LIVE MARKETS-World Cup: 60 pct chance that Germany, Brazil or Spain wins
* European stocks rise
* Italy's FTSE MIB recovers again, up 0.3 pct
* Ocado shares surge as much as 80% after U.S. deal
* UK bookmakers fall after UK stake restriction
LONDON, May 17 (Reuters) - Welcome to the home for real-time coverage of European equity
markets brought to you by Reuters stocks reporters and anchored today by Kit Rees. Reach her on
Messenger to share your thoughts on market moves: kit.rees.thomsonreuters.com@reuters.net
WORLD CUP: 60 PCT CHANCE THAT GERMANY, BRAZIL OR SPAIN WINS (1228 GMT)
UBS (LSE: 0QNR.L - news) has done the maths and found there is a 60 percent chance one of these three teams wins
the football tournament in July.
The Swiss bank stresses this prediction is by no means a finger in the wind estimate.
"We’ve applied the insights and tools from our daily work as investment strategists to
predict the likelihood of each team doing in the tournament," UBS analysts said, adding however
that "past performance is no guarantee of future results".
As a reminder, an informal survey of investors by JP Morgan in March found that over a third
thought Germany would win:
Here's UBS' detailed chart:
(Julien Ponthus)
*****
STILL SHUNNING ENERGY STOCKS WITH CRUDE AT $80 (1215 GMT)
You would think that with WTI crude at $80, a flurry of broker upgrades and a steady
outperformance of the sector (+13 pct ytd), there would be a rush into oil stocks. But no.
Sanlam's head of global equities Pieter Fourie told us this morning that he still prefers to
stay out of oil stocks.
"The fact that energy stocks have done very well this year is hurting us, but we're not
going to invest in those names any time soon," he said. His reasons?
"Very high capital intensity, low margins and the fact you have no pricing power: you're
basically a price taker, not a price maker."
He's not alone: it seems like quite a few investors remain sceptical of energy stocks
despite their surge. BAML's European fund manager survey on Tuesday found that oil & gas is "not
yet" a crowded sector.
That's despite persistent plugging from Goldman Sachs (NYSE: GS-PB - news) , leading the commodities bull charge.
Late yesterday its analysts noted oil is currently enjoying its strongest year-to-date returns
in a decade. "The rally likely has room to run," they wrote in a note titled "The case for
commodities strengthens". GS has an $82.50/barrel target.
(Helen Reid)
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MIDDAY SNAPSHOT: NO REBOUND FOR ITALY AS COALITION DEAL NEARS (1134 GMT)
It was a short-lived rebound: Milan is back in the red after a tentative recovery in early
trading as Italy's two anti-establishment parties try to finalise a coalition deal which is
spooking financial markets by the stress it could add to the country's debt pile, worth about
130 percent of GDP.
Benchmark yields on 10-year government have hit a fresh near three-month high at 2.18
percent with investors such as Craig Veysey, manager of the Sanlam Strategic Bond Fund, cautious
on the market.
"We did have quite a constructive stance on Italian bonds (...) but we cut it entirely a
couple of weeks ago as a result of what's turning out to be a much more fraught political
situation, particularly statements about cancelling some of the outstanding Italian debt and not
proceeding with pension reforms," he told us this morning.
Elsewhere, Ocado is on a supersonic high, up as much as 81 percent and
the broader market is sluggishly up, with the STOXX up 0.23 percent.
Here's your snapshot:
(Julien Ponthus and Helen Reid)
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IT'S GETTING TOUGHER FOR EUROPEAN ASSET MANAGERS (1038 GMT)
UBS has taken a look at how the first quarter went for European asset managers and the main
takeaway is that the first three months of 2018 saw the first sequential decline in assets under
management since early 2015, as turbulent markets dissuaded investors from adding exposure.
Looking ahead they predict AUM growth rates for 2018 to be about half the 2016-2017 levels.
