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* European stocks jump after U.S. data
* Banks shine, up 5.9%
* British Airways owner - IAG shares jump
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
stocks reporters. You can share your thoughts Joice Alves (joice.alves@thomsonreuters.com) and
Julien Ponthus (julien.ponthus@thomsonreuters.com) in London and Stefano Rebaudo
(stefano.rebaudo@thomsonreuters.com) in Milan.
FRIDAY SENSATION: U.S. JOB DATA BOOSTS RALLY FURTHER (1304 GMT)
Wow! The unexpected fall in U.S. unemployment sure took the market by surprise and gave an
additional boost to the rally.
Most European indexes jumped to new session highs, mirroring a spurt of enthusiasm which
also lifted U.S. futures higher.
It somewhat felt this morning that the "rally of hope" was looking for another excuse to go
higher and it may just have found it.
From top left to bottom right you can see the DAX, S&P futures, the STOXX and the FTSE
rising on, the news:
(Julien Ponthus)
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GERMAN STIMULUS PACKAGE: HERE ARE THE WINNERS (1223 GMT)
The German stimulus package, one of the largest globally, has already been supporting the
sentiment across financial markets, but analysts are now focusing on its real effects on the
German economy and listed companies.
The stimulus announced this week is worth of 3.8% of national GDP, but it comes on top of
the existing German Covid-19 stimulus of 4.8% of GDP, including a 3% decrease in the value added
tax rate.
These moves obviously support the already positive view shared by most analysts on the
German economy, which by the way is also exposed to Asia, the first area where the recovery will
take place.
Besides, according to a UBS research note lining up companies which will benefit from the
package, first we have to look at stocks exposed to Electric Vehicles (EV) incentives, such as
Volkswagen, Hella as well as Infineon.
Then Siemens because it "will benefit through energy and infrastructure spending
alongside digitization, security and defence."
E.ON is likely to be supported by "investment in climate change mitigation
projects," while accelerated depreciation will be "positive for capex plays," such as KION
.
(Stefano Rebaudo)
*****
ELECTRIC VEHICLES: WHO CASH IN? (1030 GMT)
There has been a gradual push from regulators towards electric vehicles, while current
ownership of such cars is still low, this could be changing as consumers seem keen to choose
sustainable mobility, according to a Morgan Stanley survey.
Almost a third of future car sales could be electric, say analysts at Morgan Stanley, which
asked 10,000 people in five countries in February about their consumption habits.
"It will take time to know how the consumer changes, but our survey suggests there is a
clear interest in becoming more sustainable – even before COVID-19," MS says.
But which are the companies most likely to benefit from this trend?
"We particularly highlight Valeo, Aptiv, Hota, CATL, LG Chem and Panasonic which are also
rated overweight by our stock analysts," it says.
Some key beneficiaries also include:
- Within autos and auto parts: Tesla, VW, S&T Motiv and Hota
- On the battery side: CATL, LG Chem, Panasonic and Samsung
- Among semiconductors: Maxim, NXP, Rohm, STMicro and Analog Devices
- In the tech and hardware space: Foxconn, Delta, Chroma, Sunwoda and Bizlink
(Joice Alves)
*****
DAX GETTING CLOSER TO FEBRUARY RECORD HIGHS (0930 GMT)
German shares are getting closer and closer to the February record highs and it is
now only around 8% lower than it was before the coronavirus lockdown spread across Europe.
Here is the Dax performance since it touched its highest three months ago:
Yesterday's bumper stimulus from the ECB is helping, so is the massive €130bn package of tax
and spending measures designed to boost the country's economic recovery announced this week.
The country had one of the lowest number of COVID-19 deaths among developed countries.
(Joice Alves)
*****
TIME FOR CYCLICALS TO TAKE THE STAGE (0844 GMT)
It is true that multiples are at pretty high levels and 'easy gains' triggered by oversold
technical and short covering are probably over. But this rally fuelled by good news seems to
have legs, as central banks and governments are increasingly showing their commitment to support
the global economy.
