* European stocks recover
* France hits 6-mo high as strong LVMH boosts luxury stocks
* Kering (PA:PRTP), Moncler, Dior, Burberry all rise
* Brexit extension drives airlines easyJet (LON:EZJ), Ryanair up
April 11 - Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Josephine Mason. Reach her on Messenger to share your thoughts on market moves: josephine.mason.thomsonreuters.com@reuters.net
EUROPE LOSES 22-1 TO AMERICA IN CREDIT SUISSE'S MOST PREFERRED THEME (1239 GMT)
Are European and Asian companies not catching up fast enough to hot themes the investment world is keenly watching?
"Big Data" and artificial intelligence make it to the top of Credit Suisse 's list of most-preferred themes list at Credit Suisse (SIX:CSGN) this year, with the likes of Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), Intel (NASDAQ:INTC), and SS&C Tech, among others in its list of favourites. No! Apple (NASDAQ:AAPL) is not on the list.
Just one European company was named in that list and that's SAP.
That's a score of 22 to 1. By the way, Asia scored zero.
The 50-plus page note also talks up "Healthy Living". Yoga-pants specialists lululemon athletica, Germany's Adidas (DE:ADSGN), Saputo, the maker of Armstrong Cheese and Cheese Heads, were among the most preferred.
Europe scores better in this theme with 6 of the 15 companies listed in the region.
"Consumer Connectivity" was the analysts' third most preferred theme, including Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN) and Google-owner Alphabet (NASDAQ:GOOGL).
The UK scores well in this space with Moneysupermarket.com, Rightmove and Autotrader making it to the list. The overall U.S. vs. Europe score is 15-6.
Credit Suisse's two other top themes were "Ageing" and "Automation".
The table below summarizes the themes, ranked in their order of preference, and the region where the companies are listed:
Themes
North America
Europe
Asia 1. Big Data/AI
22
1
- 2. Healthy Living 9
6
3 3. Consumer
15
6
3 Connectivity
(Thyagaraju Adinarayan)
*****
A EUROPEAN RECOVERY TRADE? IT'S ABOUT TIME! (1123 GMT)
France's CAC 40 is certainly looking chipper today, hitting six-month highs thanks to an impressive luxury rally, and Europe as a whole is climbing again after an earlier wobble. But how long can this last? Is the rally across Europe, led today by cyclical sectors, here to stay?
BAML analysts think it is, as we're moving into a recovery phase for the market. Their composite macro indicator has improved for the second month (see below), indicating macroeconomic signals have reached a bottom.
As a result, investors would do well to buy value, high risk, and smaller size stocks which should outperform high quality, they argue. Plus, they're extra cheap!
"With macro data starting to improve and given extreme valuations, recovery stocks are now more attractive," Manish Kabra and team write.
They're not the only ones who see a recovery ahead.
Goldman Sachs (NYSE:GS) analysts say "we think growth could soon hit its trough. And from there, we expect a pick-up in the second half of the year, propped up by a coming fiscal boost and an improved external environment—especially in China."
(Helen Reid)
*****
DEJA-VU FOR EU TECH (1008 GMT)
With German silicon wafer maker Siltronic WAFGn.DE delivering a shocker yesterday afternoon with its big profit warning, research houses are scrambling to warn investors to expect more such news ahead.
It's all giving us a sense of deja vu.
Barclays (LON:BARC) expects the tech hardware sector to report in-line results in Q1 with a more cautious outlook, similar to Q4.
"Weak end markets, high inventory levels, mixed leading indicators and continued macro overhangs lead us to conclude that the awaited-for improvement in tech hardware fundamentals is delayed and likely to result in consistently muted trends into 2Q," Barclays lead analyst Andrew Gardiner writes.
Pointing to economic slowdown, geopolitical uncertainties and continuing inventory corrections, Siltronic said the timing of a market rebound is "not visible". however, anticipates a meaningful improvement in H2.
Credit Suisse says rising wafer inventory at memory chip makers are leading to production cuts at Western Digital (NASDAQ:WDC) and Micron (NASDAQ:MU), and potential reduction in utilization at Toshiba and Hynix.
"Raw wafer inventory remains at low levels, but finished goods at Semis customers remain high," Citi analysts add.
German chipmaker Infineon IFXGn.DE to which Siltronic supplies, cut its 2019 revenue forecast two weeks back, for the second time this year, blaming a weakening Chinese car market. Other Siltronic customers Samsung Electronics (KS:005930) and TSMC had also warned on sales.
Barclays points to Eurozone manufacturing PMI dipping below 50 and says it is concerning for Europe-heavy names such as Infineon and STMicro.
(Thyagaraju Adinarayan)
*****
DEPOSIT TIERING: NOT A PIECE OF CAKE (0934 GMT)
Far from a luxurious tiered cake for banks, the ECB's reported plan to potentially tier deposit rates - on which we got no further details yesterday - would not be a silver bullet for their problems, analysts and economists say.
UBS analysts reckon TLTROs are largely priced in by credit and equity markets now - and they're not convinced deposit tiering will make much of a difference.
