LIVE MARKETS-What's in store for REITs?
* European stocks edge up
* Publicis (Paris: FR0000130577 - news) , ABB (LSE: 0NX2.L - news) jump after results
* U.S. stocks futures retreat
LONDON, April 19 (Reuters) - Welcome to the home for real-time coverage of European equity
markets brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her
on Messenger to share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net
WHAT'S IN STORE FOR REITS? (1120 GMT)
Yesterday UK commercial property stocks were in focus after Hammerson (Frankfurt: 876140 - news) pulled out of
a bid for Intu Properties (LSE: INTU.L - news) . A couple of brokers mull what lies ahead for a sector
facing multiple challenges.
"We think NAVs (net asset value) are about to take a cold shower with shopping centres
taking the plunge first, and our cash flow analysis which pre-empted HMSO’s dividend issue a
year ago, confirms that REITs are in a weak and weakening position," Jefferies analysts say in a
note.
Jefferies analysts also weren't fans of the proposed takeover, and now think that
Hammerson's board is now in an "untenable" position given that it didn't engage fully with
Klepierre (LSE: 0F4I.L - news) , and shareholders are "likely to demand the boards’ collective heads on spikes".
In a note entitled 'Just not that Intu (Swiss: OXIGTU.SW - news) you (anymore)', Barclays (LSE: BARC.L - news) analysts upgrade Hammerson
to "equal weight" and moved Intu to "underweight".
Though Barclays does point out that is only took Hammerson four months to change its mind
about the deal.
"We always failed to see a clear rationale for the Intu deal: bigger does not necessarily
mean better," Barclays analysts say in a note, adding that now Hammerson will be free to focus
on "nearer term shareholder value creation", such as making disposals, investing in
higher-growth areas such as premium outlets and Ireland (Other OTC: IRLD - news) and an evaluation of the potential
returns from its capital projects.
(Kit Rees)
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WILL EUROPEAN BANKS SURF THE EQUITY TRADING BOOM? (1034 GMT)
Big Wall Street banks have reported above-consensus quarterly numbers but what really stood
out were the booming equities revenues: +32%, driven by the spectacular reawakening of
volatility at the start of the year.
Now (Frankfurt: 11N.F - news) it's European investment banks' turn with results from UBS (LSE: 0QNR.L - news) , Deutsche Bank (IOB: 0H7D.IL - news)
, Barclays and Credit Suisse (IOB: 0QP5.IL - news) all lined up for next week, and analyst
expect similar patterns, although the dollar weakness could hurt.
Here's in two bullets, courtesy of Citi , what to expect from European investment banks:
* Very Strong Equities To Benefit Societe Generale & UBS "The pick-up in VIX resulted in
very
strong Equity volumes across both cash and derivatives in 1Q18, with particular strength in
derivatives. SocGen (Paris: FR0000130809 - news) & UBS look best placed to benefit in our view."
* Weak FICC To Hurt Barclays and Deutsche Bank: "In sharp contrast CVIX and MOVE indices
were more
muted, while Rates were also negatively impacted by further yield curve flattening. Credit was
notably weaker yoy, due to a fall in DCM (KSE: 024090.KS - news) activity and as spreads started to widen. BARC & DB are
highly exposed to Credit, as is CS, albeit stronger equities should help offset at the latter."
(Danilo Masoni)
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TRADE WARS: THE FED'S 36 SHADES OF BEIGE ANXIETY (1002 GMT)
There's quite a lot of skepticism out there on whether the Trump administration is actually
willing to get into a full-blown trade war with China, given corporate America's pro-free trade
agenda.
One way to assess the nervousness and the resistance of the business establishment to a
trade war can be found in the "Summary of Commentary on Current Economic Conditions by Federal
Reserve District", otherwise known as the "Beige Book".
Paul Donovan, chief economist at UBS Global Wealth Management, spotted that the publication
--"an economist's "Hello" magazine of anecdote and gossip"-- mentioned "tariff" 36 times, and
"not in a good way".
He adds: "This is not surprising. The economic cost of trade taxes was always likely to
exceed any benefit from US President Trump's tariff signing Twitter (Frankfurt: A1W6XZ - news) moment."
Here's a link to the publication: https://bit.ly/2Hatslr
During a presentation on Tuesday, Mike Bell, global market strategist at J.P. Morgan Asset
Management, summed up in an eloquent way how skeptically some analysts view Trump's trade war
rhetoric:
"Like a WWE wrestling match there’s an awful lot of talk but very little damage done", Bell
said, adding that "we see this as more of skirmish than a war and expect China to do more of
what the U.S. wants and avoid an escalation".
Here's a screenshot where you can see that a search for "tariff" on the beige book gives you
36 hits, and usually the words "concern" or "risk" are not far away.
(Julien Ponthus and Tom Finn)
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M&A IN U.S. TECH RUNNING AT FULL DOT-COM BUBBLE SPEED (0915 GMT)
With (Other OTC: WWTH - news) so many strategists calling for caution on the U.S. tech sector, it's hard to tell
whether M&A running at full pre dot-com bubble speed is a sign of good health or a rather
sinister omen.
Anyhow, Thomson Reuters (Dusseldorf: TOC.DU - news) research shows that M&A activity in the U.S. is at its highest level
since the 2001 tech bubble burst. Have a look:
Following the Facebook (NasdaqGS: FB - news) /Cambridge Analytica scandal, a growing number of analysts have warned
investors that the sector could face a wave of regulation similar in scale to the post-financial
crisis banking regulations and even perhaps in the magnitude of the anti-monopoly drive which
restructured the U.S. economy at the beginning of the 20th century.
