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€112.08 2.3  2.1%

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Sector
Financials
Size
Large Cap
Market Cap £6.81bn
Enterprise Value £11.07bn
Revenue £736.7m
Position in Universe 126th / 1052

LIVE MARKETS-Closing snapshot: risk-on trade, can it last?

Tue 7th April, 2020 4:57pm
* Second day rally for European stock * STOXX up 1.9% * Britain's blue chip gaining 2.2% Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@thomsonreuters.com), Joice Alves (joice.alves@thomsonreuters.com) and Julien Ponthus (julien.ponthus@thomsonreuters.com) in London. CLOSING SNAPSHOT: RISK-ON TRADE, CAN IT LAST? (1550 GMT) European stocks closed comfortably higher today and gains from March bottom stood at a staggering 22% -- yes, a bull market, but only technically. Such bouncebacks are common in bear markets and another unsurprising fact is the rally was mainly led by sectors which were battered the most. Cineworld CINE.L shares for instance jumped nearly 50% today, but is still more than 70% down from 2020 highs, we saw similar moves in Carnival CCL.L , easyJet EZJ.L and many other travel and leisure names. Meanwhile, winners during this selloff were the underperformers today with HelloFresh HFGG.DE , Ocado OCDO.L , TeamViewer TMV.DE and Biomeriux BIOX.PA at the bottom of the STOXX 600 .STOXX index. The index closed up 1.9%, still well below its intraday highs, as investors noted a spike in infection rate in Spain. "The rising optimism may well have been tempered... by the news that Spain saw an increase in its death and infection rate with the release of its latest numbers, while authorities in France warned that they still expected the number of deaths and infections to continue to rise in the coming days," Michael Hewson, CMC Markets analyst writes. (Thyagaraju Adinarayan) ***** WHAT IF REAL ESTATE COMPANIES DON'T GET RENT? Good news first: analysts are not seeing a credit crunch hitting European real estate companies. The bad news is: that is because most of the sector's debt have long-term maturity. Real estate companies, analysed by UBS, have an average 6.5-year debt maturity and a "manageable" debt due this year: As a growing number of market analysts forecast a global recession, Europe's real estate space could face further stress. It could see rising vacancy and lower rents in the face of a coronavirus-induced recession, which would add pressure on cash flows and dividends, the Swiss bank says. This sort of pressure, and lower financing availability, could push down real estate values. Here are what is hot and what is not in the real estate space: - Companies exposed to the hospitality and retail sector have been the most directly affected by lockdowns so far. Office and industrial players would be affected by a global recession (Sell mall REITS) - Overall homebuilders look more resilient, especially German residentials (Buy Deutsche Wohnen DWNG.DE and LEG Immobilien LEGn.DE ) -Companies in the warehouse and logistics space are benefiting from ecommerce (Neutral SEGRO SGRO.L ) (Joice Alves) ***** SOUTHERN EUROPEAN BANKS' RISK PREMIUM BOUND TO BE HIGH (1020 GMT) Risk premiums on Southern European banks is bound to remain high, unless a European deal to share the burden of public debt due to the coronavirus takes place, Jefferies analysts say. No doubt, COVID-19 is putting pressure on public finances and many countries will see soon a spending increase coupled with falling tax revenues. Jefferies economists forecast (even assuming that everything will be back to normal by 2021) a eurozone debt to GDP ratio 6% to 16% higher than today. The situation will be worse for heavily indebted countries. For instance, Italy's public debt could rise from the current 137% closer to 150% in 2021, after spiking as high as 180% in 2020, due to a possible collapse of GDP. In such a situation the topic of sovereign default risk will come up again in the eurozone and, according to Jefferies estimates, even "a modest sovereign haircut would have substantial implications for CET1" of Southern Europe lenders. On the other hand, any "step towards debt mutualisation in the Eurozone would likely drive a sharp reduction on the market-implied cost of equity." So it's up to politics. Spain and Italy have repeatedly said that a debt sharing deal is necessary and without it even Europe itself is at stake. Germany and Netherlands do not seem willing to put up with it and want any lending from the European Stability Mechanism to come with conditions. urn:newsml:reuters.com:*:nL8N2BU3ET But any additional request is a pill that Southern European countries are not ready to swallow in current coronavirus times. (Stefano Rebaudo) ***** WHAT BREXIT? (0950 GMT) Since the referendum in 2016, the UK's process to leave the European Union was a top concern for investors, until Covid-19 happened. Today investors are rather focusing on the news that the number of new infections in Italy and Spain is at the lowest in three weeks and two weeks respectively. The sentiment is still fragile in London due to Boris Johnson's hospitalisation but stocks meanwhile are riding on the global risk-on wave as infection/death rate slows. The pan-European index is up 2.4% and Britain's blue chips .FTSE is gaining 2.3%. The British pound has steadied after the recent selloff. Here's how the currency has performed against the dollar in the past 30 days: Foreign Secretary Dominic Raab, who will deputize for Johnson for now has plenty on his hand