Last checked at 
* European end slightly in the red
* STOXX had hit May 2015 high during session
* FTSE outperforms
* Wall Street retreats after new high
Welcome to the home for real-time coverage of European equity
markets brought to you by Reuters stocks reporters and anchored
today by Danilo Masoni. Reach him on Messenger to share your
thoughts on market moves:
danilo.masoni.thomsonreuters.com@reuters.net
CLOSING SNAPSHOT: IT JUST WASN'T MEANT TO BE (1645 GMT)
We started the session in what seemed touching distance of a
record high for the STOXX 600 and even for the MSCI All country
World Index but it simply just wasn't meant to
be.
Wall Street briefly touched a high at the open but quickly
retreated with headwinds from the consumer discretionary sector,
bringing down the mood globally.
The FTSE's overperformance hasn't been unnoticed: British
blue chips ended the day up 0.2% while the euro zone's STOXXE
fell by a similar amount.
Tonight's TV debate between Labour's Corbyn and the
Conservatives' Boris Johnson might provide some action for
tomorrow's session.
(Julien Ponthus)
*****
IS THE FTSE A PROXY FOR TONIGHT'S UK DEBATE? (1532 GMT)
The easiness with which British blue chips have outperformed
their European peers today seems to suggest there isn't much
angst that tonight's big TV debate turns out to be a game
changer that allows Jeremy Corbyn to shift the momentum before
the Dec 12 election.
There's a lot at stake for investors, however, between the
Conservatives' promise to deliver Brexit swiftly and Labour's
pledge to implement a radical redistribution of wealth in the
country.
Of course, bookmakers don't see much of a chance of Labour
government. The latest opinion poll to hit our screens gives the
Boris Johnson an 18-point lead:
19-Nov-2019 15:00:00 - UK ELECTION: CONSERVATIVES ON 45%
(+8), LABOUR 27% (UNCHANGED) - KANTAR POLL
"Corbyn has to make these events count with Johnson if he
wants to catch up, so expect a full on attack from the
challenger", said DB's Reid in his morning note.
The FTSE 100 is currently up 0.4% while the euro zone's
STOXXE is limping behind at -0.1%.
For its part, the pound is flat - even if steep movements
can't be excluded later in the evening.
"The duel is one to watch for currency traders", says Jasper
Lawler at LCG.
"A strong debate performance from Boris and the resultant
favourable change in the polls could see sterling break above
the 1.30 psychological level against the dollar".
Anyhow, going back to equities, investors seem to be already
convinced the biggest risks are on the upside.
The Dec. 12 election could deliver a possible triple whammy
of Johnson delivering both Brexit and a pro-business agenda and
- should Corbyn lose heavily - the Labour leader being replaced
by a more moderate figure.
In this context, there's little surprise to see UK equities
ETFs securing their best year-to-date asset gathering
performance, according to Lyxor records, with over 4.4 billion
euros of cumulated inflows so far.
"After three years of wasteful 'wait-and-see' investors seem
to have identified a reasonable entry-point", Lyxor analysts
reckon.
Nb. The 2019 line pointing sharply upwards is coloured
grey.
(Julien Ponthus)
*****
WHAT HAPPENS TO STOXX AFTER RECORD PEAKS?
We've taken a look at what happened to the STOXX 600
when the European benchmark surged in 2000 and 2007 and
2015 to record levels above the 400 points threshold.
Well this chart shows that a significant correction took
place in the following several weeks. So, if history is any
guide, is it time to start to get worried again now that the
STOXX has climbed back above 400 points?
Perhaps a degree of extra caution would not hurt.
Only last week UniCredit strategists warned: "The high level
of short positions in volatility indices reflects the high
degree of investor complacency, which makes equities vulnerable
to event risk".
(Danilo Masoni)
*****
WHAT DO INDUSTRIALS, CHEMICALS AND DRUGMAKERS HAVE IN
COMMON? (1407 GMT)
Well they're all trading at their highest on record or, to
be a more accurate, at a peak since 1987, when our charts
started.
And they're not alone in this club. Builders and financial
services are also there and altogether they represent the
driving force behind the attempt to push the broader STOXX 600
index to a new lifetime high.
But what does this tell us about recent market dynamics as
we head into 2020?
Three of these sectors are cyclicals (industrials,
chemicals and builders) and their rally may
partly reflect expectations that the negative macro has bottomed
out, as optimism over a trade deal grows.
Healthcare, however, is a defensive play but its
relatively cheap valuations of some companies may be playing in
favour of it, underscoring the recent return of appetite for
so-called Value factor.
Last but not least, financial services. They look
neither cyclical or defensive but the latest burst of dealmaking
among exchange operators shows how M&A can be a driving force in
pushing prices higher.
In this 15-year rebased chart you can see how these sectors
have all left the STOXX behind.
(Danilo Masoni)
*****
THINK OF INFLATION LIKE THE DOTCOM BUBBLE (1223 GMT)
Market strategist Kevin Muir, author of the Macro Tourist
newsletter, has left East West Investment Management and now
wants to make a big contrarian bet.
"My goal is to create a fund that will take advantage of
what I believe to be the next major market disruption - a return
of inflation and a breaking of the negative correlation between
stocks and bonds", he wrote to his followers.
"In 1981 no one could imagine inflation doing anything
except go higher. Today we are at the opposite extreme", he
believes, adding that because so few investors are positioned
for a come-back of inflation, "protection is dirt cheap".
