GVC.L Share News (GVC)

* Rally on report China open to partial US trade deal
* STOXX 600 up 0.4%, DAX up 1% after hitting one-week high
* Fed's Powell says open to more rate cuts, eyes on FOMC minutes
* Solid update lifts food deliverer Takeaway.com, GVC gains
* Wall Street gains on hopes of trade deal

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

CORPORATE BONDS ARE THE CRACK IN THE ECONOMY
"Where can we observe the first crack?" asks Sonja Laud, chief investment officer at Legal &
General Investment Management (LGIM), asking a question that's often posed as investors wonder
where the biggest vulnerability is in the market as the economic cycle nears an end, or rather
as investors perceive the end of a decade-long cycle.
A big risk lies in the corporate bond space. "Looking globally across dollar, euro and
sterling bond markets, ... there's a huge vulnerability to a downturn, much bigger than we would
ever have seen historically," says Madeleine king, co-head of pan-European investment grade
research at LGIM.
If there is an economic downturn, more than $450 billion of debt will be vulnerable to a
ratings downgrade, according to LGIM.
"This is a completely unprecedented situation. So it is really hard to imagine how the
market is going to cope with this. Ultimately it comes down to who would have to absorb this
volume of downgraded paper," King says.
Even without a downturn, there would be globally almost $200 billion worth of debt that
could be downgraded to non-investment grade, a level that matches 2009 and the 2015-2016 levels,
King says.
LGIM sees a recession in the UK as very likely if there is a hard Brexit.
If there is a recession before companies have had the chance to repair their balance sheets
or before central banks have given incentives to help companies to repair their balance sheets,
"we could be in a situation where the high-yield markets have an absolutely enormous amount of
debt to absorb and that's a very scary position,” King says.

(Joice Alves)
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REMEMBER 2016? BEING RIGHT AND still GETTING IT ALL WRONG (1212 GMT)
Amid speculation on what impact the rise of Democratic hopeful Elizabeth Warren in the 2020
presidential race could have on U.S. stocks, here's a interesting anecdote from Lee Spelman,
head of U.S. equities at JP Morgan Asset Management.
Reminiscing on how she had not seen the victory of Donald Trump coming in 2016, she told the
audience of the asset manager's International Media Summit in London this morning about a
meeting she had with portfolio managers a week before the election.
"Only one person was right", she recalls, adding that the manager who had correctly called
the victory of Donald Trump had accordingly built a defensive stance which couldn't have been
more wrong given the subsequent market rally that came afterwards.
So the only person in the room who was right at that meeting was wrong, she said as a word
of caution against making early bets.
The only thing investors can expect in 2020 in regards to the U.S. presidential race is
volatility, she argued, particularly for in stocks in healthcare, a key issue in the campaign.
Anyhow, irrespective of the 2020 race, Spelman believes there's still some upside in U.S.
equities given that continuing expected profit growth particularly in the consumer sectors,
technology or energy areas.
Here's JP Morgan AM's expectations (Spelman believes the current consensus could be slightly
revised down towards 7-8 percent) for 2020.



(Julien Ponthus)
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STRESS TESTING BREXIT
MSCI has done some analysis of the impact of Brexit based on the two possible scenarios - an
orderly exit with a last-minute deal or a no-deal on or around Oct. 31.
MSCI's analysis shows that:
* A disruptive no-deal scenario could weaken the UK equity market by 15% and the GBP by 10%
relative to the U.S. dollar, as well as hurt corporate-bond markets
* If the UK reaches a deal, the domestic equity market could gain 10% and the pound could
rise by
8% relative to the U.S. dollar.

Here's a summary of the scenarios and their assumed market impact:


MSCI based its findings for the first scenario on analysis by the IMF, which found that
Brexit is already partially priced in, but that things could turn worse in the event of a
no-deal Brexit.
In the IMF's most severe scenario, the economy is disrupted by increasing tariff and
non-tariff trade barriers, border disruption and stricter immigration policies, with an adverse
impact on economic growth.
The scenario envisions a (partial) reversal of what has been priced in over the past two
years: equity markets could rebound, with the UK outperforming European and U.S. equity markets;
the pound and euro could strengthen against the dollar; and corporate spreads could tighten.
It also assumes that — along with the positive surprise to future expected growth —
sovereign bonds may lose, as rates go slightly up.


