TheChek News Flow

MILAN, Feb 12 - European utilities and cement makers tumbled on Thursday, tracking a sharp slide in carbon prices after suggestions the European Union should intervene to reform the market, which investors fear could squeeze these sectors' earnings.

Europe’s benchmark carbon contract CFI2Zc1 fell to its lowest level since August after leaders from countries including Germany and Italy said the European Union should consider revising the bloc’s emissions trading system (ETS).

"If that message is gaining traction, those who have been speculating on and buying green certificates are realising there could be some dilution ahead," said Luca Moro, CIO at SpesX, an Italian fund focused on the energy transition.

"If CO2 credits fall, power prices drop. And when power prices drop, generators earn less."

The European utility index was the worst-performing sectoral gauge .SX6P, falling as much as 2.3%, trimming some of this year’s strong gains. The broader STOXX 600 .STOXX rose 0.2% by 1501 GMT.

Among the biggest losers were Germany’s RWE RWEG.DE, Italy’s A2A A2.MI and Enel ENEI.MI, Finland’s Fortum FORTUM.HE, Austria’s Verbund VERB.VI and Denmark’s Orsted ORSTED.CO, all down between around 3% and 7%.

European utilities and renewable energy stocks have been buoyed in recent months by expectations they would benefit from rising power demand linked to artificial intelligence infrastructure. But potential changes to emissions rules complicate the outlook.

"You now have two opposing forces: deregulation tends to push power prices down, while data‑centre build‑out tends to push them up. The question is which one wins out first," said Moro.

The benchmark EU carbon permit contract was last down 6.5% at 73.35 euros per metric ton of CO2, LSEG data showed.

The ETS is the EU’s most important climate‑policy tool. It requires power plants and industrial sites to buy CO2 permits for their emissions and caps the total number of allowances in circulation, tightening over time to drive reductions.

European utilities have risen over 40% over the last year, beating the broader index.

Cement makers also came under pressure on Thursday after the calls for a revision to the EU's ETS. Shares in Heidelberg Cement HEIG.DE, Holcim HOLN.S and Buzzi BZU.MI were down between 6.1% and 8.2%.

Berenberg analysts believe that carbon regulation has been a positive for the sector as it not only forced companies to improve their utilisation and close less efficient plants, but also improved pricing to ensure investment costs were recovered.

"Given these positive regulatory-driven financial outcomes, it would therefore be rational to view any dilution or delay to carbon regulation as a net negative for the larger European companies," Berenberg said in a note.

"Any changes to timing and/or implementation of such regulation would have a commensurate impact on the shape of cement pricing and utilisation," Berenberg said, while reiterating that it holds its core view that the cement sector was going through a period of positive structural change.

MILAN, Feb 12 (Reuters) - Schaeffler SHA0n.DE has emerged as a rare humanoid-robotics play in European stock markets, shifting the narrative around this high-precision auto parts supplier and helping its shares decouple from the turmoil gripping the sector.

Schaeffler, which employs 110,000 people, announced a partnership last month to supply components to UK tech company Humanoid and said it would integrate several hundred humanoids into its production network over the next five years. In November, it partnered with Neura Robotics.

Humanoids, viewed as the physical frontier of artificial intelligence, still make up less than 1% of the German company's sales, yet its shares have already rallied strongly.

Over the past year, an index for European autos and auto suppliers .SXAP has lost 11%, most recently hit by Stellantis' STLAM.MI hefty EV-related writedown, but Schaeffler has surged around 150% in that time, reaching a market cap of over 10 billion euros ($12 billion).

The outperformance reflects early bets by investors on how this new business stream could reshape a family-controlled company that is still largely tied to an auto industry exposed to U.S. tariffs, weak demand and Chinese competition.

Schaeffler's CEO Klaus Rosenfeld aims to generate up to 10% of sales by 2035 - over 3 billion euros - from sectors including humanoid robotics, defence, and electric vertical take-off. In 2024, revenues were 24.3 billion euros.

Lemanik fund manager Andrea Scauri said Schaeffler's jump has more to do with excitement around robotics-themed investing than with its auto business, which he still sees as "weak".

"There are no pure-play humanoid robotics companies listed, so investors are buying stocks like Schaeffler largely ignoring the underlying business. These are potentially very attractive bets, but still highly speculative," he said.

EUROPE PLAYS NICHE ROLE IN HUMANOID RACE

Although the humanoid race is led by the U.S. and China, Europe is carving out a niche role as industrial and component supplier, with companies such as Siemens SIEGn.DE, SKF SKFb.ST and Renishaw RSW.L also seen as well positioned.

In the auto sector, TeslaTSLA.O is pushing ahead with development of its in-house Optimus humanoid robot, while Asian carmakers such as Xpeng9868.HK and Hyundai005380.KS are building their own robots to pilot them on factory floors.