To those who will argue that it is usually dangerous to be
right too early, Muir replies that keeping on betting on lower
inflation "would be like someone buying the Nasdaq 100 index at
the turn of the century".
An excellent short term investment but a disastrous one just
a few quarters down the line when the index for what was
promised to be a new economy completely collapsed with the
bursting of the dotcom bubble.
In both cases, he argues, the risk-reward is "completely
skewed to the downside".
But of course it goes both ways: betting on higher inflation
has been a horrible trade until just recently.
Austria's infamous 100 year bond saw its yield fall from
above 2% to less than 0.6% in less than two years...
Not a trade you would have wanted to be on the wrong side of
even if common sense (or what feels like it) seemed to scream,
at say 1%, that the yield was way too low for a product which
will live longer than the vast majority of Austrians.
Here's the chart for Austria's 100 year benchmark and the
slope from above 2% to below 0.6%:
(Julien Ponthus)
*****
WORLD STOCKS NEAR RECORD HIGHS AMID 2020 UPGRADES (1009 GMT)
Four little points is all it would take to lift the MSCI All
country World Index to its highest level ever as
a wave of upgrades from banks and asset managers in their 2020
equity outlooks fuels bullishness across the world.
Here in Europe, the STOXX 600 is back at May 2015
highs and less than seven points from its April 2015 record of
415.18 points.
Other milestones are in touching distance, such as the 6,000
points threshold on the CAC 40: that's just about 0.7%
away.
Looking at Wall Street, yet new fresh records look quite
likely again with S&P futures trading (again!) at their highest
levels ever.
The only trepidation out there, as one says in our newsroom,
is that the rally is wholly dependent on a trade deal being
sealed by the U.S. and China by the next tariff deadline of Dec
15.
(Julien Ponthus)
*****
OPENING SNAPSHOT: STOXX BACK TO JULY 2015 HIGHS (0845 GMT)
European shares are positive at the open with the STOXX 600
climbing back to its highest since July 2015, helped by
gains across most sectors, as investors appeared hopeful about
progress in trade talks between the U.S. and China.
"Overall, we think the chance of a complete breakdown in
talks is now lower, and the chance of a positive resolution –
potentially including a rollback of tariffs – is higher," says
Mark Haefele, CIO at UBS Global Wealth Management.
"Political pressure ahead of the 2020 elections is rising,
and a workable agreement would enable President Trump to
'declare victory' ahead of the vote. Meanwhile, monetary policy
and fundamentals are also now more supportive and we have
adopted a neutral stance overall on equities," he adds.
Among top STOXX movers, satellite operator SES is
down 20% after the Federal Communications Commission in the U.S.
said it backed a public auction to free up spectrum in the
C-Band for next-generation 5G wireless networks.
Well-received results are driving in London-listed Halma
, ICG and Homeserve up 8.8%, 6.2% and
5.2% respectively, while Sonova in Zurich is down 4% as
margins missed expectations, offseting an upgrade to its outlook
which ZKB said is already reflected in consensus estimates.
Meanwhile, Madrid bourse operator BME, at the
centre of a takeover battle shares were up 1.8%, extending
yesterday's 38% surge.
Here's your opening snapshot.
(Danilo Masoni)
*****
ON OUR RADAR: BATTLE FOR BME, GERMAN REAL ESTATE, EARNINGS
(0755 GMT)
European shares are seen rising slightly at the open, helped
at the margins by news that the U.S. has granted Huawei a
longer-than-expected 90-day license extension, although the
region's top index remains stuck in its recent tight range, just
below record highs, pending clearer news on whether the U.S. and
China will strike a preliminary deal to end trade war.
EuroSTOXX50, DAX, FTSE, CAC and IBEX futures are up
0.2-0.5%.
On the corporate front, eyes on the bidding war for Madrid
bourse operator BME which could heat up further after
Spanish newspaper La Informacion said Deutsche Boerse
is mulling a bid for BME following competing moves by SIX and
Euronext to take over their smaller Spanish rival.
German real estate could also grab some attention due to M&A
action. Shares in TLG Immobilien are up 1.5% in early
Frankfurt trade after agreeing to merge with Aroundtown SA
in an all-share transaction.
In earnings, news is mixed.
Sonova lifted its FY 2019/2020 sales and profit
outlook after the hearing aid maker said a new device took
market share from rivals in H1. Its shares are seen up 2%.
Private bank Julius Baer said it was unlikely to
achieve its target of 4-6% growth in net new money this year due
to outflows from funds at its Italian subsidiary Kairos. Plans
for a 400-million-francs share buyback could sweeten the
disappointing earnings update.
Dialight could be hit hard after the lights
manufacturer warned on its annual operating profit, hit by the
Sino-U.S. trade spat which has led to uncertainty around the
timing of orders from its customers.
(Danilo Masoni)
*****
MORNING CALL: LITTLE CHANGED (0628 GMT)
European shares are expected to open little changed,
hovering at striking distance from their past record highs, as
investors await clearer news on whether the U.S. and China will
strike a preliminary deal to end a drawn-out trade war.
Spreadbetters at IG expect London's FTSE to open 6 points
higher at 7,314, Frankfurt's DAX to open 9 points higher at
13,216 and Paris' CAC to open 5 points higher at 5,934.
Over in Asia, shares were mixed.
(Danilo Masoni)
*****
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and
Thyagaraju Adinarayan)
