* European stocks tumble
* ASOS (LON:ASOS) plunges after profit warning
* Retail sector tumbles on latest sign of strife
Dec 17 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net
MIDDAY SNAPSHOT: SINKING LOWER AS U.S. FUTURES TUMBLE (1357 GMT)
Past the halfway point of the day's trading and the selloff is deepening across European indices. The STOXX 600 is down 0.9 percent now, with consumer and financial stocks the biggest drag.
U.S. futures are down 0.4 to 0.7 percent, likely being pushed down further by the latest Twitter tirade by Trump railing against the Fed for "even considering" another rate hike. retail selloff is deepening with the sector index down 2.5 percent and ASOS down 38.7 percent. N Brown Group is down 12.7 percent and Debenhams is down 7.6 percent on the UK small-caps index, while Next and Marks & Spencer - down 5 percent and 4.1 percent - are among the biggest fallers on the FTSE 100.
(Helen Reid)
*****
STAY BEARISH ON MINERS, BUT WATCH OUT FOR CHINA STIMULUS (1244 GMT)
Miners are the strongest gainers in a falling European equity market today as hopes of fiscal and monetary support from top metals consumer China resurface. Despite the 1.2 percent bounce, the sector remains among the worst performers year-to-date, down 15 percent as 2018 draws to its close and prospects for next year aren't looking that bright either.
Among the bears is Credit Suisse (SIX:CSGN) which sees danger signals into early 2019.
"While valuations are generally undemanding (and this may present some downside cushioning), we believe that amid declining earnings and poor short-term macro sentiment, the sector will trade well below fundamental long-term value during the early stages of 2019," Samuel Catalano and other analysts at the Swiss investment bank say in a note.
"This is particularly the case for stocks with greater exposure to the Chinese construction cycle," they add, noting that in past cyclical downturns, some stocks have traded at less than 50 percent of their net present value for short periods.
That being said, they acknowledge a key risk for their bearish call: a significant Chinese demand stimulus.
Any clues on further stimulus may come from President Xi Jinping's (pictured below) speech on Tuesday to mark the 40th anniversary of China's reform and opening. Also closely watched will be this week's Central Economic Work Conference, where key growth targets and policy goals for 2019 will be discussed. Masoni)
*****
SMALL & MID CAP MANAGERS SMASHED (1223 GMT)
This year hasn't been good for very many investors, but it seems like small & mid-cap focused managers in Europe have been particularly badly hit, JP Morgan figures show.
Of the 816 actively managed European small & mid cap funds sampled in their analysis, 57 percent underperformed their benchmark year-to-date, despite more than half having generated alpha over the last decade.
As you can see below, volatility for small & mid-cap stocks has also picked up - only two of the last 20 years saw more monthly return volatility in the MSCI small-cap Europe than 2018. This year saw as much volatility as 2008 and 2009 in the depths of the crisis.
"Fundamental PMs have faced a trial by fire over the last decade," writes JP Morgan's head of small and mid-cap Eduardo Lecubarri.
What's interesting is that small and mid-caps' price performance belies the fundamentally sound underlying performance: this year was one of just five over the last 23 in which Europe's small and mid-caps delivered negative returns despite achieving double-digit earnings growth, according to JPM.
"Such a discrepancy between growth and performance was partly driven by the macro-heavy newsflow that struck the equity market throughout the year," says Lecubarri.
(Helen Reid)
*****
MAKE YOUR PEACE WITH 2018 (1149 GMT)
With less than 10 trading days left before year-end, there's little hope of a change of trends on equity markets but some investors are struggling to make their peace with the fact that 2018 could just very well be a bad vintage and not only for European stocks.
"Investors on Wall Street must be frantically writing and posting letters to Santa Claus, asking him to bring them a traditional end-of-year rally", writes Rabobank.
"If Santa Claus doesn't turn up very soon, US stocks may end this year in negative territory", it adds, as the Nasdaq remains the only big index in the black so far with the Dow and the S&P down between 2 and 3 percent.
But for Russ Mould, investment director at AJ Bell, some have given up on 2018.
