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ON THE RADAR: EPS WARNINGS, STATE AID, LOCKDOWN EASINGS (0640 GMT)
Today’s batch of Q1 earnings has brought its expected share of coronavirus driven profit hits, most particularly with Adidas saying it expects sales to fall at least 40% in second quarter.
Steelmaker SSAB reported a steep fall in quarterly operating earnings while Swiss freight-forwarding group Kuehne und Nagel International’s saw a 24% fall in first-quarter core earnings.
It’s not at all doom and gloom with shares in German drugs and pesticides company Bayer rising in early trading after its earnings report and a statement that the economic downturn had prompted it to take a tougher stance in talks to settle claims its glyphosate-based weedkillers cause cancer.
Deutsche Bank announced first-quarter results it said were above market expectations.
State aid is a key theme also this morning with Lufthansa shares rising sharply in early trading amid talk of government help. While Air France KLM secured a government backed loan, Virgin Atlantic is still talking with the British government about a bailout package.
European planemaker Airbus is also looking into some help from the state. It issued a bleak assessment of the impact of the coronavirus crisis, telling the company’s 135,000 employees to brace for potentially deeper job cuts and warning its survival is at stake.
Some of the optimism on the markets is fuelled by the prospects of lockdown being eased to provide some breathing space for the economy.
The British retail industry’s lobby group and its main trade union on Sunday issued new guidance to retailers in preparation for an anticipated easing by the government of the country’s coronavirus lockdown and the re-opening of more stores.
Low cost airline Wizz Air said it would restart some flights from London’s Luton Airport on May 1, becoming one of the first European carriers to begin to restore services
Volkswagen said it had resumed work at its biggest factory in Wolfsburg, Germany, to give its workers time to adapt to new hygiene measures to combat the coronavirus.
Reopening might prove difficult however and a trade union representing workers at Renault’s Flins plant near Paris on Sunday urged staff not to return to work before May 11, saying it was still too risky in terms of their health.
Another positive for the automotive industry is Mercedes-Benz maker Daimler saying business has stabilised in China.
Talking about easing lockdown and how massive testing will be key in going forward, Healthcare and clinical diagnostics company Novacythas signed a supply contract with the UK’s Department of Health & Social Care (DHSC) for its product aimed at testing for the presence of the coronavirus.
(Julien Ponthus and Stefano Rebaudo)
European stocks markets have woken up on the right side of the bed this morning with futures pointing to an opening rise of over 2% on the continent and 1.4% for the FTSE 100 in London.
While falling oil prices are continuing to paint a dire picture of the world economy, the Bank of Japan pledging to buy unlimited amounts of government bonds did ease the mood in Asia which saw risky asset move upwards overnight.
With possibly more to come from the ECB, investors seem ready to take some risk on this morning rather than to concentrate on last week’s horrid PMIs or devastating U.S. job data.
The Q1 earnings season, which is currently in full swing, is expected to shed more light on how European blue chips sailed through the first weeks of the crisis in March and offer some clues on the extent of the incoming EPS rout.
Anyhow, the 20% rebound in stock prices from their March lows is still alive even if many investors fear it could prove to be nothing more than a temporary bear rally.
Reporting by Thyagaraju Adinarayan, Joice Alves, Julien Ponthus in London and Stafano Rebaudo in Milan.