"We have argued 2018-19 will likely be fundamentally more volatile as the cyclical component
of volatility increases. This suggests more variability in market performance and weaker inflows
in the coming quarters," UBS analysts Michael Werner and Federico Braga say in a note.
Among single stocks, they note how Ashmore and Amundi (Berlin: 350155.BE - news) were the only asset
managers under their coverage to report growth while Jupiter posted the sharpest
decline. It may be little surprise then that Jupiter has been the worst performer so far this
year among the European asset managers covered by UBS.
(Danilo Masoni)
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OPENING SNAPSHOT: ITALY GAINS GROUND, OCADO JUMPS (0739 GMT)
After a relatively subdued open, European shares have pushed higher thanks to a recovery
among Italian equities and a jump in Ocado's shares after the company signed a partnership deal.
Earnings are also helping with Altice (Other OTC: ATSVF - news) and Suez (LSE: 0NRV.L - news) up after results, while firmer commodities
prices are boosting miners and oil majors.
The FTSE is also in positive territory, shrugging off a rise in sterling after a media
report saying that Britain would tell Brussels it was prepared to stay in the European Union's
customs union beyond 2021, which has been dismissed today by a source in Theresa May's Downing
Street office.
UK betting stocks are on the backfoot, however, after the UK government cut the top stake on
FOBT gambling machines to 2 pounds, but the likes of William Hill (Frankfurt: 633847 - news) , GVC and Paddy Power Betfair (Other OTC: PDYPF - news)
have regained some earlier losses and are down only 0.7 to 3 percent.
Here's your opening snapshot:
(Kit Rees)
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WHAT WE'RE WATCHING AHEAD OF THE OPEN (0657 GMT)
European shares are expected to open roughly steady on a busy day of earnings and political
developments. FTSE futures are currently lagging, however, after a media report that the UK is
ready to stay in a customs union beyond 2021 boosted sterling. Meanwhile Italy will continue to
be a big focus as the two anti-system parties remain on the verge of reaching a deal to form a
coalition government.
Among earnings, the UK property sector is in the spotlight following earnings updates from
British Land (LSE: BLND.L - news) and Foxtons, the latter of which is seen tumbling around 10 percent after its
revenue dropped 15 percent in the first quarter on lower sales and lettings income.
Another sector to feel the pain today are UK bookmakers, after the UK government slashed the
top stake on FOBT gambling machines to 2 pounds. William Hill has said that the limit could have
an annualized impact on its total gaming net revenue of 35 to 45 percent. Traders see shares in
William Hill down 5 to 10 percent.
On the positive side, Ocado is seen surging 20 percent after signing a deal with U.S.
retailer Kroger to use Ocado’s technology for grocery deliveries.
Here are key headlines for European companies:
Conglomerate Bouygues keeps full-year goals in spite of weak Q1
Maersk profit lags forecast; flags geopolitical and trade risks
Dutch insurer NN Group raises cost-savings target as Q1 profit plunges
Telecom Italia Q1 earnings fall on golden power provisions
Altice's French unit shows first signs of recovery in first quarter
Ceconomy sales disappoint after tax campaign ended
Higher waste volumes boost Suez's Q1 core earnings
Telekom, Daimler (IOB: 0NXX.IL - news) settle truck toll dispute with German government
Merck KGaA (LSE: 0O14.L - news) 's lung cancer drugs show promise in early-stage trials
RTL faces headwinds in Q1 but confirms guidance
YNAP to delist June 20 after Richemont reaches 94.999 pct of group
Angry Birds maker Rovio doubles first-quarter profit
UK's National Grid (LSE: NG.L - news) reports profit rise helped by U.S. business
Thomas Cook (Frankfurt: A0MR3W - news) says on track to meet annual forecasts
3i reports $1.9 bln FY total return
British Land's FY NAV rises on strong London office business
UK's National Grid reports profit rise helped by U.S. business
UK estate agents Foxtons sees revenues fall as sales drop
Royal Mail (LSE: RMG.L - news) revenue rises boosted by GLS, parcel volumes
Just Group Q1 retirement sales jump, beat forecast
UK's Mothercare (Other OTC: MHCRF - news) to close 50 stores, reappoint Newton-Jones as CEO (-source)
U.S grocer Kroger signs deal to use Ocado's home delivery tech
Britain slashes top stake on gambling machines to 2 pounds
(Kit Rees)
*****
EUROPEAN STOCKS FUTURES RISE, FTSE LAGS (0628 GMT)
European stocks futures are slightly higher, though FTSE futures are in negative territory.