"It seems investors are increasingly losing hope of a stock market rally going into Christmas. They simply want the final run of trading sessions to be over, so they can put their feet up in front of the fire with a mince pie and not think about the damage to their investment portfolio until the festive season is over".
Same take from Lyxor: "expectations of a year-end rally in risk assets have faded, as concerns over Brexit remain acute and the probability of a recession in the U.S. keeps rising (although it stands at low levels)".
But it doesn't mean that the last few days will necessarily be dull.
"Heading into the festive period, trading volumes are expected to be significantly lower which could make things a lot more interesting as it's unlikely to be the uneventful end to the year that we often see", notes Oanda's Craig Erlam for whom Brexit could lead "be a source of potentially extreme volatility for the pound".
(Julien Ponthus)
*****
OUTFLOWS TRIGGER "BUY" SIGNALS (1103 GMT)
Investors have been pulling record amounts of money out of stock markets, so much so that it's triggered "buy" signals for Bernstein's quantitative research team.
Last week saw the largest weekly outflow in dollar terms in the history of Bernstein's weekly dataset, the broker's quantitative research team says, citing EPFR data which showed a record weekly outflow of $39 billion. has sent Bernstein's flow indicator sharply into "buy" territory while its composite sentiment indicator is at -0.93 standard deviations - what they call a "weak buy" signal but close to the -1.0 standard deviations classified a strong buy.
An important caveat they add to the EPFR data is that half of this was payouts of dividends, e.g. from income funds. Minus that dividend amount, the outflow would not be a record, Bernstein's Inigo Fraser-Jenkins and team highlight. BUT even taking half the outflows would push the flow indicator into "buy" territory, they note.
"Our outlook is still for range-bound but volatile markets in 2019. That is unchanged, but within that tactical opportunities can present themselves," they write.
Fund flow signals were neutral at the start of December, but are now "supportive", they add.
Bernstein has some interesting insight from clients, however, which acts as a reminder not to get overly enthusiastic too early: "Some investors whom we have spoken to had positioned themselves for a December rally and the path has been painful."
(Helen Reid)
*****
OPENING SNAPSHOT: ASOS CASTS GLOOM ACROSS EUROPEAN SHARES (0831 GMT)
ASOS' profit warning this morning has cast gloom across European bourses at the open, with online retailers and high street chains all being sold off heavily. ASOS is down almost 40 percent already, rival Zalando off 16 percent at its lowest in four years and Next, which has shops and a catalogue business, is down 4.4 percent.
(Josephine Mason)
*****
WHAT'S ON THE RADAR: ASOS AND RETAIL PAIN, SSE/INNOGY, ABB (0751 GMT)
European stocks were set for modest gains on Monday, though how long those will stay is anyone's guess as a busy week of central bank decisions looms. Single-stock moves were likely to be the main focus after yet another retailer profit warning and some dealmaking news from ABB and Uniper.
Europe's STOXX, euro zone STOXXE, and Britain's FTSE 100 were all on track for their biggest quarterly loss since 2011, but gains this week may change that if a “Santa rally” finally materializes.
A profit warning from British online fashion retailer Asos comes hot on the heels of poor trading updates from Sports Direct (LON:SPD), Dixons Carphone (LON:DC), and Bonmarche and confirms that November was a tough month across the retail industry, even in the online offerings often seen as immune to the high street's woes. November was “significantly behind expectations,” the retailer said in its trading update, downgrading its annual forecasts.
Traders saw Asos shares falling 15 to 20 percent – though some said they could sink even more – with negative readacross likely to Boohoo and Zalando.
Also in Britain, shares in holiday and tour operators On the Beach and TUI were seen falling 3 to 5 percent after a Sunday Times report that the government's no-deal contingency planning includes a warning to families not to book holidays for after March 29. https:// and doors retailer Safestyle also forecast a bigger loss for the year.
SSE (LON:SSE) shares were seen falling after it scrapped its deal with Innogy that would have created the UK's no.2 retail power provider, saying the deal was not in the best interests of its shareholders or customers.
Swedish retailer H&M reported sales in-line with expectations for Q4, but its shares were seen falling 1 to 2 percent.
Dealmaking was a driver once more with Swiss industrials firm ABB seen rising 2 to 5 percent after it sold its Power Grids division to Hitachi for $11 billion. Uniper also said it entered agreements on LNG with Japan's Mitsui OSK and Hungary's MOL.
