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LIVE MARKETS-Opening snapshot: Shell shocked; banks rally on results, Fed

Published 01/08/2019, 05:48 pm
Updated 01/08/2019, 05:50 pm
© Reuters.  LIVE MARKETS-Opening snapshot: Shell shocked; banks rally on results, Fed
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* STOXX 600 reverses opening losses, now up 0.2%

* Banks rally on Fed and SocGen results; financial services gains on LSE

* Siemens under pressure after results

* Shell shocks oil, miners sink on strong dollar

* Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: thyagaraju.adinarayan.thomsonreuters.com@reuters.net

OPENING SNAPSHOT: SHELL SHOCKED; BANKS RALLY ON RESULTS, FED (0745 GMT)

European stocks have managed to reverse opening losses and are now higher as a sharp rise in banking and financial services stocks after an onslaught of earnings and some investors were relieved the Fed signalled its overnight rate cut would not necessarily be the first of many.

That's offsetting big declines in miners and oil companies. Shell RDSa.L is singlehandedly dragging the FTSE 100 in the red.

The financial services .SXFP index and LSE LSE.L shares have both hit their highest on record after the London stock exchange agreed to buy financial information business Refinitiv in a $27 billion deal in a move to transform the British company into a market data and analytics giant.

European banks are rallying 1.4%, ending a 6-day losing streak, after SocGen's results and Fed chair Powell's comments about future rate cuts dampened expectations for further cuts. SocGen SOGN.PA , Barclays BARC.L and StanChart STAN.L all reported better-than-expected numbers.

Oil giant Shell's profits missed expectations by a huge margin, sending its shares are down 4% and wiping off roughly $10 billion in market value.

Europe's basic resources index .SXPP is down 1.8% and on track for a seven-day losing streak as the dollar rallied overnight following the Fed news, making dollar-denominated metals more expensive for holders of other currencies and weighing on prices.

Among top movers, Altice Europe ATCA.AS shares are skyrocketing (+17%) this morning as the company raised its outlook after swinging back to growth in France.

As expected, Siemens SIEGn.DE is among top fallers in Europe after the German industrial company warned of weaker environment, particularly in automotive markets.

(Thyagaraju Adinarayan)

*****

GERMAN INDUSTRIALS, UK BANKS, SHELL, LSE DEAL IN FOCUS (0657 GMT)

European stock futures are sliding 0.6% after the U.S. Fed dashed hopes of further cuts following its first interest rate cut since 2008. German stock futures are lagging the broader region, after a raft of weak results from the euro zone's No.1 economy.

In the UK, Shell is seen down 3-4% after the oil major reported its lowest profits in over two years and that kind of fall from a market heavyweight is likely to drag on the blue-chip index. Barclays BARC.L , StanChart STAN.L , Rio Tinto RIO.L RIO.AX and British American Tobacco BATS.L were other big names reporting numbers this morning.

Barclays has boosted its dividend after reporting Q2 results in line with estimates, StanChart profit has beaten estimates. Both banks are seen up 2%.

In the euro zone, ING reported better-than-expected Q2 profit but warned that rock-bottom interest rates will pressure future earnings; profits at France's SocGen SOGN.PA fell 14% plagued by restructuring costs at its corporate and investment banking unit.

Siemens SIEGn.DE shares are down 1.7% in early Frankfurt trade after the German industrial giant warned of weaker environment hitting its business. Mirroring Siemens' view chemicals company Evonik EVKn.DE also said it saw "an increasingly gloomy economic environment."

In a further hit to industrials/autos, Siemens says it expects the downturn from customers in the automotive and machine building industries to continue well into 2020.

Meanwhile, ArcelorMittal MT.AS shares are expected to open down 4% after the world's largest steelmaker cut demand outlook.

In fashion, we've got Zalando ZALG.DE lifting profit forecast after a big jump in the number of visits to its site and orders in the second quarter. Its shares are rising 4.7% in early dealings.

In luxury goods, Hugo Boss BOSSn.DE has lowered outlook on challenging U.S. market, the German fashion house, like its peers, saw strong sales in China. Shares are sliding 2.2% in premarket trade.

Tobacco company BATs is seen slightly higher after reporting a 4.6% rise in revenue.

In other news, Pearson PSON.L shares are seen falling 2% after data breach in the U.S. and LSE LSE.L has agreed to buy Refinitiv from Blackstone (NYSE:BX) BX.N for an enterprise value of $27 billion.

