LIVE MARKETS-What's on the radar for the open: Daimler takes big tariff hit
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WHAT'S ON THE RADAR FOR THE OPEN: DAIMLER TAKES BIG TARIFF HIT (0639 GMT)
European stocks are set to extend Wednesday’s modest relief rally as no new trade salvos
were exchanged, and after Asian markets and Wall Street made gains overnight with the tech-heavy
Nasdaq (Frankfurt: 813516 - news) sealing a new record high close.
Futures for the main European benchmarks are trading flat to up 0.5 percent, but it may be a
false dawn as trade tensions remain high ahead of the tariff implementation date of July 6, with
analysts at Goldman saying it seems likely trade concerns could rise further over the next few
months.
Autos stocks are set to fall further after Daimler (IOB: 0NXX.IL - news) issued a profit warning late on Wednesday
in the most high-profile impact of U.S. China tariffs on a European firm’s outlook yet.
The German carmaker said new import levies on cars exported from the U.S. to China would
hurt sales of its high-margin Mercedes Benz sports vehicles – an ironic turn of events for the
company after President Trump reportedly said he would pursue German carmakers until there are
no more Mercedes (Xetra: 710000 - news) -Benz rolling down Fifth Avenue.
The autos sector – which hit a new 7-month low on Wednesday - is seen falling 1 percent,
with Daimler seen losing 3 to 4 percent, BMW (EUREX: BMWE.EX - news) 3 percent and Volkswagen (IOB: 0P6N.IL - news) 1 to 2 percent in
pre-market indications. Germany’s DAX futures are lagging the rest with autos likely to dent the
index.
Auto suppliers’ shares are also indicated down 2-3 percent on the negative readacross.
Oil and gas stocks are another key sector to watch ahead of the OPEC producer cartel’s
meeting on Friday. Crude prices are falling as Iran signaled it may support a small rise in OPEC
crude output, paving the way for a supply increase to be agreed.
M&A news includes Altice (Other OTC: ATSVF - news) selling stakes in French and Portuguese telecom towers to cut debt,
and Engie (LSE: 0LD0.L - news) selling its majority stake in Glow Energy to Thailand’s PTT (Stuttgart: 1306682.SG - news) for $2.9 billion.
Dixons Carphone (Frankfurt: CWB.F - news) confirmed its profit slump but its shares are seen rising modestly with
analysts and traders saying the announcement would drive a small relief bounce on no new bad
surprises after a profit warning cratered the shares at the end of May.
(Helen Reid)
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DAX FUTURES LAG EUROPE ON AUTOS, TRADE WORRIES (0612 GMT)
Germany's DAX futures are lagging European peers in early trade, reflecting the likely drop
in autos stocks driven by Daimler's profit warning.
"Bears will point out this is the first physical evidence of Trump trade war," says one
trader.
(Helen Reid)
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EARLY MORNING HEADLINE ROUND-UP (0536 GMT)
Autos will be in focus today again after Daimler late on Wednesday issued a profit warning,
saying new import tariffs on cars exported from the U.S. to China would hurt sales of
high-margin Mercedes-Benz sports cars - one of the first companies to directly factor in the
impact of tariffs.
Separately Chinese-owned Volvo Cars warned higher tariffs could undermine its plans to hire
up to 4,000 workers at a new car assembly plant in South Carolina.
Europe's autos sector hit a new 7-month low yesterday and is likely to be under further
pressure today.
In M&A news, Altice is selling stakes in French and Portuguese telecom towers, a move which
could be welcomed by investors keen to see its debt pile shrink, while Thailand's PTT is set to
buy power firm Glow Energy from Engie for $2.98 billion.
Daimler sees lower 2018 profit, blames trade war, emissions clamp-down
Volvo Cars CEO says auto tariffs threaten jobs at new U.S. plant
Altice selling stakes in French, Portuguese telecom towers to cut debt
Thai PTT to pay $4 billion for Glow Energy as Engie exits coal
Telecom Italia (Amsterdam: TI6.AS - news) keen to discuss fiber-to-the-home tie-up with Open Fiber
Deutsche Bank (IOB: 0H7D.IL - news) to pay $205 mln to settle NY currency rigging charges
Saudi bourse will be ready for capital inflows after MSCI EM inclusion
(Helen Reid)
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MORNING CALL: FADE IN TRADE WAR TALK LIKELY TO SUPPORT EUROPEAN STOCKS (0517 GMT)
European shares are seen rising quite strongly at the open after modest gains in Asia thanks
to a lull in trade war talk, while oil markets are nervy ahead of tomorrow's meeting of the OPEC
production cartel.
Asian shares edged higher on a respite in protectionist rhetoric from the U.S. and China, as
well as speculation the Chinese central bank would deliver more stimulus to the economy.
Wall Street had also made gains in the previous session with the unstoppable Nasdaq posting
a record high close.
Oil prices will likely drive stocks today too ahead of Friday's meeting between OPEC and
other big producers including Russia. Crude is declining slightly as tensions grow in the market
with Iran signaling support for a small rise in crude output.
Spreadbetters expect the FTSE to open 49 points higher at 7,676 points, the DAX to open 66
points higher at 12,761 and the CAC 40 to open 27 points higher at 5,400.
(Helen Reid)
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(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)