(Helen Reid)
*****
FUTURES RISE AS HEADLINES STREAM IN: DEALMAKING AND ANOTHER RETAIL PROFIT WARNING (0716 GMT)
Futures have opened up, an encouraging sign for the European market as investors eye a busy week which could deliver more market stress with liquidity likely to be modestly lower as some in Europe and the U.S. take off for holidays.
Dealmaking is again a main focus today with Switzerland's ABB selling its Power Grids division to Hitachi in a mammoth $11 billion deal. Energy group Uniper, meanwhile, entered agreements with Japanese shipping group Mitsui OSK Lines and Hungarian oil and gas group MOL in LNG.
A profit warning from British online fashion retailer ASOS comes hot on the heels of poor trading updates from Sports Direct, Dixons Carphone, and Bonmarche and confirms that November was a tough month across the retail industry even with Black Friday.
ASOS downgrades annual forecasts after tough November considering increasing its stake in Deutsche Bank (DE:DBKGn) -Handelsblatt to sell Power Grids division to Hitachi in $11 bln deal board aims to boost governance post-Ghosn at Monday's meeting-sources Eat shareholder calls for asset sale, new targets teams up with Chinese firm to develop and sell glaucoma drug intensifies LNG plans with Japan's Mitsui OSK, Hungary's MOL said to near $1.6 bln deal for Bristol-Myers's UPSA- Bloomberg Reid)
*****
CENTRAL BANK BONANZA: WHAT TO EXPECT (0653 GMT)
It's a busy week for monetary policy watchers with the Fed decision on Wednesday and the Bank of England on Thursday, as well as potential for Chinese policymakers to tweak guidance at the Central Economic Work Conference. Japan, Indonesia and Taiwan central banks will also make policy decisions on Thursday along with Sweden's Riksbank.
"Although the Fed will almost certainly hike again, it may signal just two hikes in 2019 - one fewer than previously," write Societe Generale (PA:SOGN) analysts.
"We expect a dovish tilt to the proceedings," write Goldman Sachs (NYSE:GS) analysts. They expect the growth characterisation to be downgraded to "solid" from "strong" and the funds rate guidance to be tweaked to something more non-committal - "some further increases" instead of "further gradual increases".
For the Bank of England, Brexit remains a key hurdle, and SocGen says the market remains unconvinced the Bank will raise rates unless Britain can get the deal through Parliament. "The market sees a low probability of a near-term rate rise, pricing just a 75 percent chance of a 25bp hike over the whole of 2019."
(Helen Reid)
*****
EUROPEAN SHARES DIRECTIONLESS AS GROWTH WORRIES GIVE INVESTORS PAUSE (0628 GMT)
Spreadbetters' indications see European shares floundering at the open after a weaker session in Asia where Chinese and Hong Kong shares tumbled. The S&P 500 marked its lowest close since April 2 on Friday, banishing once and for all any hopes of a Santa rally.
Any gains this week will likely be capped with all eyes on the Fed and other central bank decisions. "This week is full of central bank meetings, but a majority of them will probably deliver no change," write Societe Generale analysts.
Asian share markets began the week on a cautious note after soft economic data from China and Europe added to evidence of cooling global growth and reinforced anxiety over the broadening impact of international trade frictions. spreadbetters at IG expect London's FTSE to open 3 points lower at 6842, Frankfurt's DAX to open 20 points higher at 10886 and Paris' CAC to open flat at 4,854.
(Helen Reid)
*****
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ BLOG HEADSHOT
http://reut.rs/2y3Bc4f Eur futures Dec 17
https://tmsnrt.rs/2S4U2xD Indices
https://tmsnrt.rs/2A2ArHj stocks
https://tmsnrt.rs/2GoeJU5 Bernstein flow indicator buy signal Dec 17
https://tmsnrt.rs/2S8dIRi JPM small mid cap funds Dec 17
https://tmsnrt.rs/2QWLxrb Xi
https://tmsnrt.rs/2GnleX8 STOXX sectors Dec 17
https://tmsnrt.rs/2ChA3pX
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>