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U.S. equity futures started the week on the back foot as a stimulus deal remained elusive and coronavirus infections hit a record for a second day. Asian stocks drifted and Treasuries advanced.

Nikkei -0.09% Hang Seng closed CSI -0.97% Shanghai -1.14% Shenzen -0.05%

Eur$ 1.1836 CNH 6.6746 CNY 6.6833 JPY 104.87 GBP 1.3026 CHF 0.9049 RUB 76.5554 WTI$38.97 -2.21%

S&P -0.67% Nasdaq -0.48% EuroStoxx -0.94% FTSE -0.56% Dax -1.32% SMI

Macro :

- Hedge Fund Darling Mirati’s $5 Billion Stock Rally Set for Test

- Saudi Index Drops Most Since May in Final-Hour Slump: Inside EM

- Brexit Talks Extended to Oct. 28 as U.K. Indicates Optimism

Keep an eye on :

- AIR FP : Ariane 6 Delay Threatens Europe’s Rocket Industry, OHB Unit: SZ

- ALO FP : Alstom in Talks With Skoda Transportation to Sell Plant: Echos

- ARYN SW : Aryzta Says Elliott Talks Concluded Without Binding Offer

- AZN LN : Vaccine Deal Allows Astra to Make as Much as 20% Above Costs: FT

- AZN LN : Oxford Covid Vaccine Produces Immune Response in Elderly: FT

- AV/ LN ; Macif, Generali-CVC Mull Bids for Aviva’s French Arm: Echos

- BARC LN : U.K. Considers Plans to Let Banks Restart Dividends: Times

- BAYN GY : Bayer: FDA OKs FoundationOne CDx as Vitrakvi Diagnostic

- BPE IM : BPER Banca Says Option Rights Exercised for 99.21% of Shares

- BMW GY : BMW to Adopt Alibaba Business Operating System for China Sales

- BMW GY : BMW Labor Chief Sees Possible Profit Surge in 2021: Merkur.de

- BAER SW : Julius Baer Seeks to Withhold Bonuses from Two Former CEOs: FT

- CLNX SM : Cellnex Is Said to Be in Advanced Talks for CK Hutch Tower Unit

- DAI GY : Mercedes Drops More Hints About Its Sports Cars Going Electric

- G IM : Generali Confirms EU300m Cattolica Investment for 24.46% Stake

- HEI GY : HeidelbergCement to Withdraw From Some Markets: Handelsblatt

- HLE GY : Hella Mulls Acquisitions to Expand Beyond Cars: Automobilwoche

- RMS FP : Hermes, Not Gucci, Is the Chic Choice Right Now: Andrea Felsted

- KER FP : Hermes, Not Gucci, Is the Chic Choice Right Now: Andrea Felsted

- LBK SM : Liberbank 3Q Net Income Beats Estimates

- LHA GY : Lufthansa Maps Out Deeper Cuts in Internal Letter: Handelsblatt

- COX FP : Nicox’s NCX 470 Wins Chinese Approval for Phase 3 Trial

- NOVN SW : Novartis Granted FDA Orphan Drug Status for Branaplam

- RILBA DC : Ringkjobing Landbobank Takes Writedown on Bankrupt Client: JP

- ROG SW : Roche Granted FDA Orphan Drug Status for Atezolizumab

- SAF FP : Ariane 6 Delay Threatens Europe’s Rocket Industry, OHB Unit: SZ

- SAN SM : Santander to Create Bad-Loan Servicing Platform: Expansion

- SAP GY : SAP Cuts Year Revenue Outlook, Citing Covid-19 Impact on Demand

- SAP GY : SAP Cuts 2020 Sales Outlook Citing Covid-19 Impact on Demand

- SIE GY : Carlyle Said to Near $2.4 Billion Deal for Siemens’s Flender

- SWI US : SolarWinds to Buy SQL Sentry

- SOP FP : Sopra Steria Identifies Cyberattack Virus, Says No Data Leaked

- FP FP : Total Considers Investing in Iraqi Natural-Gas Projects

- TGS NO : TGS: Petronas Awards Multi-Year M-C Contract to Seismic Group

- URW NA : Proxinvest Recommends Vote for URW’s EU3.5b Capital Increase

- VPK NA : Royal Vopak Completes EU100 Million Share Buyback Program

- VOW3 GY : Volkswagen to Shift Bentley to Audi Division: Automobilwoche

- VOW3 GY : Volkswagen Backs EU’s Green Deal, CEO Tells Tagesspiegel

- WDI GY : Wirecard Nears Sale of Core Business, Sueddeutsche Reports

* Aker Solutions Raised to Buy at SEB Equities; PT 11 kroner

* Avance Gas Raised to Buy at Arctic Securities; PT 40 kroner

