UK Markets closed

REFILE-LIVE MARKETS-Closing snapshot: It's not FOMO

(Drops acronym for Habit Of Missing Out from headline) Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Danilo Masoni. Reach him on Messenger to share your thoughts on market moves: danilo.masoni.thomsonreuters.com@reuters.net CLOSING SNAPSHOT: IT'S NOT FOMO (1641 GMT) That's right, it's not Fear Of Missing Out, it's actually a Habit Of Missing Out for the STOXX 600, which ends the session up 0.19%, just one point from its record of 421.43 hit on January 9. Meanwhile, the S&P somewhat triumphantly crossed the 3,300 benchmark and is up about 0.5% so far today. YTD, the U.S. index is comfortably ahead of its European cousin with a rise of 2.3% versus 1.1% for the STOXX 600. Two quotes to illustrate the mood: Connor Campbell from Spreadex: "Flaws be damned! The Dow Jones decided to keep celebrating the signing of the US-China ‘phase one’ trade deal, with momentum firmly on the index’s side. The same couldn’t be said for its European peers, however..." Josh Mahony from IG: "US markets continue to outperform their European counterparts today, as the dust settles on a somewhat lopsided US-China trade deal. For all the hope that the eventual trade deal will spark a resurgence in global growth..." Anyhow, here's your closing snapshot: (Julien Ponthus) ***** STOXX 600 MISSING OUT AGAIN (1604 GMT) There's a party and the STOXX 600 isn't invited. While Wall Street is celebrating the trade deal, Morgan Stanley's fresh earnings and positive retail data with new record highs, the STOXX 600 is missing out again. European stocks are up just about 0.1% while the S&P is gaining 0.5%. Another annoying performance for all the brokers betting that 2020 will be the year when European stocks finally outperform! One simple reason behind that underperformance - if one excludes the fact that the U.S./China trade deal isn't that reassuring from the old continent's point of view - is a much weaker newsflow with the European earnings season still at a very early stage. Plus the companies reporting aren't exactly sparkling: Pearson is down about 9% at a decade low. "There just isn't that much going on in Europe to justify more price action", Mikael Jacoby, a senior equity sales trader at Oddo Securities. (Julien Ponthus) ***** FEELING STRESSED? TAKE A CVIX CHILL PILL! (1255 GMT) As mentioned on Wednesday, it's somewhat hard to reconcile the flow of major international news, ongoing trade uncertainty and how volatility is sinking on European bourses. Markets are only rarely this stable but it's not specific to stocks. Volatility on the multi-trillion-a-day foreign exchange market, has also collapsed. Deutsche Bank's currency equivalent to the VIX, the CVIX, just plunged below 5% for the first time ever. That's half of levels seen as recently as 2017. In a nutshell, given that central bank around the world are moving in tandem to keep interest rates low for longer, forex traders are just struggling to find persuasive reasons for betting on one currency moving against another. Funny that QE and low rates are also widely believed to be the driving force in the current longest equity bull market in history. "Central banks have clearly become great gardeners over the years and markets are now hooked on their precious fertiliser", Unigestion analysts noted Tuesday in their weekly Macro Views. Anyhow, here's the chilled CVIX: (Julien Ponthus and Tommy Wilkes) GOING DOWNHILL: EUROPEAN CAR STOCKS HURT BY TARIFF RISKS (1100 GMT) Risks of Trump turning his attention towards Europe after a truce with China is clearly evident in European auto stocks, top sectoral losers this morning. All fifteen stocks on the STOXX autos index are in red. After a sharp slide yesterday, auto stocks are down 1.5% on news that Washington has threatened to impose a 25% tariff on European automobile imports if Britain, France and Germany do not formally accuse Iran of breaking the 2015 nuclear deal. Since the preliminary deal with China was agreed to be signed late last year, auto stocks have decoupled from the German blue-chip index DAX: (Thyagaraju Adinarayan) ***** OPENING SNAPSHOT: STAYING AFLOAT (0825 GMT) It's clear from the start that much of the initial trade deal between the world's two largest economies has already been priced in and investors are now busy assessing what's next in global trade relations, as the earnings season gets into gear. As a result the STOXX 600 was last trading just above parity, inching 0.1% higher and just a fraction below the record high it hit this month in anticipation of the formal signature of the accord. Sectoral moves are also muted. Under the surface there are some big stock movers, mostly in reaction to trading updates. UK publisher Pearson is down a 12% after is 2019 operating profit came in just short of market expectations, while meal-kit delivery company Hellofresh rallied 10% after raising its guidance. Here's your opening snapshot: (Danilo Masoni) ***** WHAT'S ON OUR RADAR: ASSESSING THE TRADE DEAL (0750 GMT) European shares are expected to open slightly higher after a much-anticipated deal between China and the U.S. and amid talk the White House is considering an election-year fiscal stimulus. Futures on main European benchmarks were last trading up around 0.1-0.2% as Europe's two largest trading partners ended 18 months of trade war. Even though the deal is seen as a positive for global equity markets, there is a risk that some European exporters, especially in manufacturing, could lose market share as China pumps up purchases of U.S. goods. The big concern however is that Trump makes Europe his next trade war target amid frictions over cars, subsidies to Airbus, climate policy and a French tax on US tech giants' profits. A report in the Washington Post saying the White House had secretly threatened Europe with 25% auto tariffs over the Iran nuclear program is just a fresh reminder of how tensions could flare up again. One trader in Frankfurt sees the report weighing down auto stocks. Turning to European corporate news front, eyes on PSA Group after the French carmaker said global sales fell 10% last year to 3.49 million units from a record in 2018 as it kept suffering from declining volumes in China, Middle East and Africa. One dealer sees PSA shares opening down 2%. In other earnings-related moves, Geberit shares fell 1.7% in premarket after the plumbing supplies company posted a 1.9% rise in Q4 organic sales. HelloFresh lifted it's guidance, sending its shares up 8.2% in early trade, while Nivea-maker Beiersdorf said it was "cautiously optimistic" for 2020 despite another quarter of slowing sales growth. In the UK, Associated British Foods kept its full year earnings outlook, and education company Pearson met guidance with flat revenue in 2019 and operating profit. Battered battery make Varta said it was increasing production capacity for lithium-ion batteries, lifting its shares 4.9% in premaket trade. Good news for chip and tech stocks from Asia where the world's largest contract chipmaker Taiwan Semiconductor Manufacturing posted a better-than-expected quarterly profit on strong demand for 5G chips. One trader sees ASML and Infineon opening up around 1%. (Danilo Masoni) ***** MORNING CALL: STEADY AFTER TRADE DEAL (0634 GMT) There are no fireworks after the much-anticipated trade deal. In Europe, spreadbetters at IG expect London's FTSE to open 12 points lower at 7,631, Frankfurt's DAX to open 9 points lower at 13,423 and Paris' CAC to open 3 points lower at 6,029. On Wednesday the United States and China signed an initial trade deal that will roll back some tariffs and boost Chinese purchases of U.S. products, defusing an 18-month row between the world's two largest economies but leaving a number of sore spots unresolved. China will boost purchases of U.S. goods and services by $200 billion over two years. For more on what's in the deal, here's a FACTBOX: Meantime world stocks also took a break, last trading flat near record highs. (Danilo Masoni) ***** (Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)