(Josephine Mason)
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TRADE HOPES ADD FUEL TO EUROPEAN GAINS (1047 GMT)
Stocks in Europe, and trade-sensitive Germany in particular, got quite a jolt earlier after
a report that Beijing was ready for a partial truce with Washington kindled hopes that the next
round of official talks between China and the United States kicking off tomorrow will result in
a deal of some sort.
It added further fuel to gains triggered by comments from Fed chairman Powell overnight that
the U.S. central bank will be ready to cut rates further if the economy deteriorates further.
The conciliatory signs over trade have offset a move overnight by Washington to impose visa
restrictions on Chinese officials for the detention or abuse of Muslim minorities, the latest to
anger Beijing this week coming after it blacklisted some Chinese firms.
Frankfurt's DAX 30 got the biggest boost, rising as much as 0.8% in a matter of
seconds. The bourse is now up 1.1%.
"China being open to partial trade deal have seen U.S. futures trading higher and could
explain the pick-up in Europe this morning," says Rory McPherson, head of investment strategy at
Psigma.
The market may be getting a little ahead of itself. U.S. President Trump has said he's not
keen on a partial deal, pushing instead for one that ends the spat in its entirety.
"There's usually some rough and tumble ahead of a meeting. The closer Trump gets to the
election, and if you see the U.S. economy suffering, there is a chance of a partial deal down
the line," says Josh Mahony, analyst at IG.
A partial deal is unlikely to include anything contentious like resolving disagreements over
intellectual property, but crucially for the market, it may include pledges by China to buy more
U.S. agricultural produce, in exchange for Washington delaying further tariffs on Chinese
imports due on Oct. 15.
Anything that avoids further punitive duties, which have crimped global trade and damaged
the global economy, would be a huge relief to the market.
"The market would certainly be positive about a trade deal, even if it's just a partial one.
The market cares about the tariffs, it wants some sense of normality," says Mahony.
Here's a chart showing the jump in the DAX earlier:



(Joice Alves and Josephine Mason)
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CHINA: LOOKING BEYOND THE TRADE WAR (0959 GMT)
Well it actually looks very, very good if you ignore the current tug of war between the
world's two biggest economies, at least that's according to Richard Titherington, chief
investment officer for JP Morgan AM's EM equities.
"We've been big supporter of investing in Chinese equities for a very long time", and that's
not about to change, he told the audience at the asset manager's International media summit in
London today.
"The key story for me about China is the transformation of China from an export orientated
economy towards a domestic consumption oriented economy", he says, adding that China's
vulnerability to trade war risks has been exaggerated by the investment community.
He adds that within China, real estate looks particularly attractive.
If you take into account that tensions between the Trump administration and China could
deflate pretty soon as suggested this morning, the investment case could even look stronger.
As we speak, European bourses are riding higher on such that hope with the STOXX 600 up
0.8%.

(Julien Ponthus and Thyagaraju Adinarayan)
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EUROPE'S CASH PILE WHETS ASSET MANAGERS' APPETITE (0843 GMT)
While European stocks markets may have been underperforming their U.S. peers for some years
now, the cash piles laying unused across the continent, particularly in Germany, are whetting
the appetite of big asset managers such as JP Morgan AM.
Despite negative interest rates and local banks starting to charge clients for holding too
much cash, the typical European saver has a strong bias in favour of cash in comparison to the
U.S., notes Patrick Thomson, chief executive officer for EMEA.
Looking at the slide provided at the JP Morgan AM's International Media Summit, there are
arguably quite some growth opportunities given the risk adverse profile of Europe.