* Betsson Raised to Buy at Pareto Securities; PT 82 kronor

* BPER Banca Raised to Buy at HSBC; PT 1.75 euros

* BW LPG Raised to Buy at Arctic Securities; PT 55 kroner

* EDF Raised to Buy at HSBC; PT 12.10 euros

* Ipsen Raised to Overweight at Barclays; PT 96 euros

* L'Oreal Raised to Hold at Berenberg; PT 280 euros

* LEARNING TECHNOLOGIES RAISED TO BUY VS HOLD AT PEEL HUNT

* McCarthy & Stone Raised to Equal-Weight at Barclays

* New Work SE Raised to Hold at Berenberg; PT 220 euros

* PKO Raised to Buy at Goldman; PT 30.90 zloty

* RBI Raised to Buy at HSBC; PT 18 euros

* Royal Unibrew Raised to Hold at Handelsbanken; PT 650 kroner

* Synthomer Raised to Overweight at JPMorgan; PT 450 pence

* TechnipFMC Raised to Buy at SocGen; PT $8.89

>>> Down

* Adidas Cut to Hold at HSBC; PT 305 euros

* Beazley Cut to Equal-Weight at Morgan Stanley; PT 350 pence

* Fortum Cut to Neutral at Credit Suisse; PT 19 euros

* ICA Gruppen Cut to Hold at SEB Equities; PT 440 kronor

* KWS Saat Cut to Hold at Nord/LB; PT 63 euros

* SAP Cut to Neutral at JPMorgan; PT 120 euros

* Topdanmark Cut to Hold at ABG; PT 290 kroner

* Wartsila Cut to Underweight at JPMorgan; PT 6.70 euros

>>> Initiation

>>> Call

* DSV’s Good Performance Takes Pressure Off M&A for Now: Bernstein

* Kungsleden Preferred Swedish Office Exposure Stock: Barclays

* Learning Tech Outlook Improving, Peel Hunt Upgrades to Buy

* Neste Well-Placed to Keep Margins Strong, Berenberg Hikes PT

The boss of the Stuttgart-based automaker, Ola Kallenius, can be satisfied with his performance so far. Sales in China rose year-on-year by nearly one-fifth during the third quarter bringing year-to-date revenue there up by 7% to 14.7 billion euros, a marked divergence to declines in every other major country. The V-shaped recovery in Mercedes-Benz cars’ largest market meant Kallenius trimmed the group’s year-to-date revenue decline to 14%, a deficit which could shrink further in the last three months of the year. Combined with tough cost-control, 2020 operating profit should be broadly in line with last year’s 4.3 billion euros – an impressive turnaround from the middle of the year when Daimler hoped to merely break even.

By contrast, Renault’s engine has been sputtering for some while. New Chief Executive Luca de Meo is at least heading in the right direction. A 8% year-on-year revenue decline in the third quarter was less than analysts feared. The fact it was mitigated by higher pricing vindicates a key plank of his turnaround strategy to focus on profitability rather than volume. A 3% sales shrinkage in Europe, compared to a 5% regional drop, suggests de Meo also took share in a market which accounts for roughly half of group sales. That gave him enough confidence to accelerate towards the modest goal of positive free cash flow in the second half, after suffering steep losses in the first six months.

De Meo’s target of 2 billion euros in cost savings by 2022, compared with 2019, should hasten Renault’s forward propulsion. Even so, Renault’s enterprise value is over 8 times its 2021 operating profit as forecast by Refinitiv-compiled data. Daimler is less than 5 times. That doesn’t give much incentive for investors to choose the French company over its German rival.

Big Oil well placed to accelerate transition to electric vehicles

The ability to manage flexibility in the energy system presents an opportunity for majors

By 2030, the EU expects 35m electric vehicles to be on the road, but that transition is not a done deal — especially if potential owners think the cost will be too high.

