January 23, 2018 / 10:44 AM / 3 months ago

LIVE MARKETS-Deutsche Bank confesses to "investment heresy"

    Jan 23 (Reuters) - Welcome to the home for real time coverage of European equity markets
brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on
Messenger to share your thoughts on market moves: julien.ponthus.thomsonreuters.com@reuters.net 
    

    DEUTSCHE BANK CONFESSES TO "INVESTMENT HERESY" (1044 GMT) 
    "We commit ‘investment heresy’", DB analysts admit in their latest research, as they take an
unconventional (contrarian?) view on consumer staples. 
    In a nutshell the German investment bank disagrees with the common wisdom that "rising U.S.
10-year treasury yields = sell staples".
    DB analysts make the case that in fact, European staples are "ultimately correlated to the
yield of the currency in which they report". They, accordingly, have "buy" ratings on a number
of stocks such as Nestle and Heineken.
 
    (Julien Ponthus)
    *****
     
    M&A, WHETHER "REAL OR IMAGINED", WILL BOOST TELCOS SECTOR (1016 GMT)
    Long-awaited consolidation deals could be a driving force behind a brighter year for the
European telcos sector, Deutsche Bank analysts say, the day after Orange and Deutsche
Telekom shares were boosted by a report they had held merger talks last year.

    "Reports that Deutsche Telekom was in talks with Orange would appeal to the European
Commission which has long argued for a single market for Telco services, and what better
demonstration than a merger of French and German incumbents," note analysts. 
    Whether ramping M&A is 'real or imagined', it will help inject more optimism into telcos,
they say, with smaller operators, including those with limited government ownership or more
flexible governments, likely to gain from increased deals speculation. 
    Overall they're positive on the sector which they think will do well in 2018 after two years
of underperformance drove its valuations sharply down, making them relatively attractive. DB's
top sector picks are Vodafone, Telenet, KPN, Telefonica and
Liberty Global.
 
    (Helen Reid)
    *****
    
    
    BREXIT WATCHERS, WHAT DO YOU MAKE OF BLANKFEIN'S LATEST TWEET? (0947 GMT) 
    The CEO of Goldman Sachs, which has yet to announce precise plans as to how it will move
staff from the City of London to Frankfurt and Paris post-Brexit, has just delivered some high
praise to France's Macron after a meeting in Versailles. (Reuters was there:)   
    "Feels like a new day has dawned in France," Lloyd Blankfein tweeted, leaving Brexit
watchers speculating whether this is a hint as to where the bulk of the London jobs will go.
    Last October, the CEO caused some English eyebrows to rise with this tweet: "Just left
Frankfurt. Great meetings, great weather, really enjoyed it. Good, because I'll be spending a
lot more time there. #Brexit" 
 
    (Julien Ponthus and Helen Reid)
    *****   
    
    OPENING SNAPSHOT: DAX AT NEW RECORD, STRONG POUND WEAKENS FTSE (0809 GMT)
    As expected European shares have opened in positive territory with the pan-regional STOXX
600 index edging up 0.3 percent.
    The outstanding mover however is the DAX. The main German stock index has hit a
fresh all-time high and is up 0.8 percent, while Britain's FTSE looks the weakest among
big European indexes after the pound reached a post-Brexit vote high.    
 
    (Danilo Masoni)
    *****
        
    WHAT YOU NEED TO KNOW (0749 GMT) 
    European shares are set for a strong start in the wake of the rally, which took place in
Asia and on Wall Street following the deal to end the U.S. government shutdown. 
    After yesterday’s M&A-fuelled session, there is little corporate news at this stage but
faith in “global synchronised growth” should continue lifting indexes to new highs. 
    Among possible movers is Sky: Britain's competition regulator said Rupert Murdoch buying all
of Sky was not in the public interest because it would give the media mogul too much influence. 
    Also EasyJet said recent reductions in capacity by competitors in the industry were
contributing to a positive trading environment, as revenues improved in the first quarter.
    Still in the industry, Wizz Air is keen on Alitalia but only for short, medium-haul routes. 
    Here are a few other interesting headlines: 
    Netflix crosses $100 bln market capitalization as subscribers surge 
    Trump deals blow to solar makers; forcing industry to look elsewhere for growth 

    Sweden's Com Hem Q4 underlying EBITDA just beats forecasts   
    SGS expects sales growth in 2018 after FY profit rises  
    Niki Lauda to buy airline he founded, say administrators   
    Carrefour CEO steps up digital push, inks deal in China 
    Paragon's Q1 lending rises as buy-to-let focus pays off 
    (Julien Ponthus) 
    *****
       
    TRUMP'S SOLAR TARIFFS TO HIT EUROPE TOO (0734 GMT)
    U.S. President Donald Trump announced late yesterday tariffs on some imported solar cells,
boosting shares in U.S. solar companies but hitting rivals in Asia, such as Korean solar panel
manufacturers.
    There could be victims in Europe too, such as Germany's SMA Solar Technology ,
which develops photovoltaic system technology. 
    "This could bother SMA's already difficult US business furthermore. SMA hosts CMD Friday
maybe giving some insight soon," a Frankfurt-based trader said. 
    Another trader said  also shares in Solarworld, REC Silicon, Solar A/S
, Soitec and Solar-Fabrik could be under pressure following
Trump's move.
    (Danilo Masoni)
    *****
    
    FUTURES POINT TO A STRONG START FOR EUROPEAN BOURSES (0706 GMT) 
    There seems to be little doubt as to whether European shares will follow the rally in Asia
and on Wall Street which followed the deal to end the U.S. government shutdown:       
 
    (Julien Ponthus) 
    ***** 

    
    AN ECB CHEAT SHEET: FROM "VERY DOVISH" TO "VERY HAWKISH" (0650 GMT) 
    As Thursday's ECB meeting quickly approaches, ING has drafted a "cheat sheet" to help
investors read through Mario Draghi's carefully scripted language and decide whether his message
is "dovish" or "hawkish". 
    Here it is:  
 
    (Julien Ponthus) 
    *****
            
    MORNING CALL: EUROPE TO RISE IN THE WAKE OF U.S. SHUTDOWN DEAL RALLY (0618 GMT)   
    Good morning and welcome to Live Markets. European shares are set to open higher on Tuesday
in the wake of the rally on Wall Street and Asia which followed a deal to end a three-day
government shutdown in the U.S. 
    Financial spreadbetters expect London's FTSE to open 18 points higher at 7,733.1,
Frankfurt's DAX to open 54 points higher at 13,517 and Paris' CAC to open 17 points higher at
5,558.5.
    (Julien Ponthus)
    *****

    
 (Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)
  
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