(Julien Ponthus and Thyagaraju Adinarayan)
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OPENING SNAPSHOT: SEARCHING FOR DIRECTION (0731 GMT)
Selling pressure has indeed stabilised but Europe was lacking a bit of direction at the open
with the STOXX 600 trading just around parity in early deals and sectoral indexes showing muted
moves.
The major indices are now gaining some momentum, with Germany's DAX up 0.5% and the STOXX
600 up 0.3%, but investors are staying on the sidelines ahead of the start of another round of
high level trade talks between the U.S. and China tomorrow and there is little hope of any
breakthrough.
There are some bright spots in earnings, however, with Dutch online food delivery company
Takeaway.com reporting an 87% increase in third-quarter orders.
Its shares are up 3% to the top of the STOXX and UK peer Just Eat, which is merging
with the company, is also supported.
GVC is gaining 2.6% after the Ladbrokes-owner raised its full-year core earnings
forecast for the second time in three months, as betting shops proved resilient despite tighter
regulation and online gambling rose.
Here's your earnings snapshot:

(Danilo Masoni)
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WHAT'S ON OUR RADAR AT THE OPEN (0702 GMT)
European shares are expected to stabilise this morning, although worries over mounting
tensions between Washington and Beijing ahead of high level talks persist, likely limiting any
gains, as the outlook for earnings growth deteriorates further.
After main regional benchmarks suffered losses of around 1% on Tuesday, futures on main
European indexes are trading between a rise and a fall of around 0.1%.
According to the latest I/B/E/S Refinitiv data, European companies are expected to report a
3% drop in Q3 earnings, worse than the 2.2% fall expected a week ago. That fall would be the
third in a row, prolonging an earnings recession in Europe.
Shares in Plastic Omnium are expected to be heavily hit after the plastic
processing group with business in the automotive and environment sectors cut its FY operating
margins target. Dealers expects the shares to open down 3-10%.
Elsewhere in results the picture is not so bad.
A solid update from Takeaway.com, which reported an 87% increase in Q3 orders, is
set to lift shares in the online food delivery company with a positive read-across for UK's Just
Eat. Takeaway is in the process of merging with the UK company.
Good-looking updates also from Cropenergies, GVC, Codemaster and
OMV, all seen rising at the open.
In another sign of how Hong Kong tensions are taking their toll on the luxury industry, a
Daily Telegraph report that Burberry is braced for 100 million pound ($122 million) hit
to sales from the protests in the former British colony are seen sending its shares down 1% at
the start. After the market close today, LVMH will report its own update.
Meanwhile, China's state media criticised the iPhone maker Apple for an app used by Hong
Kong protesters. That has weighed on Apple suppliers in China and could also dampen the mood for
European names such as ams and Dialog Semi.

Other stock movers:
Kingfisher names Bernard Bot as finance chief;
Renault to start search for new CEO - Le Figaro;
Italian prosecutors seek trial for BT Italy, former execs in fraud case;
EDF’s Flamanville nuclear plant faces 1.2 bln euros in added costs;
GSK recalls popular heartburn drug Zantac globally after cancer scare

(Danilo Masoni)
*****



EUROPE'S SELL-OFF SEEN CALMING DOWN (0530 GMT)
After trade and Brexit angst caused heavy and widespread losses, European shares are set to
stabilise somewhat this morning, with spreadbetters pointing to slight gains at the open.
Sentiment however remains fragile with shares in Asia falling the most in a week amid little
signs that the dispute between Washington and Beijing could come to an end.
"Escalating tensions between the US and China painted the equity markets in red, as
investors finally surrendered to the idea that the US-China talks may not lead to a deal at this
week’s high-level negotiations," says Ipek Ozkardeskaya, analyst at LCG.
The pan-European STOXX 600 fell 1.1% yesterday.
Spreadbetters at IG expect London's FTSE to open 23 points higher at 7,166, Frankfurt's DAX
to open 28 points higher at 11,999, and Paris' CAC to open 21 points higher at 5,477.
(Danilo Masoni)
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($1 = 0.8194 pounds)


(Reporting by Danilo Masoni, Joice Alves, Josephine Mason, Julien Ponthus and Thyagaraju
Adinarayan)