"Despite the positive resonance from banks on such a policy measure, we would expect deposit tiering to bring only minor relief to bank profitability pressures," they write.
The move could, instead, be read as an indicator of the ECB's willingness to help banks.
"The signal sent to bank shareholders and creditors and the potential shift in sentiment towards the sector from an ECB becoming more supportive to banks should also not be underestimated, in our view," they add.
Indeed, the central bank may not, in the end, feel it needs to implement deposit tiering at all. ECB governor Mario Draghi said yesterday it was too early to make a decision on tiering, which would depend on a thorough assessment of the bank-based transmission channel for the ECB's monetary policies and on further developments in the economic outlook. the ECB's communication "points to a lower hurdle for a move to a tiered reserve system", the bank's next move is going to be primarily determined by economic developments, Goldman Sachs analysts say.
"If growth picks up from here - as we and ECB officials expect - the Governing Council will likely see little need for action in the near term and opt for less attractive pricing of TLTRO-III," they argue.
Below, you can see the ECB's systemic stress indicator which UBS points out is far from euro crisis levels:
(Helen Reid)
*****
HALLOWEEN BREXIT: TRICK OR TREAT'Y'? (0752 GMT)
You could be forgiven for thinking that European leaders were having a bit of fun when they agreed to give UK PM May until Oct. 31 to convince her disgruntled Brexiteers to back her exit deal.
The date was not lost on social media - #HalloweenBrexit was one of the trending topics on Twitter in the UK.
One Twitteratti suggested the country is set for Nightmare on Downing Street, another channelled the Rocky Horror Brexit Show, while others depicted Brexiteers Jacob Rees-Mogg and Nigel Farage and the PM with ghoulish masks.
Suggestions for the best Hallowe'en costume are coming in thick and fast.
BBC political editor Laura Kuenssberg says she's going dressed as Donald Tusk, while another Twitteratti says she's going as a bus with lies on the side, a reference to the Leave bus which was emblazoned with pledges about the benefit of Brexit that have been questioned for their accuracy.
In another ghoulish sign, news of the summit deal in Brussels that means Britain will not crash out on Friday without a treaty was announced at the stroke of midnight. Markets' Michael Hewson notes that the delay was much longer than the UK was looking for, but also shorter than most EU leaders were proposing.
"The fly in the ointment so to speak was France and French President Emmanuel Macron, who pushed back on the rest of EU leaders, by insisting that an extension until June was sufficient," Hewson writes.
Some creative headlines in the UK media:
Brexit could haunt UK until Halloween - The Guardian
Brexit: Trick or treat? 31 October Halloween deadline is both - BBC
Halloween horror or brilliant Brextension? - Metro
MAY'S NIGHTMARE Brexit delayed AGAIN until Halloween in humiliation for May – will we EVER leave? - The Sun
(Thyagaraju Adinarayan, Josephine Mason and Helen Reid)
*****
OPENING SNAPSHOT: PARIS IN THE LAP OF LUXURY AS LVMH SHINES (0731 GMT)
Paris is adding some sparkle to an otherwise lacklustre European market today as investors cheer better-than-expected sales growth from LVMH.
The luxury goods company's shares are up more than 3 percent after hitting record highs in early deals and the news is lifting rivals: Gucci owner Kering, Moncler, Hermes and Burberry are all up between 1 and 2 percent.
France's Sodexo is up more than 4 percent at January 2018 highs, giving the Paris market a boost and leading the STOXX 600 after its results.
Those factors are lifting the CAC 40 up 0.3 percent, outpacing gains on the euro zone STOXXE benchmark, while the STOXX 600 is down 0.1 percent as the FTSE 100 lags due to a number of heavyweights going ex-div.
Airlines and travel stocks are another hot spot after Delta Airlines (NYSE:DAL), the No. 2 U.S. carrier, lifted its revenue target overnight, boosting sentiment in the sector hurt by worries about slowing global economy. Travel and leisure stocks .SXTP are up 0.8 percent.
Budget airlines Ryanair and easyJet are also rallying on relief that European leaders have agreed an extension to Brexit until end-October, soothing worries that a no-deal exit would severely damage the UK economy and curb consumer spending.
(Josephine Mason)
*****
ON OUR RADAR: LUXURY, CABLES AND FAST FASHION (0703 GMT)
Euro zone stocks are rising hesitantly this morning, although it's a mixed bag at regional level with Paris up 0.5 percent and Frankfurt flat. London is down 0.2 percent after PM May clinched a Brexit extension until Hallowe'en from EU leaders overnight.
On the corporate news front, LVMH shares are seen higher and possibly lifting the sector as a whole after reporting stronger-than-expected Q1 sales growth, setting a high bar for its rivals in the fiercely competitive luxury goods sector.
Shares in French food services group Sodexo, the world's second-biggest catering company, could rise 2 percent after delivering stronger-than-expected rise in H1 revenues and sticking to its FY goals.
