Live Markets: Stock-picking in a rebound

SIMCORP A/S

19/03/2020 12:25

* ECB pulls out bazooka fund
    * Sovereign bonds rally
    * STOXX 600 slightly down 
    * FTSE 250 underperforms, Milan outperforms  
    * 

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.
    
    
    
    STOCK-PICKING IN A REBOUND (1218 GMT) 
    For those wanting to look on the bright side, there are research notes out there looking out
how to trade a rebound and in no mood to capitulate. 
    Jefferies, for instance takes the view that "winners and losers will emerge" from the
coronavirus crisis and scanned 600 stocks in Europe to see which are better placed. 
    Its conclusion is that rock solid balance sheet in the way forward and here are its seven
picks: 
    
     Saxo has introduced on March 9 a ’bounce back basket’ which has so far lost 14% but that it
believes could work as an inspiration when sentiment picks up. 
    "With the policy moves in the last 24 hours from the Fed starting a Money Market Funds
Liquidity Facility, ECB launching a €750bn quantitative easing programme in bonds and RBA
announcing effectively yield curve control on 3-year government bonds there is definitely scope
for some risk-on sentiment", they write. 
    
    (Julien Ponthus) 
    *****     

    
    
    WORK FROM HOME DIARIES: STUCK IN THE BOILER CUPBOARD (1009 GMT) 
    As the UK braces for coronavirus shut down,  urn:newsml:reuters.com:*:nL8N2BC2I3 bankers, brokers and analysts are
already facing the challenges of working from home. 
    "I must tell you about the stresses of working from home yesterday," writes Deutsche Bank's
Jim Reid in his today's note. "With an hour to go until my client credit conference call with
nearly 1500 registered, I realised I couldn’t do the call," he writes. 
    Reid's worst moment was when he bought a new phone and realised that the only suitable
socket was in his boiler cupboard. 
    "So I then had to tuck myself into the boiler cupboard... I also had to turn the central
heating off so it didn’t fire up during the call. My family froze for the benefit of our
clients," he says.  
    "I’m not sure other brokers can match that for commitment." Can you? 
    Has this happened to you already? Please share your pain with us. What do you do when phone
lines and computers fail to collaborate? 
    
    (Joice Alves)
    ***** 
    
    
    
    WHO'S HURT BY VIRTUAL HUGS AND KISSES? (0954 GMT)
    Don't bank on a V shaped recovery for the travel industry!
    With friends, families and businessmen getting used to e-meeting, e-hugging and e-kissing,
there's a chance there's no going back.  
    There's the short term pain first: a 100% travel ban globally (though this has still not
happened) would lead to a negative global GDP growth print of around -4%, Citi says.
    Once these restrictions are lifted, Citi believes the travel & tourism industry is unlikely
to see a V-shaped recovery. 
    Citi says: "the lack of face-to-face meetings in the corporate world might alter future
business trip schedules".
    Hotels are likely to be affected the most as they make a large chunk of their money from
business travellers and conventions.
    Citi says "we could see some of the virtual meetings replace costly gatherings as corporate
management teams look for efficiencies."
    Meanwhile, crude is plumbing multi-year lows as it's one of the asset class most vulnerable
to travel restrictions. Citi sees oil demand falling by 2.8 million barrels per day against a
growth of 1.25 mb/d expected in late 2019.
    
    Travel & leisure index's rout:    
 
 
    
    (Thyagaraju Adinarayan)
    *****
    
    OPENING SNAPSHOT: BOY, THE MARKET IS UP!
    Is it the classic dead cat bounce or is it because the ECB's emergency programme is actually
bringing some comfort? Shoot me if you have a clue (joice.alves@tr.com).
    It does help a little that the oil has gained some ground after a brutal selloff yesterday. 
    European stocks  .STOXX  is up more than 1% bouncing off seven year lows as the bloc's
central bank launched last night a set of stimulus measures in a bid to help the major health
and economic crisis across the region. 
    Europe's construction & materials  .SXOP , banking  .SX7P , and telecom  .SXKP  sectors were
rising around 3%, while travel and leisure  .SXTP  continued to trade in the red. 
     
    (Joice Alves)
    *****
    
    ON OUR RADAR: CARS, AIRLINES, RETAILERS, WHAT ELSE?   
    Futures are pointing to gains across Europe in early trade, but that could change at any
point as main future indices have been trading up and down this morning. 
    It is not really clear if ECB's 850 bn euros bond buying programme announced last night will
buy a day of peace of mind to stock investors as most of Europe is closed for business due to
the coronavirus outbreak. 
    The unprecedented corona-virus induced crisis is putting all sectors to the test, especially
retailers (those not selling food). British clothing retailer Next  NXT.L  said its balance
sheet and margins will help it to weather the storm.  urn:newsml:reuters.com:*:nFWN2BC072
    Fiat Chrysler is the latest car maker to suspend production operations. It said it is
suspending production in North American manufacturing facilities.  urn:newsml:reuters.com:*:nFWN2BB1DK
    Airlines continue to be under pressure and Lufthansa  LHAG.DE  said that the industry may
not survive without state aid.  urn:newsml:reuters.com:*:nL8N2BC100
    Back to food for our dose of positive news: UK online supermarket Ocado is seeing a boost in
demand.  urn:newsml:reuters.com:*:nFWN2BB1RK
 
    
    (Joice Alves)
    ******

    
    STRANGE CHANGE OF HEART (0714 GMT) 
    European futures turned positive for a few minutes, while they were down around 1% earlier
this morning. 
    Have investors just reacted to the ECB bond buying programme? 
    It seems it is going to be just as short-lived as other recent rounds of stimuli from
European and U.S. central banks. 
    Indeed, while we are writing this, futures are already fighting to stay in the black in
choppy market. 
    
    (Joice Alves)
    ***** 


    ANOTHER SELLOFF EVEN AFTER ECB'S MOVE? (0640 GMT)
    The latest round of fiscal stimulus measures is not reassuring investors and futures and
financial spreadbetters point to another day in the red for European bourses. 
    The ECB launched a 750 bln euro emergency bond purchase programme last evening in a bid to
stop the pandemic-induced financial rout shredding the euro zone's economy as much of Europe is
in lockdown amid the coronavirus outbreak.  urn:newsml:reuters.com:*:nL8N2BBACD
    Yet, financial spreadbetters expect London's FTSE to open 191 points lower at 4,890,
Frankfurt's DAX to open 353 points lower at 8,089 and Paris' CAC to open 172 points lower at
3,583.
    In the UK, the pound collapsed as Boris announced he is closing schools.
    Additionally, Britain's oil and gas sector is calling for financial help to survive,
industry body OGUK says, as the oil price crash means the sector may be unable to keep producing
hydrocarbons in the North Sea.  
    
    (Joice Alves)

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 (Reporting by Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)