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€140.7 1.4  1.0%

Last Trade - 07/05/21

Consumer Cyclicals
Large Cap
Market Cap £53.60bn
Enterprise Value £56.68bn
Revenue £12.56bn
Position in Universe 18th / 848

LIVE MARKETS-What's hot and what's not in post-lockdown world

Wed 15th July, 2020 11:36am
* Vaccine hopes give stocks a shot in the arm * Italy's Atlantia shares soar as end of concession dispute nears * Burberry shares slump after it warned demand faces slow recovery Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts Joice Alves ( and Julien Ponthus ( in London and Stefano Rebaudo ( in Milan. WHAT'S HOT AND WHAT'S NOT IN POST-LOCKDOWN WORLD (1015 GMT) It's becoming quite clear to investors that the road to recovery will be long and bumpy, with some spaces struggling a bit more than others. Kasper Elmgreen, Amundi's head of equities, likes luxury and building materials over "expensive" tech stocks and he has a "tactical call" on Europe. "We are in the midst of a cyclical recovery. I think that cyclical recovery benefits Europe over the U.S.." "Europe is a more cyclical market and tends to do well in this kind of (cyclical) recoveries. So you have the advantage of a market which is historically cheap relative to the U.S. - even on a sector adjusted basis," he says. Then you also have "the backdrop of political risk perhaps increasing in the U.S." LUXURY OVER TECH "We quite like luxury, which has proven to be resilient. We've seen demand in China rebound quite nicely", Elmgreen says, adding that as the coronavirus crisis accelerated structural changes across sectors, the asset manager prefers luxury because it isn't disruptive. "We quite like businesses that are not disruptive, so what they produce or the way it's being produced does not go out of favour quickly," he says. On the other hand, "when we look at technology we are less optimistic here." Though the tech sector holds many winners, he thinks the very strong rally has sent valuation soaring. OTHER SECTORS Go for: ** Building materials as recovery in construction and stimulus measures could result in "activity increasing particularly around a green initiative" - healthcare stocks which continue to do well during health crisis Don't go for: - energy due to "the cyclical and structural headwinds, we are not being compensated for" (Joice Alves) ***** RELYING ON THE TINA EFFECT (0945 GMT) A choppy summer, but we shouldn’t lose sight of the big picture. On the last part analyst views are inclined to differ with some stressing the high level of stock ratios and risks of a bubble, while others are more confident about an extension of the recent rally. Barclays analysts sound more optimistic. “P/Es are demanding, but in a world of zero rates,” the TINA (there is no alternative) effect makes equities look more attractive than bonds, it says in a research note. Global funds are still wary about equity, relying more on cash and bonds, but they are gradually increasing their exposure to the stock market*:nL5N2EL2JR. And this is going to help too, as “light positioning provides a cushion to equities and could give legs to the rally if investors put cash at work,” Barclays adds. The virus is still a threat but many countries are now better prepared to deal with it without reinstating restrictive measures. Barclays is overweight on Europe versus U.S., on cyclicals versus defensives and see further catch-up potential for value versus growth. (Stefano Rebaudo) ***** OPENING SNAPSHOT: Q2 BREAKFAST GOING DOWN WELL (0735 GMT) As mentioned earlier, there was a quite a platter of Q2 tasters for breakfast this morning which is going down reasonably well with the STOXX 600 up 0.8% even if there are few big exceptions. So let's start with the bad news and Burberry falling 5% after the British fashion brand said demand severely impacted by COVID-19 in the first quarter, with comparable sales falling 45%. On the other hand, British online fashion retailer ASOS was up 3% after its sales rose 10% in the four months to June 30, benefiting from trading through the coronavirus lockdown. Two other big losers following the release of a trading update were Finnish telecom service provider Elisa, down 3.3% and Swedish bank SEB down 2.7%. There seemed to be some read across effects with the telecom (flat) and banking (0.4%) sectors among the less upbeat. All other sectors are rising and cyclicals are leading the pack with travel and leisure, miners