February 20, 2018 / 12:46 PM / a year ago

REFILE-LIVE MARKETS-Brexit-"Mad Max", the olive branch and a Corbyn reminder

 (Adds codes, twitter snapshot)
    * STOXX 600 steady in choppy trading
    * Wall street to resume trading after holiday

    Feb 20 (Reuters) - Welcome to the home for real time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on
Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net
    A lot of the action on the FTSE this morning was driven by swings on the FX front with the
pound "on a Brexit hype", according to the expression used on Twitter this morning by ING
strategist Viraj Patel. 
    The FTSE took a temporary hit after the pound rose on hopes for a soft Brexit, but gradually
recovered as sterling gave back some gains. 
    "The big move of the morning was in the normally somnolent EURGBP pair," IG's Chris
Beauchamp noted after a media report said the European Parliament was preparing to call for
Britain to have "privileged" single market access. 
    "Is sanity about to prevail?", Beauchamp asked. 
    News of the possible olive branch came after a pledge by the UK's Brexit minister not to
push post-Brexit Britain into a competitive war with the EU via "a Mad Max-style world borrowed
from dystopian fiction" and "an Anglo-Saxon race to the bottom". 
    David Davis also said he was certain Britain and the European Union could reach a deal.
    As the feel-good headlines hit traders' screens, Berenberg's Kallum Pickering published a
note where he warned that while a transitional arrangement might very well be found at an EU
summit next month, "the hard questions (Irish border and UK immigration policy) remain largely
    It might also be worth noting that for a number of investors, a snap election leading to a
Labour government is a more frightening prospect than Brexit. 
    Here is what Jeremy Corbyn tweeted this morning: 
   (Julien Ponthus)