A mixed statement from German car parts maker Hella, which warned that its current quarter will be challenging but stood by its FY guidance. Its shares are down 2 percent in early Frankfurt trade.
Italian cable maker Prysmian shares are expected to fall as much as 5 percent after warning overnight it will review its financial results for last year after the latest setback facing its WesternLink submarine connection and damage claims following an anti-competition probe.
In the UK, United Utilities and Severn Trent (LON:SVT) shares may come under pressure after water watchdog Ofwat published draft plans put forward by water suppliers that indicate cuts to bills fall and spending plans over the next six years.
Fast-fashion retailer Quiz, which operates almost 120 concessions in Debenhams stores and sells through the department store's website, is seen falling after its trading update. Debenhams went into administration earlier this week.
Banks may be under scrutiny again after UniCredit disclosed late last night it's been targeted as part of a EU Commission probe into suspected antitrust violations.
Jefferies says in a note this morning that eight unnamed banks were charged on an anti-trust issue in January and a potential fine is capped at 10 percent of global turnover suggesting an upper limit of about 2 billion euro for UniCredit.
(Josephine Mason)
*****
INVESTORS CLING TO GOOD NEWS (0632 GMT)
European stock futures are slightly higher this morning as investors cling to nuggets of positive news overnight that are helping soothe growing worries about growing conflict between the EU and the U.S. and slowing global growth.
For a start, the Fed minutes didn't contain any nasty surprises, reinforcing the U.S. central bank's dovish tilt, while China's factory-gate inflation picked up for the first time in nine months last month, in a sign that Beijing's efforts to boost the economy may be putting a floor under domestic demand.
It's a mixed bag at country level though - Paris is up 0.3 percent, Frankfurt down 0.1 percent and London down 0.1 percent after PM May clinched a Brexit extension until Oct. 31 from EU leaders overnight (the Hallowe'en date is not lost on us).
Signs of progress (albeit slow) are coming from the U.S.-China trade talks, with U.S. Treasury Secretary Steven Mnuchin saying the world's two largest economies have largely agreed on a mechanism to police any trade agreement they reach. Discussions will resume today.
In earnings news, LVMH is likely to garner support after reporting stronger-than-expected Q1 sales growth, setting a high bar for its rivals in the fiercely competitive luxury goods sector while French food services group Sodexo, the world's second-biggest catering company, delivered stronger-than-expected rise in H1 revenues and stuck to its FY goals.
More bad news for the car market though - Germany's Hella warned that its current quarter will be challenging but it stood by its FY guidance. Its shares are down 2 percent in early Frankfurt trade.
Trouble at Italian cable maker Prysmian continues to brew with the company announcing overnight it will review its financial results for last year in light of the latest setback facing its WesternLink submarine connection and damage claims following an anti-competition probe.
Here's your futures snapshot:
Deutsche Boerse (DE:DB1Gn) says it is in talks to buy some Refinitiv FX units of ousted Nissan boss Ghosn returns to Japan to testify Bank CEO wants more time to assess Commerzbank (DE:CBKG) merger - Die Welt
Sunrise's UPC deal faces hurdle as top shareholder blocks capital leeway plan Vuitton keeps rivals on their toes with solid sales Air postpones Airbus plane delivery to cut costs official calls on EU watchdog to rethink Brexit stocks trading ban group Sodexo keeps financial goals as growth accelerates in Q2 Sets Up Boutique In Italy With Partnership To Launch Multi-Asset Strategies to review 2018 results after latest WesternLink setback to unveil purchase of French Messier Maris on Thursday-source says received objections European Commission for suspected violation of antitrust rules dei Paschi will feel impact of weak growth in Italy - CEO Confirms Revenue Guidance After Q1 Callebaut Q2 sales growth accelerates spies' stole secrets from chip equipment maker ASML - Dutch newspaper FD
Hella Confirms Outlook Despite "Very Challenging" Current Quarter
(Josephine Mason)
*****
HIT PAUSE IN EUROPE (0523 GMT)
And the lull continues.
Concerns about global growth and escalating trade tensions are stalling European equities near eight-month highs at the moment, with the Fed minutes largely in line with expectations.
Reinforcing its recent dovish policy tilt, the Fed minutes released overnight showed the U.S. central bank is likely to leave interest rates unchanged this year given risks to the U.S. economy from a global slowdown and uncertainty over trade policies and financial conditions.
Financial spreadbetters IG expect London's FTSE to open 23 point lower at 7,399, Frankfurt's DAX to open 7 points lower at 11,899 and Paris' CAC to open 15 points higher at 5,465.
(Josephine Mason)
*****
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Futures
https://tmsnrt.rs/2X18Ork Indices
https://tmsnrt.rs/2VAq724 Halloween Brexit
https://tmsnrt.rs/2VD8lv2 ECB systemic stress indicator April 11
https://tmsnrt.rs/2D6jPQy European tech hardware
https://tmsnrt.rs/2D9px42 composite macro indicator BAML Europe
https://tmsnrt.rs/2VECc6C CS themes
https://tmsnrt.rs/2VBZs5d
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>