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LIVE MARKETS-Why European tech is a natural target for China

* European shares turn flat in choppy trade

* ASML (Milan: ASML.MI - news) , Ingenico (Paris: FR0000125346 - news) results disappoint; Metro Bank (Frankfurt: 6MB.F - news) tanks

* Retailers lifted by Carrefour (LSE: 0NPH.L - news) , Ahold updates

* Wall St pares gains after positive open on strong earnings

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: rm://


The current Sino (Dusseldorf: 1205802.DU - news) /U.S. trade talks are often seen as a mere chapter in the 'long game' played

these last decades by the first and second biggest economies in the world.

There's a view that both are keeping true to their respective long-term strategies.

While Trump's tariffs are sometime seen as just new means for the United States to slow down

the economic rise of its rival, China's priority in the trade talks is the technology race.

In a piece flagged by ING research, Alicia García-Herrero, a senior fellow at the Bruegel

think tank and chief economist for Asia Pacific at Natixis (LSE: 0IHK.L - news) , argues that China's ultimate goal is

"moving up the technology ladder" and that it needs to become less reliant on U.S. technology.

"We should not be surprised to see a new wave of government-supported mergers and

acquisitions (M&A) by Chinese companies, especially on the high-tech end such as in the

semiconductor sector", she noted, adding "the easiest target continues to be Europe given the

increasingly wary attitude of the U.S. on M&A by China".

Here's a link to the story:

Below a photo taken from an April 2017 story about how Chinese student were testing

self-sustaining space stations in Beijing.

By the way, talking about tech, interesting to see how strongly the European index bounced

back, now up 0,2 percent, after this morning Ingenico and ASML led fall.

(Julien Ponthus)



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.

With (Other OTC: WWTH - news) 800,000 workers plus contractors furloughed until Washington breaks the deadlock over

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

corporate growth.

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.

(Josephine Mason)



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

more gains among retailers after solid updates from Carrefour and Ahold, and fresh strength

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

levels at

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:

(Danilo Masoni)



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.

(Danilo Masoni)



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

were also Metro Bank (down 26 pct) and French payments firm Ingenico (Swiss: ING.SW - news) (down 16

pct) which reported disappointing results.

Not all updates were that bad.

Carrefour (Swiss: CA.SW - news) (up 5 pct) was a notable exception: the French supermarket expressed

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:

(Danilo Masoni)



European shares are set to begin morning trading lower than they closed yesterday as a combo

of worries on global growth and on the Sino/U.S. trade negotiations weighed on global markets,

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

EPS miss.

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.

Also positive views on Antofagasta (Other OTC: ANFGF - news) and its copper output rise, and for Deutsche Boerse (IOB: 0H3T.IL - news) .

Perhaps an important chapter in the Nissan/Ghosn saga with Renault (LSE: 0NQF.L - news) convening a board meeting

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

Cocoa giant Barry Callebaut (IOB: 0QO7.IL - news) sees sales accelerating after Q1 miss

Antofagasta Q4 copper output rises 23.7 pct

(Julien Ponthus)



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:

(Julien Ponthus)



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.

According to IG (Frankfurt: A0EARV - news) , financial spreadbetters expect London's FTSE to open 16 points lower,

Frankfurt's DAX and Paris' CAC, down 13 points and 16 points respectively.

CMC Markets (LSE: CMCX.L - news) has a similar, albeit slightly higher forecast.

(Julien Ponthus)