LIVE MARKETS-Wall Street's Trump bump disappearing quickly

* Fed, ECB coordinated emergency move fails to reassure * STOXX 600, FTSE 100 last down 7% to 8% * Shares in holiday operator TUI plummet 30% * U.S. shares slump as much as 11% Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London. WALL STREET'S TRUMP BUMP DISAPPEARING QUICKLY (1435 GMT) With another 11% selloff in the U.S., the indexes are now close to wiping out all the gains seen under Trump's presidency since Jan 2017. Another 1,000-point fall (which looks very likely) on the Dow Jones index will clean out all the gains since he came into power. Here's a quick chart showing the rally upward over the last 3-1/2 years and the breath-taking sell-off which took less than a month to wipe off those gains: (Thyagaraju Adinarayan) ***** EUROPEAN AIRLINES: TO THOSE WAITING FOR CLEAR BLUE SKIES As the coronavirus pandemic threatens to bring the aviation industry to a standstill, Citi has some advice for those in for the long-haul: hold the well-capitalised carriers who in 2021 will likely consolidate the market i.e. Ryanair. Citi lists reasons why they think a merger between the western Europe-dominated Ryanair and the eastern Europe-focussed Wizz Air Holdings would work: Wizz with its Airbus fleet could be a fix for Ryanair's Boeing 737 MAX issues. They also note that the two are remarkably similar in terms of competitive business models (running routes that few others operate) and with little overlap between businesses. "The Eastern European market is of course undeniably attractive and more importantly an inferior number of seats per capita vs Western Europe," a group of Citi analysts led by Mark Manduca write in a note. If needed, Ryanair could also buy surplus slots in UK's Gatwick airport, Citi notes. They view Ryanair & IAG as the most well-capitalised, Air France and Lufthansa as the most government-backed, while EasyJet and Wizz provide the greatest strategic geographical value. With the possibility of further capacity cuts and shutdown across all of European airspace hanging, Citigroup says any of form of government aid will purely swap equity into debt, could even come with restrictive agreements and will not possibly result in a windfall for equity investors. (Sruthi Shankar) ***** THE SURPRISE STOCK IN THE BLACK (1318 GMT) Cigarette maker Imperial Brands gained a eye-popper 6% this morning and is now up about 1% while most European shares are in free fall and only a handful of stocks are trading in the black across Europe. With scenes of wild stockpiling across the world, it's quite intuitive to see retailers like Ocado in the black. It is more puzzling to see investors putting money in a cigarette maker while the world faces a sanitary emergency. "We recognise that Covid-19 and the oil price shock have potentially created a plethora of opportunities across multiple sectors for investors with longer time horizons. However, few of those opportunities will have the defensive qualities of Imperial in our view," writes Gerry Gallagher at DB. According to the German bank, even taking into account the coronavirus impact on sales, Imperial generates enough cash to pay off all its liabilities and potentially buy itself back from the equity market in a little more than a decade. "Thinking of cash flows in another way... How many companies, at a 7.5% cost of capital can cover their entire EV by cash flows in 14 years?" Needless to say, DB has a buy on Imperial Brands. (Joice Alves) ***** LOSSES ACCELERATE AS WALL STREET OPEN NEARS (1254 GMT) European stocks have reached new lows as we're getting closer to the open on Wall Street. The STOXX 600, trading on 2012 levels, is now down 10%. With futures on limit down, U.S. stocks looked set to crater after the Fed's interest cut aggressive move heightened fears the economy is tipping into a coronavirus-driven recession. Here's the STOXX 600 low hit a few minutes ago: (Julien Ponthus) ***** VIRUS DIARIES: TUBE'S EMPTY, PLANES PARKED, STREETS DESERTED (1142 GMT) Underground rail nearly empty, flights grounded, bars shut, restaurants closed, streets deserted... the virus or the fear of it has heightened and its clearly visible with number of sales/profit warnings pouring in from everywhere. Airlines across the world have given dire warnings on the impact and Air France for instance is grounding its entire Airbus 380 fleet in response to the rising travel bans due to coronavirus. Hotels will be massively affected: Citi says in Q2 they expect up to 80% reductions in revenues for tour operators and 45% reductions in hotel revenue per available room. Finding room to stand during peak hours would be a difficult task in the London