Here's what Saxo Bank told its clients in its outlook for Q2:
(Julien Ponthus)
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OPENING SNAPSHOT: EUROPE MIXED AS EARNINGS DOMINATE, MINERS RISE (0710)
Main European stock indexes are off to a mixed start, although moves are small in both
direction, as investors go through a jungle of earnings updates.
Further gains in mining stocks, as metal and oil prices hit new peaks, however is providing
support.
Here's your opening snapshot:
(Danilo Masoni)
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WHAT'S ON THE RADAR FOR EUROPEAN STOCKS (0649 GMT)
Earnings take centre stage today as futures point to a positive open, with stellar gains in
commodities stocks likely to keep driving the market up after crude prices hit new late-2014
highs overnight and aluminium and nickel prices continued to surge.
The earnings season is gathering pace with consumer giants Nestle (Swiss: NESN.VX - news) and Unilever (NYSE: UL - news) reporting,
both confirming their 2018 outlook and indicated up 1 percent in pre-markets.
Investors are particularly watching currency movements this season, and some companies will
have been under strain due to the strong euro.
M&A news will also move stocks: Merck KGaA (LSE: 0O14.L - news) ’s shares are seen gaining 2 to 3 percent after
Procter & Gamble (Swiss: PG-USD.SW - news) agreed to acquire its consumer health business for around 3.4 billion euros.
Weir Group (Other OTC: WEIGY - news) is indicated down 3 to 4 percent, however, after announcing a $1.28 billion deal to
acquire Esco Corporation.
A difficult season for UK retail continues with Debenhams (Frankfurt: D2T.F - news) indicated down 10 percent after
warning on its outlook and cutting its dividend. Ultra Electronics (Frankfurt: 909716 - news) was also seen falling 10
percent by some traders after saying it was being investigated by the SFO for suspected
corruption in Algeria.
Some extra headlines to watch:
Unilever stands by outlook after Q1 meets expectations
Ultra Electronics investigated by UK's SFO for "suspected corruption" in Algeria
Hedge fund Elliott issues new attack on Vivendi (LSE: 0IIF.L - news) over Telecom Italia (Amsterdam: TI6.AS - news)
Debenhams cuts dividend as first-half profit slumps
Southwest challenged engine maker CFM over proposed FAA inspections
Acacia Mining (Frankfurt: 33A.F - news) posts lower Q1 earnings, maintains FY targets
(Helen Reid and Danilo Masoni)
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EUROPEAN STOCK FUTURES RISE AS EARNINGS DOMINATE (0612 GMT)
Futures across the major benchmarks are up 0.1 to 0.2 percent, indicating an upbeat open
after a strong trading day yesterday - particularly for commodities stocks.
ABB shares are indicated up 1.6 percent higher after its profit beat, while Nestle is seen
gaining 1 percent after it reported growing volumes.
Today is going to be dominated by earnings, with some M&A news sprinkled in as well - here
are a few extra headlines to watch:
Publicis beats Q1 growth expectations on North American rebound
Schneider Electric (EUREX: SND1.EX - news) beats Q1 revenue forecast on upbeat China demand
Pernod Ricard (TLO: RI-U.TI - news) gives more upbeat outlook after strong Q3
Aéroports De Paris Acquires Exclusive Control Of Airport International Group
Weir Group to buy Esco Corporation in $1.28 billion deal
(Helen Reid)
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EARNINGS, M&A: CORPORATE NEWS ROUND-UP (0532 GMT)
The earnings season is gathering pace and today we've got ABB reporting its best
start to the year since 2015, and a huge M&A move with Procter & Gamble agreeing to acquire the
consumer health business of Merck KGaA for around 3.4 billion euros.
It's a big day for consumer staples with Nestle also reporting increased volume
growth and confirming full-year guidance.
In other interesting results, Swiss pumpmaker Sulzer (IOB: 0QQ9.IL - news) , whose shares were dented by
sanctions on its main Russian shareholder, confirmed its 2018 outlook - saying it saw a one-off
hit of 10 million Swiss francs from business disruption due to the sanctions.
Currency movements are going to be particularly important this results season, and while
some companies will have been under strain due to the strong euro, others could benefit.
Novartis (IOB: 0QLR.IL - news) said it got a boost from a weaker dollar helping its first-quarter sales rise
10 percent.
Here are some of the headlines that have caught our eyes:
ABB's first quarter profit beats forecasts
P&G to buy German Merck's consumer health business for about $4.21 bln
Sulzer confirms 2018 outlook, sees small hit from sanctions impact
Nestle confirms outlook as volume growth picks up
Novartis Q1 sales beat gets help from weak dollar
France's AccorHotels upbeat about 2018 after strong Q1 sales
Total (LSE: 524773.L - news) buys stake in U.S. battery developer Ionic Materials
Deutsche Bank COO to leave amid continuing management reshuffle
(Helen Reid)
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EUROPE SEEN OPENING HIGHER AS RESOURCE STOCKS SHINE (0515 GMT)
Yesterday's resource stocks strength has spread into Asian trading overnight as oil prices
hit new highs not seen since late 2014.
Brent crude climbed to $73.77 a barrel, while U.S. crude rose to $68.73 after a Reuters
report that Saudi Arabia would be happy for crude to rise to $80 or even $100.
European stocks are likely to maintain Asia's trend higher, with spreadbetters calling the
DAX 18 points higher at 12,609, the CAC 40 up 14 points at 5,394, and the FTSE 100 6 points
higher at 7,323.
(Helen Reid)
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(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)