Live Markets: European consumer staples' H2 recovery hopes "may prove optimistic" - MS
16/05/2025 11:04
STOXX 600 up 0.7% Richemont rises after results, lifts luxury Healthcare stocks rise Wall St futures higher Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at markets.research@thomsonreuters.com EUROPEAN CONSUMER STAPLES' H2 RECOVERY HOPES "MAY PROVE OPTIMISTIC" - MS European consumer staples companies are relying on a second half recovery but such hopes might prove optimistic if their U.S. peers' cautiousness is anything to go by, say Morgan Stanley equity analysts. "Q1 reporting season reinforced the challenging backdrop across key developed markets (US, Europe) and the increasing reliance companies are placing on an innovation-led H2 recovery," they say. But they think that is uncertain given still weak U.S. and West European consumption and weak sentiment. Delving into European results, a majority reported modestly weaker first quarter organic sales figures, offset by stronger than expected pricing. "Pricing largely reflected increased commodity costs (e.g., coffee, cocoa, palm oil), and driven by Europe and Emerging Markets, with the pricing environment in the US largely more muted with increased promotional intensity." Across the pond, U.S. peers generally reported later than in Europe, with MS flagging a noticeably more cautious tone as reporting season progressed. MS says the macroenviormemnt is also impacting the M&A outlook for the space, with both acquisitions but also divestments on the back-burner until visibility improves. They favour defensive plays with earnings visibility. They are overweight ABI ABI.BR, Haleon HLN.L, Reckitt Benckiser RKT.L, Danone DANO.PA, Imperial Brands IMB.L and Carlsberg CARLb.CO. They are underweight Diageo DGE.L, Nestlé NESN.S, Henkel HNKG_p.DE and BAT BATS.L. (Lucy Raitano) ***** FRIDAY'S OTHER LIVE MARKETS POSTS: LESSONS FROM APRIL'S TARIFF TURMOIL CLICK HERE EUROPE IN THE GREEN, SET FOR FIFTH WEEKLY RISE CLICK HERE EUROPE BEFORE THE BELL: STOCKS SET TO ROUND OFF POSITIVE WEEK IN THE GREEN CLICK HERE TRADE-DRIVEN RALLY ENDS THE WEEK WITH A WHIMPER CLICK HERE European shares ending the week in the green https://reut.rs/3F4g6X3