tube, but in the last few days it's been just easy. Underground trains in metro cities are running nearly empty and that's you get a doomsday kind of feeling. London underground has had 19% drop in passenger numbers last week, but we (some Reuters witnesses who took the tube) believe it's far worse today. Many countries have shutdown schools across apart from the UK. And for anyone who's wondering why, Deutsch Bank thinks: "the U.K. Chief Medical Officer he made the point that if they close too early then children might be forced to spend a lot more time with their grandparents as child carers. Given this group is more likely at risk then this could be counterproductive." (Thyagaraju Adinarayan) ***** THE 99% FALL THAT WASN'T ONE (1134 GMT) Today's open was a very stressful one but even more so if you were a shareholder in Associated British Foods. At one stage, about an hour after the bell, the share price was seen down over 99%! Surely a mistake? Yep, even in this tense coronavirus crisis, some things don't turn out for the worse. So while we still don't have the official line on what happened precisely, the worst case scenario turned out not to be the right one. The owner of British retail chain Primark actually resumed trading a bit later and fell 'only' 13%. News was grim with Primark shutting down 20% of its store space and not providing a full-year forecast but the shares get to fight another day. Here's the moment when the AB Foods shares stopped trading: (Julien Ponthus and Thyagaraju Adinarayan) ***** FALLING FTSE 250 EXPOSES DOUBTS OVER UK VIRUS STRATEGY (1040 GMT) "With the domestically-focused FTSE 250 being hit hard this morning, there is clearly a perception within the trading community that the UK strategy is riskier and could result in a more significant economic impact despite the current lack of a hard line shutdown seen elsewhere", writes IG analyst Joshua Mahony. "The UK strategy appears to be willing to ramp up total cases yet minimise deaths in a bid to raise herd immunity within the wider population", he adds. The domestically focused FTSE 250 is currently down 11.7% while London's blue chip benchmark and its bigger global exposure is down 6.2%. (Julien Ponthus) ***** BANKS, ENERGY, AIRLINES INDEXES DOWN >50% FROM 2020 PEAK (1016 GMT) A whopping 50% drop in the pan-European STOXX travel & leisure, banks and energy indexes from their respective 2020 peaks. With the virus' impact on the world economy and its peak still hard to forecast, investors are staying far away from stocks that are the most exposed. This chart (travel and leisure) says it all: (Thyagaraju Adinarayan) ***** FOLLOW THE PASTA! (0947 GMT) With all these empty shelves of pasta across supermarkets across Europe, food retailers are seen as an essential area of the economy for the foreseeable future. While cafes and restaurants are shutting down across continental Europe, households will need to cook from home probably more than they did before the virus outbreak. "A widespread, Italy-like lockdown would not dent European grocers' FC or earnings attractions", Jefferies' analysts argue. They upgrade AholdDelhaize, Sainsbury and Carrefour to Buy, Colruyt to Hold. Tesco, Morrisons and Jeronimo are reiterated at Buy, Casino and Ocado at Underperform, and Metro at Hold. Here's their picks in the sector: (Julien Ponthus) ***** EUROPE'S FEAR INDEX HAS NEVER BEEN THIS SPOOKED (0922 GMT) 'Europe's fear index' has never been this spooked. The volatility gauge for euro-zone stocks has hit a high of 88.73 points against 87.88 on October 16, 2008. Clearly, last night's coordinated monetary bazooka salvo has failed to reassure markets about the economic damage the coronavirus health crisis is unleashing on the world. (Julien Ponthus) ***** EUROPEAN STOCKS SINK TO 2013 LEVELS, AIRLINES FALL (0822 GMT) European stocks markets fell between 4% and 5% at the open but have quickly passed the 6% since. As expected, airlines and travel operators are taking another huge hit due to the travel restrictions imposed all over the world. TUI is losing 26%, Easyjet and BA owner ICAG are both down 20%. The travel and leisure sector as a whole is down a dramatic 12%. The coordinated monetary stimulus offered by the Fed, the ECB and other central banks last night were no game changers. That's visible with the banking sector down 6.4%, so more than the average despite the massive hike in liquidity offered by monetary policy makers. The oil and gas sector is also under pressure Brent crude price falling as the price war between top producers adds to a growing supply glut. (Julien Ponthus) ***** "WE EXPECT THE MARKET TO END THE YEAR AT MUCH HIGHER LEVELS THAN TODAY" (0755 GMT) There's