The ECB yesterday boosted its Pandemic Purchase Emergency Programme by 600 billion euros
spreading confidence across global financial markets and triggering today's stock rally.
"Some pullback seems thus possible after the impressive run of the last few weeks, yet we
believe the equity risk-reward remains favourable," a Barclays research note says. "The
leadership has now turned resolutely pro-cyclical," it adds.
And the expectation of a V-shaped economic recovery is back, as "mobility data, high
frequency indicators and economic surprises are rebounding," according to the investment bank.
While additional stimulus could be announced during summer in the U.S., the proposed EU
budget increase and the 750 billion euros recovery fund could be a game changer for Europe.
Below the rebound of cyclicals and of the COVID-19 Economic Stimulus Index (CESI).
(Stefano Rebaudo)
*****
OPENING SNAPSHOT: RISK-ON SESSION AFTER THE ECB MOVE
Another risk-on session is on its way, after the ECB boosted its Pandemic emergency purchase
program (PEPP) by 600 billion euros spreading confidence across global markets.
"Recent signals of commitment by European policymakers, political leaders, the EU Commission
and the ECB to spur the eurozone economic recovery are impressive," a Unicredit research note
says.
"A 'whatever it takes' mindset continues under the Lagarde presidency," according to Chris
Bailey, European Strategist at Raymond James.
The STOXX 600 is up 1.3% with banks rising 3.5% and insurers, carmakers and the travel and
leisure sectors all up more than 2.5%.
Healthcare, which outperformed other industries during the crisis, is up 0.2%. AstraZeneca
is flat after saying it would be able to supply more than two billion doses of its potential
coronavirus vaccine.
IAG shares are the best performers in the Stoxx 600. The boss of its unit British
Airways said it was burning through 178 million pounds a week and urged unions to engage over
12,000 job cuts.
(Stefano Rebaudo)
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ON THE RADAR: ASTRAZENECA AND LUFTHANSA (0645 GMT)
European equities are set to open in the black, on expectations of a solid recovery from the
coronavirus crisis after the ECB pledged extra money in its Pandemic emergency purchase program
(PEPP).
Some investors might be cautious ahead of today's U.S. nonfarm payroll data.
On the corporate front, the pandemic is still holding the stage. AstraZeneca said it
would be able to supply more than two billion doses of its potential coronavirus vaccine, thanks
to a string of manufacturing deals including one with Coalition for Epidemic Preparedness
Innovations (CEPI)
The container shipping industry, which includes heavyweights like Maersk, MSC and
Hapag-Lloyd, faces its biggest downturn since the 2008 financial crisis.
Stobart will exit its rail and civil engineering business this fiscal year under a
plan to offset a hit from the coronavirus crisis
Lufthansa, hit hard by the coronavirus and taking a 9 billion euro state bailout,
is being removed from the country's benchmark blue-chip DAX index.
Norwegian Air's passenger volume fell by 97.8% in May from a year ago as most of
its fleet remained grounded amid restrictions to halt the pandemic.
Eni is creating a division to focus on renewable energy, as part of a corporate
reorganisation.
Lonza Group named Roche executive Pierre-Alain Ruffieux as its new chief executive
. Clas Ohlson said Its chief executive Lotta Lyra was leaving the company
to take on another top job in a different industry. Hugo Boss is in talks with
Daniel Grieder for ther position of CEO.
Taylor Wimpey has seen a surge in interest in buying homes in May and the company has
seen fewer cancellations in Britain's 9-week lockdown than in the same period last year.
(Stefano Rebaudo and Joice Alves)
*****
MORNING CALL: FUTURES BACK IN THE BLACK (0539 GMT)
European stocks are poised to open higher, after holding the line yesterday after the ECB
pledged extra cash to its Pandemic emergency purchase program (PEPP).
Even if equities paused for a breather yesterday after a 35% bounce back since mid-March,
the sentiment remains positive while the easing in lockdowns continues and hopes of a swift
economic recovery rise.
Investors will be cautious ahead of today's U.S. nonfarm payroll data, which is expected to
show a fall of 8 million jobs in May after a record 20.54 million plunge in April.
(Stefano Rebaudo)
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