    Harsh competition, costly network upgrades, sluggish growth have been weighing on European
telecoms for years, making the sector rather unpopular among investors. And now there's also the
risk that rising rates could add pressure on the highly-indebted, dividend-paying sector. 
    But is it all that bad? 
    Raymond James analysts Stephane Beyazian and Thibault de Coincy have taken a look at the
latest earnings updates and there are some positives, namely potential M&A and growth in less
traditional business like digital and internet of things. 
    Overall however it's still a mixed bag, probably still not enough to bring investors back.
Anyway here are their key eight takeaways from the telecoms earnings season:
    (-) 2018 guidance is not as exciting as we hoped for, albeit Q4 was quite encouraging
    (=) Commercial trends: Mid-Caps performed correctly, incumbents modestly
    (-) Mobile markets: going backwards for a few of them
    (=) Revenues: a mixed bag in Q4, but earnings were faster than in Q3-17
    (+) The M&A wave gets stronger by the week with the addition of VOD/LBTY
discussions and the TDC buy-out
    (+) BT back to a 'normal' telco model: spending less on football to the benefit of
Sky and significantly more in FTTH
    (+) IOT. Vodafone reported 18% growth in IOT sales, supporting its ~2% underlying
growth in B2B
    (+) Digitalization is gaining traction. Telenor stole the show with its
accelerating reduction in costs
    In this chart you can see how telecoms have clearly underperformed the broader market over
the past two years.    
    (Danilo Masoni)
    Think of the early February correction as a "welcome-to-a-new-paradigm" road sign rather
than an isolated sell-off and it suddenly could make more sense.  
    "The proximate cause of the drop in equities was a series of signals (including rising
wages) that U.S. inflation is indeed picking up", BMI research said, arguing that "the sell-off
reflects a significant repricing of asset markets rather than a harbinger of an economic
    BMI analysts caution against focusing too much on U.S. interest rates and overlooking the
global picture, with the BOE getting more hawkish and "soaring" policy rate hike expectations in
the eurozone. 
    "We are entering a world of higher interest rates across the board, which is clearly bad for
global yield sensitive assets", warns BMI, as investors reconsider equity risks premiums and
scratch their heads over how to value "bond proxies" such as consumer staples or utilities. 
    As to "soaring" expectations for eurozone interest rates, here's their chart of implied ECB
    (Julien Ponthus)
    European shares have opened slightly higher but gains among main national indexes remain
limited as investors await for Wall Street to reopen after Monday's holiday break.
    The STOXX 600 is edging up 0.15 percent, as you can see in the snapshot, while top
movers on the pan-European benchmark included HSBC and BHP, both down nearly 3
percent after disappointing updates. 
    Strong results boosted Edenred, up more than 10 percent to a record high, and
Simcorp, while Temenos dropped 6 percent after news it's in advance talks to
buy UK rival Fidessa Group for about 1.4 billion pounds.     
    (Danilo Masoni)
    WHAT'S ON OUR RADAR (0750) 
    "Hey ho, and back to 'real' markets we go today", writes Rabobank this morning as we get
back into a 'normal' day of trading with Asia and Wall Street back from holiday.
    Futures point to a slightly positive open in Europe, which ended a three-day winning streak
on Monday with consumer staples continuing to fuel doubts on their valuation as Reckitt results
showed yesterday. 
    It's a major earnings day for Britain with BHP and HSBC both reporting results. For the
banking sector, Labour’s Corbyn’s pledge to make banks work for the “real economy” and not the
other way around could worry some shareholders who are getting more sweat from the possibility
of a snap election than Brexit. 
    Still in the UK, bookmaker William Hill was fined for money laundering failures. 
Other possible movers today include HeidelbergCement raising its synergy target from Italcementi
takeover, staffing company Adecco buying U.S.-based online recruitment platform Vettery. 
    Still on the M&A front Temenos said it is in advanced talks to make cash offer for Fidessa.
    Corporate governance: LVMH named a new chairman and CEO for Fendi and drugmaker Hikma
appointed a new CEO.
    (Julien Ponthus)
HSBC's 2017 profit jumps but below view, plans $5 bln-$7 bln capital raising
BHP's half year profit jumps 25 pct, boosts dividend
HeidelbergCement raises synergy target from Italcementi takeover
Adecco buys digital recruitment firm Vettery, price not disclosed
Edenred strikes confident note for 2018 as annual profits rise
LVMH names Serge Brunschwig as new Chairman and CEO of Fendi
Temenos says in advanced talks to make cash offer for Fidessa
Dutch court says Steinhoff must amend 2016 accounts
UK pensions regulator ignored trustee requests on Carillion -lawmakers
Covestro says raking in cash at faster rate than expected
BASF to face millions in extra costs in UK each year from Brexit -Handelsblatt
ProSieben in exclusive talks with General Atlantic on digital stake sale- sources
Covestro says raking in cash at faster rate than expected
Poste Italiane reports 11 pct rise in 2017 net profit
Hotchtief To Adjust Bid For Abertis To 18.36 Eur/Shr If Dividend Is Approved 
Adecco buys digital recruitment firm Vettery, price not disclosed
Alstom To Supply 20 Additional Metros To Île-De-France Mobilités And The RATP
Vicat FY Net Income Group Share Up At EUR ‍​142 Million
    (Danilo Masoni)
    Actually, futures are pointing out to a slightly more positive open in Europe than earlier
indications from financial spreadbetters suggested.
    These are modest gains but gains nonetheless:      
    (Julien Ponthus)

    Good morning and welcome to Live Markets. 
    European shares are seen opening flat today after dipping during the previous session when
they ended a three-day winning streak as markets in the U.S. and China were closed. 
    In Asia, where trading resumed, stocks slipped while the dollar edged up to pull further
away from three-year lows. 
     Financial spreadbetters expect London's FTSE to open 8 points higher at 7,251.1,
Frankfurt's DAX to open 1 point higher at 12,386.6 and Paris' CAC to open 4
points lower at 5,256.18
    (Julien Ponthus)

 (Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below