a big demand for optimism these days so here's at least one positive headline extracted from the morning note of Mark Haefele, chief investment officer at UBS Global Wealth Management. "Broad fiscal spending and rate cuts are blunt instruments for dealing with the short-term economic impact of the virus, but should provide investors with some confidence that growth can be strong once the recovery gets underway. We expect the market to end the year at much higher levels than today, with China's economy leading the way to recovery and the US and European economies rebounding in the third quarter." Other morning notes are way more gloomy obviously but there's no harm in having an optimistic blog post from time to time! (Julien Ponthus) ***** ON THE RADAR: FUTURES FALL DEEPER, AIRLINES ON THE FRONT LINE (0738 GMT) European stock markets are expected to open sharply in the red this morning as last night’s monetary salvo failed to calm markets down. U.S. futures have already hit their down limit and Europe's are falling way over 5% at the moment. Airlines, airports and any hospitality group are going to be badly hit as Europe and parts of the U.S. start imposing new travel restrictions and lock downs. EasyJet said it could ground the majority of its fleet as people stopped travelling and is calling for coordinated government backing to help (save?) the aviation industry. Same call from travel operator TUI which said it would suspend most of its operations, scrap its outlook and apply for state aid. Still in the industry, French airports group ADP is considering closing down some areas in its main Paris airports. The access to massive liquidity in dollars might help banks and financial services in the short term in comparison but this is the worst time to be single out for a bank. Credit Suisse Group AG's alleged role in a $2 billion Mozambique corruption case might weigh further on the shares of the bank. Signs of the wider long term hit to the economy is Volkswagen preparing to suspend operations at its manufacturing plant in Bratislava. Another strong signal was LVMH preparing its perfume production site to manufacture antibacterial gel instead of perfume. There are loads of other examples of hints on the pain to come with for instance Swedish home appliance maker Electrolux which sees a considerable risk of a "material" financial hit in the first six months of 2020. (Julien Ponthus) ***** 'I LOVE THE SMELL OF MMT IN THE MORNING!' (0657 GMT) Credit to Rabobank strategist Michael Every for this headline inspired by the famous line of Lieutenant Colonel Kilgore in Francis Ford Coppola's Apocalypse now. What's the next step for central banks if last night's drastic action doesn't work is on everybody's mind. The bank's global strategist argues in his morning note that we're an war-like situation and that the real issue is dealing with the virus not the economic fallout. "Even the jaw-dropping concept of the central banks and governments making everyone whole until this crisis passes, with all the equally mind-bending socio-economic and socio-political implications, is not the real battle. The real battle is the virus. Even helicopter money would just be palliative to keep can-kicking until we can kick the virus", he writes. (Julien Ponthus) ***** FALL OF WALL STREET FUTURES WEIGHS ON THE OPEN (0637 GMT) The fact that U.S. stock index futures hit their daily down limit after the Fed and central banks around the world announced a dramatic coordinated salvo of monetary stimulus is keeping European investors on their toes. Even if this was a major policy move, it seems markets are expecting more to come and not ready to steady before there's more visibility on the epidemic slowing down. "We still think there is more to come in terms of policy easing (fiscal, liquidity, supervisory and monetary) in other countries, but even the US", wrote Ebrahim Rahbari at Citi. "And we still do not expect even these major measures to durably support asset prices as long as credit and health concerns escalate", he added. Below, U.S. futures at their limit down levels: (Julien Ponthus) ***** MORNING CALL: EUROPE IN THE RED DESPITE ECB, FED EMERGENCY MOVE (0616 GMT) European futures are currently trading in the red despite the emergency coordinated move by the ECB, the Fed and other central banks to reassure markets with a comprehensive package to soften the damage of the coronavirus epidemic. EUROSTOXXX 50 futures are down 3.7%, its -3.9% for the DAX and 3% for the FTSE derivatives. Financial spreadbetters also predict sharp losses for London, Paris and Frankfurt at the open. (Julien Ponthus) ***** (Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)