradition Securities, sees four triggers for the
1. Technical - the DAX and the Euro STOXX 50 both bounced off before reaching key support
11,000 points and 3,080 points respectively
2. Retail charging courtesy of strong reports for the likes of Carrefour and Ahold Delhaize
3. Upbeat Brexit Newsflow - it seems a no-deal Brexit is becoming less likely
4. Not a lot of volume which can exacerbate the positive trend
"That being said, I am not so sure that this rebound is sustainable, without more positive
newsflows, be corporate or on the US-China trade dispute front," he says.
Here's your snapshot:
STRESS TEST INSURERS? THEY PASSED! (1110 GMT)
Insurance stocks have outperformed both the market and their bank cousins in 2018, helped by
good fundamentals and relatively cheap valuations, but there are worries creeping in that a fall
in equities and credit downgrades could hurt them.
But should investors really be concerned?
HSBC analysts Dhruv Gahlaut and Thomas Fossard don't believe so and to be sure they have
stressed tested Europe's largest insurance groups.
The result? Passed! The sector is well positioned to manage an extreme event, they say.
"Our stress test shows that the average solvency ratio falls to 146% from 201% assuming a
50% fall in equities, 100 bps lower interest rates and credit migration (of one letter-rating
downgrade across the entire corporate portfolio)," they write.
"We also stress test our earnings estimates and highlight that 2019e normal DPS cover falls
to 1.4x from 1.9x, when assuming 2ppts deterioration in non-life combined ratio, 50 bps drop in
non-life yield and corporate bond defaults (similar to the maximum rate observed since 1940"
On top of that the sector still trades at the lower end of its 10-year discount to the
market, EPS revisions for 2019-20 are positive since the start of 2018, and share prices offer
total dividend yields of 7 pct for 2018-19.
OPENING SNAPSHOT: POOR UPDATES DRAG EUROPEAN SHARES LOWER (0842 GMT)
European shares are down for a third straight session as a string of poor earnings updates
including from ASML, a major supplier to the world's largest computer chipmakers,
added to concerns over trade and global economic growth.
In early deals the pan-regional STOXX 600 was down around 0.4 percent, while other regional
benchmarks were also slightly in the red. Trade-exposed autos were the biggest sectoral
fallers, down 1.3 percent, while defensive sectors such as utilities outperformed.
ASML (down 3 pct) was the biggest negative weight on the STOXX 600, while among top fallers
pct) which reported disappointing results.
Not all updates were that bad.
confidence over its strategy plan and it seems that the impact from the yellow vest protests in
France was not as bad as feared.
Here's your opening snapshot:
A FEW NASTY FALLS EXPECTED AT THE OPEN (0754 GMT)
European shares are set to begin morning trading lower than they closed yesterday as a combo
from Wall Street to Asia.
A new batch of corporate results will animate the session and so far there are already a few
stocks indicated with strong losses at the open, notably Metrobank down up to 10 percent after a
Premarket indications show little love and a likely fall for ASML which said it sees 2019
sales growth despite delay in orders. French payments business Ingenico is also seen retreating
after a warning on core profit.
Much better signs for supermarkets Carrefour and Ahold for their Q4 figures.
to turn the page.
Here are a few headlines:
French payments business Ingenico warns on core profit
Carrefour confident over overhaul despite Q4 'yellow vests" hit
Deutsche Boerse sees adjusted net profit growth of around 17 pct in 2018
Supermarket retailer Ahold Delhaize's Q4 sales meet expectations -
ASML sees 2019 sales growth despite delay in orders
Renault convenes board to turn page on Ghosn era
Antofagasta Q4 copper output rises 23.7 pct
FUTURES DIP (0713 GMT)
European futures have opened roughly as expected, that is in negative territory but without
any dramatic moves - yet.
Q4 headlines are starting to accumulate on our screens but don't seem to have what it would
take to drastically change the mood or paint Europe Inc in a new optimistic colour.
Here's your snapshot:
NO THRUST FOR EUROPEAN STOCKS (0626 GMT)
From global growth worries to trade war concerns, there just ain't much in store to prop up
European shares after Asia and Wall Street ended their session without any sudden new-found
faith in risky assets.
Frankfurt's DAX and Paris' CAC, down 13 points and 16 points respectively.