UK headlines:

Barclays boosts dividend, reports Q2 profits in line with expectations profits slump to lowest in over two years on weak oil, gas prices warns of trade war, rate risks as profit beats estimates H1 pretax profit down 14% as outflows hit revenues insurer RSA posts 1% rise in H1 operating profit Tinto reports 12% higher first-half profit on red hot iron ore revenue rises 4.6% on higher demand for tobacco heating products Stock Exchange agrees to buy Refinitiv in $27 bln deal Adinarayan)

*****

EARNINGS THURSDAY: WHAT'S ON OUR RADAR (0622 GMT)

Earnings Thursday is here! We've got results from every sector in the region ranging from industrials to banks, retail to semiconductors, cars to luxury.

Among industrials, Siemens SIEGn.DE shares are sliding 2.4% in premarket trade after the trains to turbines maker said it was seeing a weaker environment in many of its key markets. Chemicals group Evonik EVKn.DE said it was on track to hit its 2019 targets despite "an increasingly gloomy economic environment."

BMW BMWG.DE has stuck to its outlook even as second quarter earnings fell by 20% while diesel engine company Deutz DEZG.DE shares are up nearly 5% after its H1 results.

Hugo Boss BOSSn.DE has lowered outlook on challenging U.S. market, the German fashion house, like its peers, saw strong sales in China. Shares are sliding 2.2% in premarket trade.

Shares in Zalando ZALG.DE are up 3.6% after the Europe's biggest online-only fashion retailer raised its full-year profit outlook.

Chipmaker Infineon IFXGn.DE expects to meet its thrice-lowered guidance for the business year to Sept. 30, this could provide some relief to the stock as the market doubted an H2-led recovery earlier this year.

In France, second quarter net profit at the country's third-largest bank SocGen SOGN.PA fell 14% plagued by restructuring costs at its corporate and investment banking unit.

Elsewhere in financial services, Standard Chartered STAN.L shares in Hong Kong have rallied after the bank's Q2 results beat expectations.

In non-earnings news, Pearson PSON.L announced a data breach: the British education company has notified customers about unauthorised access to about 13,000 school and university accounts, mainly in the U.S.

LSE LSE.L has agreed to buy Refinitiv from Blackstone BX.N for an enterprise value of $27 billion. The deal talks were announced last weekend, the stock exchange operator has come out with a statement confirming it.

Key headlines:

Siemens says industrial environment has deteriorated bank SocGen's Q2 net profits dragged down by restructuring costs confirms 2019 outlook despite "gloomy" economy, weaker Q2 lifts profit forecast as site visits soar Europe lifts targets after swinging back to growth in France Pearson notifies thousands of U.S. students of data breach confirms thrice-reduced guidance, Cypress deal on track posts second-quarter profit of $1.6 bln, tops estimates H1 profit beats forecasts, flags trade tension risks H1 profit falls after writing down value of Equitable Holdings Q2 hit by rising costs of manufacturing, emissions confirms all targets after H1 results Adinarayan)

*****

FED DISAPPOINTMENT DENTS EUROPE TOO (0613 GMT)

Investors appear to be shunning riskier assets in Europe this morning with stock futures down 0.3-0.4% in early deals following heavy losses overnight in Asia and the U.S. after Federal Reserve Chair Jerome Powell dampened expectations for further cuts following the central bank's first interest rate cut in a decade.

Global share markets recoiled overnight after U.S. Federal Reserve Chairman Jerome Powell said Wednesday's easing was "not the beginning of a long series of rate cuts".

Data has done little to lift the spirits. Pressure on China's factories eased a little in July thanks to growth-boosting steps from the government, but overall manufacturing activity remained in contraction as a trade war with the United States dented export orders, a private survey showed. futures are lagging the broader region, after a raft of weak results from BMW, Siemens and Hug Boss sending their shares down in early deals.

(Josephine Mason)

*****

THE QUARTER POINT CUT: EUROPE STABLE AFTER U.S. SELL-OFF (0525 GMT)

European stocks are set to open flat to slightly higher after the U.S. Fed cut interest rates by 25 bps as expected. But, U.S. markets fell sharply overnight as the central bank poured cold water on hopes of further rate cuts.

"Let me be clear – it's not the beginning of a long series of rate cuts," Fed Chair Jerome Powell said.

Financial spreadbetters IG expect London's FTSE to open 9 points higher at 7,596, Frankfurt's DAX to open 2 points higher at 12,191, and Paris' CAC to open 1 point lower at 5,518.

"All of those who were expecting the Fed to do more ended up disappointed, which given how strong some of the recent US data has been recently really shouldn't have been a surprise to anybody," Michael Hewson at CMC Markets says.

In corporate news, its another busy day of earnings: ArcelorMittal MT.AS cuts steel demand outlook due to weak automotive markets, Germany's Siemens SIEGn.DE says it was seeing a weaker environment in many of its key markets, SocGen SOGN.PA Q2 net profits dragged down by restructuring costs.

(Thyagaraju Adinarayan)

*****

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