* STOXX 600 up 1%, FTSE 100 up 1.2%
* Denmark’s Ambu shares surge 18.6% after Q1 beat
* Hyundai to suspend S.Korea production on coronavirus impact
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters
CARS, PHONES AND THEIR CHINA DEPENDENCY (1026 GMT)
Auto stocks have started 2020 on the backfoot due to worries of potential tariffs by
Washington and supply chain disruptions due to coronavirus. Of late, it has been more about the
bottlenecks in parts supply as the world’s second biggest economy is on sick leave.
With factories shut and an entire city locked down, companies dependent on Chinese
industries for components to make cars/phones are either scrambling to find alternatives or
ending up suspending production.
Hyundai Motor was the first suspend production outside China. They temporarily
closed production in South Korea, its biggest manufacturing base.
Foxconn, which makes smartphones for Apple and others, could see a “big” production
impact if a Chinese factory halt due to the coronavirus outbreak extends into a second week,
Reuters reported citing sources.
“China is now a key component of global supply chains. Any sustained outbreak could disrupt
the supply chains of certain industries, with potential for bottlenecks,” BlackRock Investment
The bottlenecks could also lead to companies calling off/delaying product launches, such as
5G phones, UBS analysts say.
Apart from the impact from disruptions, analysts also say “companies may feel more optimized
to shift new product launches to when uncertainties from the virus is low and easier to attract
customers’ attentions” in the world’s largest consumer market.
Here are some readings:
– Coronavirus impact: fragile, handle with care
– The cursed auto sector: coronavirus dents production
– Coronavirus: Who’s who in Wuhan
OPENING SNAPSHOT: A BIG REBOUND SPICED UP WITH BIG MOVES (0840 GMT)
No real surprise in the general direction of the market but the rebound we’re witnessing at
the open is a tad bigger than previously expected with the STOXX 600 now up 0.8%.
The FTSE 100 is the lead gainer among European blue chip indexes with a 1.3% rise, thanks to
falling pound, which has been bruised again by renewed Brexit tensions and trading below $1.30.
That being said, there are quite a few wild moves among top movers which weren’t all flagged
in pre-market notes.
Denmark’s Ambu is clearly the star performer with a 15% surge after its latest trading
update. That said the stock has quite a reputation when it comes to price swings: in November it
skyrocketed 25% after launching a new endoscope. It also posted share losses of 15%, 14% and 20%
between August and May last year.
Second riser in NMC Health which made a 20% fall yesterday with traders still scratching
their heads over the reason for the fall. While the stock is shorted by Muddy Waters, there’s no
clear apparent trigger for yesterday’s fall and today’s 8.5% rise.
It’s more straightforward for Micro Focus’s 14% fall after the British IT company said its
executive chairman Kevin Loosemore would stand down this month after a “challenging year”.
Allied Irish Banks is also sustaining a big hit, down 4.5% after setting aside a
further 300 million euros to cover possible compensation owed to customers caught up in
Ireland’s mortgage tracker scandal.
While it’s not a huge absolute move, BP’s 3.8% jump on its dividend boost, is quite a big
one considering the major’s 120 billion dollar market cap.
Here’s a list of the top moving shares:
ON THE RADAR: BP RISING, LACKLUSTRE CARLSBERG, ENIGMATIC NMC (0753 GMT)
One key performer for the session will be BP which boosted its dividend pay-out after
reporting a Q4 profit beat. The stock is seen rising 2%-4% at the open, gaining further support
from oil prices amid hopes for new OPEC production cuts.
So far pre-market indication give a lacklustre reception to Carlsberg’s trading update with
shares seen dipping 1% after the Danish brewer said it expects to deliver mid-single-digit
organic operating profit growth in 2020.
One of the sharpest move expected is in Swiss inspections group SGS, seen falling up to 10%,
after the von Finck family cut its stake via an accelerated book building process.
Same story roughly for Wizz Air, indicated down, after its largest shareholder private
equity firm Indigo Partners said it would sell shares worth 500 million pounds.
Among the stocks on the rise, Swedish engineering group Alfa Laval is seen up about 3% after
reporting quarterly core earnings above market forecasts.
Pandora is also expected to gain about 3% after its trading update.
NMC Health shares are also expected to rebound sharply after their unexplained fall
MORNING CALL: UP WE GO! (UNTIL WE DON’T) (0615 GMT)
European bourses are set to rise at the open, tracking Asia’s tentative rebound as fears
regarding the human and economic toll of the coronavirus epidemic seemed to ease somewhat.
There’s a good chance the respite will prove very temporary though with the outbreak
continuing to generate concerning headlines with Hong Kong reporting its first coronavirus
death, the second fatality outside mainland China with the total death toll now at 427.
At the time of writing, European futures are up about 0.5% with financial spreadbetters at
IG expecting London’s FTSE to open 42 points higher, Frankfurt’s DAX to gain 47 points and
Paris’ CAC to rise 19 points.
It’s also a busy earnings day with results from BP, Carlsberg and Ferrari among others but
not quite yet the Q4 galore expected on Wednesday and particularly Thursday.
(Reporting by Danilo Masoni, Joice Alves, Julien Ponthus and Thyagaraju Adinarayan)