and industrials up 2.1%, 1.7% and 1.5% respectively. The biggest winner by far was Atlantia, up a whopping 20% after the Italian government received new proposals to settle a dispute over the group's motorway concession. Second top winner was Norway's Mowi, the world's largest fish farmer, up 5.5% posted higher than expected second-quarter earnings. (Julien Ponthus) ***** ON THE RADAR: APPLE SHOW TIME AND A PLATTER OF Q2 TASTERS (0638 GMT) It's show time for Apple as Europe's second-highest court rules on whether it has to pay 13 billion euros ($15 billion) in Irish back taxes, a key part of the EU's crackdown against sweetheart tax deals. A lot is at stake as a defeat for the European Commission could weaken or delay pending cases against Ikea's and Nike's deals with the Netherlands, as well as Huhtamaki's agreement with Luxembourg. Back to the corporate frontline, we will have to wait for next week at least to get a better picture of how the Q2 season is shaping out for blue chips but there's a few tasters from Northern Europe available for breakfast this morning, notably for the banking sectors with Sweden's Handelsbanken and SEB reporting smaller-than-expected fall in quarterly net earnings. Both are seen rising about 2% at the open a trader said, looking at early premarket indications. Still in the country of Abba, telecoms operator Tele2 reported quarterly core earnings above market forecasts and said it was dusting off plans for an extra payout to shareholders, which is expected to boost its shares at the open. Staying in Scandinavia, Norway's Mowi, the world's largest fish farmer, posted higher than expected second-quarter earnings. To finish our tour up North, Finnish telecom service provider Elisa reported higher profit for the April-June quarter in line with analysts' average forecast . Less rosy postcard from the Netherlands, where Dutch navigation and digital mapping company TomTom posted a 41% drop in second-quarter sales as shop closures and travel reductions saw a serious decline in its consumer business. Still in Holland, ASML Holding, one of the largest equipment suppliers to computer chip makers, reported results below expectations and is indicated down 2%. In the UK, electricals retailer Dixons Carphone has its annual group profit halved due to underperformance and British fashion brand Burberry said demand was severely impacted by COVID-19 in the first quarter, with comparable sales falling 45%. On the other hand, British online fashion retailer ASOS said its sales rose 10% in the four months to June 30, benefiting from trading through the coronavirus lockdown. Further down South in Italy, another development in the Atlantia saga with motorway unit Autostrade per l'Italia making the Italian government a new offer to settle their long-running dispute and prevent its concession being withdrawn. Among other stocks for which some market action is expected are: * Swatch up 2% in premarket trade after Swiss competition watchdog WEKO said the company would be free to supply mechanical watch movements to whomever it wants. * Draegerwerk up 9.1% in early trade after company said it expected sales and profit to be "considerably" higher than last year. * Morphosys MORG.DE up 4.7% in premarket trade after company’s licensing partner Janssen received FDA approval to use Tremeya Zooplus ZO1G.DE up 7.4% in premarket trade after results (Julien Ponthus and Stefano Rebaudo) ***** MORNING CALL: VACCINE HOPES VS CHINA/U.S. TENSIONS (0525 GMT) A fresh spike of tensions between the U.S. and China over Hong Kong has somewhat dented risk appetite in the last few hours in Asia. Optimism about a coronavirus vaccine is still nevertheless lifting stocks outside of China after an experimental vaccine for COVID-19 by Moderna Inc's showed it was safe and provoked immune responses in all 45 healthy volunteers in an ongoing early-stage study. European futures are currently trading well in the black, close to up 1.5% as hopes of a breakthrough on the EU's planned recovery fund run high ahead of a crucial summit in Brussels on Friday. On the corporate front, the earnings season is still on a slow start but a few interesting trading updates are expected with Tele2, Temenos and TomTom for instance. (Julien Ponthus) ***** <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ qsdf strategy ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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