A report in the Telegraph late on Wednesday that the UK will tell the European Union that it is
prepared to stay in the European Union's customs union beyond 2021 has sent sterling higher,
which in turn is expected to weigh on the internationally-exposed FTSE 100.
"A potential soft Brexit has lifted the pound 0.4 percent higher in trading overnight,
wiping all of the losses from the previous session. Should the report be confirmed as true then
this rally could have a lot further to go, but right now traders are awaiting some form of
confirmation," Jasper Lawler, head of research at London Capital Group, said in a note.
Here's your futures snapshot:
(Kit Rees)
*****
EARNINGS STILL ROLLING IN (0548 GMT)
Even (Taiwan OTC: 6436.TWO - news) though around 80 percent of European firms have already reported their Q1 earnings,
we've still got a few companies set to give updates today, notably Maersk and full year results
from British Land, National Grid, 3i Group and Experian (Other OTC: EXPGF - news) in the UK.
Earnings growth might not have been as stellar as in the U.S., but it is still clocking at a
health 13.7 percent for MSCI EMU companies, in dollar terms.
Here's a list of European companies reporting results today:
BLND.L Full Year 2018 British Land Company PLC Earnings
Release
PLT.MI Q1 2018 Parmalat SpA Interim Management Statement
Release
SZUG.DE Q4 2018 Suedzucker AG Earnings Release
ACTI (Taiwan OTC: 5240.TWO - news) .ST Q1 2018 ACTIVE Biotech AB Earnings Release
EING_p.DE Q1 2018 Einhell Germany AG Earnings Release
ALMB.CO Q1 2018 ALM. Brand A/S Earnings Release
VT9G.DE Q1 2018 VTG AG Earnings Release
MAERSKb.CO Q1 2018 AP Moeller - Maersk A/S Earnings Release
HLAN.AS Q1 2018 HAL Trust Interim Statement Release
ONCO.ST Q1 2018 Oncopeptides AB Earnings Release
SILMA.HE Q1 2018 Silmaasema Oyj Earnings Release
GEPH.PA Q1 2018 CGG SA Earnings Release
MWDP.PA Q1 2018 Wendel SE Trading Statement Release
ECT.AS Q1 2018 Eurocastle Investment Ltd Earnings Release
NG.L Full Year 2018 National Grid PLC Earnings Release
III.L Full Year 2018 3i Group PLC Earnings Release
FUTR.L Half Year 2018 Future PLC Earnings Release
INVP.L Full Year 2018 Investec PLC Earnings Release
ERM.L Half Year 2018 Euromoney Institutional Investor PLC
Earnings Release
EXPN.L Full Year 2018 Experian PLC Earnings Release
(Kit Rees)
*****
MORNING CALL: EUROPEAN SHARES SEEN OPENING HIGHER (0530 GMT)
Good morning. European shares are expected to open broadly higher this morning, according to
financial spreadbetters, though the focus will continue to be on Italian stocks and debt as the
country's two anti-system parties try to form a coalition government.
Overnight in Asia, however, Chinese and Hong Kong equities slipped ahead of the beginning of
trade talks between China and the U.S. later in the day, while Wall Street saw a positive
session, shrugging off a rise in 10-year U.S. Treasury yields.
Spreadbetters see Britain's FTSE taking a breather today and opening 4 points lower, while
Germany's DAX is expected to rise 13 points and France's CAC is seen gaining 10 points.
(Kit Rees)
(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)