before thinking about Brexit. "Raab must make life-or-death decisions for the UK, including the duration of the lockdown, investment in medical equipment, government aid for those who have lost their revenues, and/or their jobs and so on," says Ipek Ozkardeskaya, senior analyst at Swissquote Bank. A delay in the Brexit talks could lead to an extended period of uncertainty for the UK, but also allows the country to gain time to "start healing the coronavirus-led economic slowdown before it starts dealing with a EU-divorce-induced economic shock," says Ozkardeskaya. (Joice Alves) ***** HIGHLY LEVERAGED EU COMPANIES ARE MISSING THE REBOUND PARTY? (0858 GMT) The coronavirus outbreak raised the risk of default by some of the worst-hit companies. The Markit iTraxx Europe Crossover index of five-year credit default swaps - which measures the cost of insuring exposure to a basket of junk-rated companies - exploded in early March but has now come down quite a bit. ITEXO5Y=MG Today the index has dipped to two-week lows. But shares of some constituents in this index such as Air France AIRF.PA , ThyssenKrupp TKAG.DE , Fiat Chrysler FCHA.MI and Marks & Spencer MKS.L have still not rebounded as much as the broader indexes. Here's a quick look at their share price performance versus the broader STOXX 600 index: (Thyagaraju Adinarayan) ***** OPEN SNAPSHOT: CARNIVAL, CINEWORLD AND AMBU RALLY (0730 GMT) European shares open sharply higher as new COVID-19 cases continue to slow across the region. The pan European index .STOXX is up about 2.5%, with shares in the travel and leisure space .SXTP jumping as much as 8.5%. Cruise operator Carnival tops the index rising 25%. Battered shares of Cineworld CINE.L gained more than 20% after the world's second-largest cinema operator said it suspended dividend payment for the fourth-quarter as well as upcoming 2020 quarterly dividends. Shares in Ambu .AMBUb.Co jumped 23% in early trade, after the Dutch company, which makes life-supporting devices raised its full year revenue guidance. The mood in London is somewhat better than expected with blue chips .FTSE gaining 2.8%. Other British-listed companies doing well include EasyJet EZJ.L , Meggitt MGGT.L and Rolls Royce RR.L . (Joice Alves) ***** ON OUR RADAR: AIRLINES, OIL AND MORE DIVIDEND CUTS (0640 GMT) Futures are pointing to an open in the black for European bourses on hopes the coronavirus crisis may be receding in some of the worst hit countries across the region. But the mood in London is still sour as Boris Johnson battles with the virus. The pan-European STOXX 600 .STOXX closed yesterday 19.54% above its March 16 low, so it could technically establish a bull market if it gains more than 0.5% today. Energy companies could get a boost as oil prices rose on hopes the world's biggest producers of crude will agree to cut output as the pandemic crushes demand. urn:newsml:reuters.com:*:nL4N2BV15T On the corporate front, more dividend cuts are on the way in response to the coronavirus crisis. France's Edenred EDEN.PA says it is cutting its dividend and the pay of some top managers to help finance a solidarity fund for workers hit by the coronavirus crisis. Another French company Thales TCFP.PA is also slashing its dividend and suspending profit guidance. urn:newsml:reuters.com:*:nASN00054Q urn:newsml:reuters.com:*:nL8N2BV0JI Airlines continue their fight for survival: Lufthansa LHAG.DE will discuss permanently grounding its Germanwings low-cost airline unit at a management board meeting today urn:newsml:reuters.com:*:nL8N2BU74B, while the CEO of Air France-KLM SA AIRF.PA told French newspaper that the company will soon need support from the French and Dutch governments. urn:newsml:reuters.com:*:nL8N2BU7KP British retailer WH Smith SMWH.L said last evening it is placing shares of about 13.7% of the company's ordinary share capital to get it through the coronavirus crisis. In the corporate world, there's one company raising its outlook, Life support devices maker Ambu AMBUb.CO . urn:newsml:reuters.com:*:nASN00054D Eyes will be also on the euro zone meeting scheduled to discuss a joint political response to the COVID-19 crisis. (Joice Alves) ***** SECOND DAY RALLY? (0543 GMT) Futures are pointing to an open in the black for European bourses as signs the coronavirus crisis may be levelling off in New York and receding in Europe are giving investors some hope even as analysts warn a deep global recession and Boris Johnson's personal battle with the virus is shaking the British government. The British PM is fighting worsening coronavirus symptoms in an intensive care unit, leaving his foreign minister to lead the government's response to the outbreak. urn:newsml:reuters.com:*:nL8N2BV0BL Financial spreadbetters at IG expect London's FTSE to open flat at 5,583, Frankfurt's DAX to open 47 points higher at 10,122 and Paris' CAC to open 16 points higher at 4,181. Meantime, Asian stock markets rallied for a second day and oil prices rose too on hopes the world's biggest producers of crude will agree to cut output as the coronavirus pandemic crushes demand. urn:newsml:reuters.com:*:nL4N2BV15T (Joice Alves) ***** <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BLOG HEADSHOT http://reut.rs/2y3Bc4f Highly-levered EU cos: Coronavirus exacerbates worries IMAGE https://reut.rs/3c1ZBGz GBP= IMAGE https://reut.rs/2xd4ttV debt matu real estate co IMAGE https://reut.rs/2xdGY3I ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)
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