LIVE MARKETS-How well could tech bulls digest a sour Apple?

May 1 - 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: julien.ponthus.thomsonreuters.com@reuters.net

HOW WELL COULD TECH BULLS DIGEST A SOUR APPLE? (1255 GMT)

Pressure is building around Apple (NasdaqGS: AAPL - news) 's results which are due after the close on Wall Street and

likely to set the tone for the European open tomorrow.

There's a lot at stake for the world's biggest market capitalisation but also for the rest

of the tech sector after disappointing forecasts from the iPhone supply chain lowered

expectations for Apple's biggest product, which accounted for more than 60 percent of its

revenues last year.

"Apple’s results in particular are set to be closely scrutinised and could have wider

implications for the technology sector on the whole, as investors remain concerned that the

company will report a weak set of results due to disappointing sales of the iPhone 8 and iPhone

X," writes Dan Smith, Investment Analyst at Thomas Miller Investment.

For its part, London Capital Group says a disappointment is likely to hurt.

"Investors have been on edge that Apple might not live up to expectations. As long as Apple (Swiss: AAPL-EUR.SW - news)

doesn’t give a downbeat guidance, the market should be able to take what Apple throws out. Given

the negative bias to the markets, a downbeat guidance from Apple could prove too much."

Apple's results come at a time when more and more investors worry that the sector has

reached a peak in terms of valuation and that it is particularly vulnerable to a new wave of

regulations in the wake of the Facebook (NasdaqGS: FB - news) /Cambridge Analytica scandal.

In a research piece this morning, Nick Mustoe, Invesco Perpetual’s chief investment officer

used the historical price-to-book value chart below to show how "tech-related areas are amongst

the most expensive" in the U.S. market and how this encourages him to operate "a rotation away

from momentum-driven sectors such as tech towards undervalued sectors such as oils and banks".

More reading:

Investors look to Apple's cash, services as iPhone sales seen stalling

GRAPHIC-Apple in charts before Q2 earnings

(Julien Ponthus)

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WHICH EQUITY REGIONS ARE OUTPERFORMING? IT'S COMPLICATED (1046 GMT)

On a slower trading day it's worth stepping back and taking a broader view of how equity

markets are stacking up globally.

In general, Goldman Sachs (NYSE: GS-PB - news) says conversations with investors indicate conviction and

consensus about which region to be overweight have dwindled as the year grinds on. This could be

because there's no obvious answer to that question.

Asia ex Japan, EM and the U.S. have performed better than Japan and Europe in local currency

terms this year, thought the latter have caught up quite a bit since mid-March.

Currency effects are becoming more important to allocations to different regions,

complicating the performance picture.

"Depending on the investor and the implementation, taking account of the FX can be

critical," they say, noting that in common currency terms (e.g. USD) year-to-date performance

has been quite similar across regions.

Earnings have been revised up everywhere except in Europe year-to-date, GS finds. Its

strategists slightly downgraded return expectations to reflect the mild slowdown in growth, but

still forecast close to double-digit total return upside over 12 months in Europe.

In sectors, energy and materials have had some of the strongest EPS revisions as

commodities surged, and overall strong earnings combined with flat price performance have caused

valuations to get cheaper.

(Helen Reid)

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FTSE GETS BOOST FROM SINKING STERLING AS PMI DATA SHOWS SHARP SLOWDOWN (0844 GMT)

Manufacturing PMI data just out shows UK factory growth sank to a 17-month low in April,

further slashing the chances the Bank of England will hike interest rates next week. This latest

data point adds to weak GDP figures which on Friday caused the market to rapidly reprice the

probability of a rate hike.

Interestingly, HIS Markit said weakness centred especially around producers of consumer

goods who have been hit by households' reduced spending power after last year's rise in

inflation.

Sterling sank sharply on the news, sending the FTSE 100 up to a session high, up 0.3

percent.

(Helen Reid)

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MORNING SNAPSHOT: BP, CARLSBERG RISE AFTER RESULTS (0739 GMT)

The FTSE is up 0.1 percent, the lone index along with Copenhagen which is trading today. Oil

major BP is indeed rising after its strong profits, but its increasing debt pile could be

what's keeping gains muted to just 1.2 percent.

Interestingly, the latest Kantar retail data shows Sainsbury (Amsterdam: SJ6.AS - news) 's and Asda sales growth lagged

their rivals'. Sainsbury's shares are still rising again today, up 1.4 percent after a surge

yesterday on the merger news. Morrisons is down 1.2 percent.

In other results-driven moves, Carlsberg (LSE: 0AI3.L - news) is up 0.4 percent after sticking to its 2018

outlook despite a disappointing performance in Q1 sales. Volumes grew in all markets except for

Russia, the Danish brewer said.

Just Eat (Frankfurt: A1100K - news) is top of the FTSE 100, up 4.5 percent after its first-quarter results.

(Helen Reid)

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A FEW THINGS TO WATCH AT THE OPEN (0650 GMT)

Energy stocks: of course BP results but more widely oil prices are on the rise after Israeli

Prime Minister Benjamin Netanyahu said he was sure Trump would do "the right thing" in reviewing

Iran's nuclear deal with western powers.

Basic materials and metals stocks with Trump postponing the imposition of steel and

aluminium tariffs

In the sector: Australia's corporate watchdog said on Tuesday it has expanded legal action

against miner Rio Tinto (Hanover: CRA1.HA - news) .

Beer: Danish brewer Carlsberg sales fell 5 percent in the first quarter.

For Britain, Manufacturing PMI will be closely watched as well as the latest Brexit

controversy with Britain's upper house voting to give parliament powers to block or delay a

final deal on departure from the European Union.

(Julien Ponthus)

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FTSE FUTURES TICK UP (0616 GMT)

FTSE futures have opened just slightly up, rising about 0.1 percent it what could be a quiet

day given that most European bourses are closed for Labour day.

There will however be BP shares to watch at the open after the major reported a 71

percent jump in profit in the first quarter.

Also expect a bit of action in about two hours with some U.K. macro data:

0830 GMT UK BOE Consumer Credit for March: Expected 1.450 bln GBP; Prior 1.647 bln GBP

0830 GMT UK Mortgage Lending for March: Expected 3.600 bln GBP; Prior 3.718 bln GBP

0830 GMT UK Mortgage Approvals for March: Expected 63.000 k; Prior 63.910 k

0830 GMT UK M4 Money Supply for March: Prior -0.3 pct

0830 GMT UK Markit/CIPS Manufacturing PMI for April: Expected 54.8; Prior 55.1

(Julien Ponthus)

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M&A GALORE: $120 BILLION WORTH OF DEALS IN 2 DAYS (0547 GMT)

According to Thomson Reuters (Dusseldorf: TOC.DU - news) data, there's been $120 billion worth of deals announced

between April 29 and April 30. The M&A frenzy has been quite obvious indeed with Sainsbury's

planned merger with Asda or the tie-up between T-Mobile U.S. and Sprint.

Take a look:

(Julien Ponthus)

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MORNING CALL: FTSE SEEN OPENING FLAT AHEAD OF KEY PMI DATA (0527 GMT)

The FTSE is expected to open 4 points higher this morning while most major European bourses

are off on Labour Day.

All eyes this morning are on Britain's Manufacturing PMI for April after Friday's poor GDP

data made investors worry about a sharp slowdown in economic growth, which could prevent the BoE (Shenzhen: 000725.SZ - news)

from raising rates this month.

There is also some palpable relief on Asian markets and on U.S. futures after Trump

postponed the imposition of steel and aluminum tariffs on Canada, the European Union and Mexico

until June 1.

(Julien Ponthus)

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