Several investment banks have raised their price targets on Schaeffler stock since January, with Bank of America setting the highest at 13 euros, about 21% above Wednesday's closing price.

UBS, however, last week downgraded Schaeffler, becoming the only broker with a sell rating.

"While the opportunity is meaningful, current valuations imply around 3  billion euros of humanoid value, significantly above our estimate of 1.6  billion," said UBS analyst Juan Perez-Carrascosa.

Schaeffler, which reports on March 3, trades at a 94% premium to the broader auto sector, per LSEG data, underscoring investors' willingness to pay up for its humanoid-robot ambitions.

Nadella has been waiting for such a moment. He said on the BG2 podcast in late 2024 that over time, traditional software applications will “collapse in the agent era” because they are “essentially … databases with a bunch of business logic.”

A lot has to happen before these agents become widely used. The newfangled browser- and computer-using agents still carry enormous security liabilities because they can inadvertently disclose a user’s credentials or enable a remote attacker to take control of PCs. And some AI buyers say these products are far too difficult to use.

Some of the companies are making bolder claims about how ready these types of agents are to be used in the workplace. While OpenAI, Anthropic, and Google said their computer-using agents are only available in research previews, implying they aren’t ready for large enterprises to adopt, vendors like SAP and ServiceNow—which rely on models from AI firms including OpenAI and Anthropic—have said their computer-using agents are generally available.

Meanwhile, OpenAI and Anthropic are ratcheting up the pressure. On Tuesday, Anthropic made Cowork available in a research preview to Windows computer customers. Microsoft has spent months developing similar tools that could take over Windows tasks and has previewed some of those features.

Last week OpenAI launched Frontier, which aims to help businesses such as Uber and Thermo Fisher Scientific create multiple AI co-workers and assign them different tasks that involve pulling in data from various applications.

OpenAI didn’t specify which well-known enterprise apps its AI would use to perform these tasks. But it included a graphic in its blog post about Frontier, showing how its technology for directing these agents would sit on top of companies’ “systems of record.” That’s a reference to applications made by firms such as Microsoft and Salesforce that store critical corporate data.

Some executives at traditional enterprise application firms said they viewed OpenAI’s Frontier graphic as the company’s way of showing the heavy influence it wants to have over how businesses use and pay for software and AI.

So far, traditional enterprise app firms such as Salesforce or Microsoft don’t appear to be preparing to outright block these new AI agents from using, tapping or modifying data in major existing apps like Salesforce’s customer relationship management software or Microsoft’s Office 365 productivity app suite.

Nadella, in the 2024 podcast, said there wasn’t much his firm could do to stop someone from using an AI agent from accessing applications on the company’s Windows-powered devices.

But some executives in the AI field believe the enterprise app firms could try to limit how frequently AIs can access the apps or the data they store. A version of this happened last spring when Salesforce’s Slack chat app prevented other AI and software companies from searching or storing Slack messages even if their customers permit them to do so.

Ironically, many of the traditional enterprise firms have been powering their own agents with technology they purchased from OpenAI and Anthropic, even as those AI firms try to convince workers to use their own competing tools and apps. (Those include premium versions of ChatGPT and Claude chatbots, which workers can use to access traditional enterprise apps and automate tasks involving spreadsheets or CRMs.

Last fall, for instance, database firm Snowflake released a product powered by models from those AI firms to help its customers develop agents that can search for and get data on their sales or other corporate metrics. The agents tap information that resides in Snowflake databases or in apps such as Microsoft Teams and those of Salesforce and SAP.

Because AI is breaking down traditional barriers and enabling new competition, leaders of software firms feel like “either they go to a $1 trillion valuation or they go to zero,” Snowflake CEO Sridhar Ramaswamy said at the time.

For their part, AI customers say there’s a growing need for tools that manage and connect AI agents, but they’re cautious about where to spend money.

“When I look at Salesforce and Oracle and all the other agents that I need to bring together, there’s a conversation happening of who manages that data, where does it reside, do we need to have multiple agents bringing it together and controlled by one superagent—these are all active discussions,” said Onkar Birk, chief technology officer of Hilton Grand Vacations, a time-share rental firm with more than $5 billion in annual revenue.

So far, the company has relied on a mix of AI products from OpenAI, Microsoft, Salesforce, Oracle and other vendors to run internal agents that automate tasks like forecasting revenue and staffing needs. It has also launched an AI agent powered by software from Cresta, a startup whose product is powered in part by OpenAI and Anthropic technology, to answer customers’ questions about which properties are available to book.

Despite the abundance of new AI agent products, Birk said he’s not rushing to sign up for new subscriptions.

“It’s easy to say this is simple, but it’s really not—it takes a lot of time to get results,” Birk said, noting that the company spent nearly three years developing its customer support agent before launching it to customers. “This is not a simple architecture to invest in.”