For the traditional oil majors, who are looking to accelerate their investments in the energy transition, this presents an opportunity, as they move from Big Oil to Big Energy.

The ability to manage flexibility in the energy system — how electricity is stored or supplied to the power grid and how demand is shifted to times when more wind or solar power is available — will be the key to their role.

Matching intermittent supply from renewables with growing demand in the ever-electrifying world is where the opportunity lies — and where the oil majors should focus. 

The industry’s fleet card relationships — tie-ins with companies which offer staff cars — as well as ability to trade energy and offer incentives for EV owners will give them a bigger presence in the energy transition.

As soon as there are enough EVs on the road, batteries will be the best option to provide short-term flexibility to the grid.

If an EV is plugged in when parked (usually more than 85 per cent of the time), smart charging can shift power demand to when renewable supply is high and power prices low, or the battery can deliver electricity back to power grids — a significant contribution to flexibility and balancing.

Additionally, because EV batteries are generally replaced after 10 years, they can then be repurposed to serve as stationary storage for another 5-20 years in their second life at very low cost.

The sheer volume of projected EV batteries, used in a combination of smart charging, vehicle-to-grid, and second life, could contribute up to a third of all short-term flexibility needs projected by the European Commission in 2030, and up to 100 per cent by 2050 (with an anticipated 190m EVs on the road by then).

Additional capital expenditure needed to use these batteries for grid services is very low, as EV owners will have already paid for the batteries as part of the purchase price of their cars. 

An average driver will use only 50 per cent of the battery capacity guaranteed by the manufacturer for driving; the other 50 per cent can be allocated for grid stabilisation, reducing the cost of EV ownership and the need for government subsidies.

But how do governments and industry ensure people buy EVs to projected levels? If the owners can economically use 100 per cent rather than 50 per cent of the most expensive part of the car — the battery — then electric mobility will become more affordable. 

This makes it more likely that projected EV purchases will materialise, with the consequent increase in battery availability at low cost and making energy transition cheaper.

The oil majors are well positioned to contribute to this acceleration loop.

One way to seize an early advantage in aggregating EV battery usage is by leveraging off their fleet card relationships with customers like DHL or Microsoft. 

As car fleets become increasingly electric, existing fuel card relationships will be transformed as the oil majors shift to provide servicing, power and management of EV batteries, rather than petrol or diesel at stations.

Using their powerful trading operations, the largest oil majors should look to aggregate EV batteries as a trading asset, not only using them to balance grids but to provide lower power prices to EV owners.

They could even fulfil the dream of “zero zero” for EV owners — driving with zero emission green power at zero cost — paid by revenues from making batteries available.

Big oil companies can further incentivise EV drivers by offering loyalty points to be spent at their service stations and convenience outlets — boosting high margin retail revenues. 

Having pioneered the integrated trading units in the energy industry many years ago, this should give them deep institutional knowledge, experience and volume advantages. 

They will face competition. Utilities who made earlier moves into new energy — the “renewable majors” — are often the default power suppliers to fleets. The oil majors will need to focus on smart investments using their core advantages, rather than trying to copy utilities by just building gigawatts of renewable power.

By helping EV owners to monetise the full battery capacity of their vehicles, Big Oil can help societies to transition to new electric mobility in a cost efficient way.

Seven people detained after authorities regain control of oil vessel off UK coast

British special forces ended a stand-off aboard an oil tanker off the Isle of Wight on Sunday when they used helicopters to storm the vessel and detain seven stowaways suspected of attempting a hijacking.

The Ministry of Defence said that, in response to a police request, the defence secretary and home secretary had authorised armed forces personnel to board the ship — the Nave Andromeda — to “safeguard life and secure a ship that was subject to suspected hijacking”. One person familiar with the incident indicated that those involved belonged to the Special Boat Service, the naval arm of the UK’s special forces.

“Armed forces have gained control of the ship and seven individuals have been detained,” the MoD said. “Police investigations will now continue. Initial reports confirm the crew are safe and well.”

Ben Wallace, defence secretary, wrote on Twitter that he commended the hard work of the armed forces and police to protect lives and secure the ship.

“In dark skies, and worsening weather, we should all be grateful for our brave personnel,” Mr Wallace wrote. “People are safe tonight thanks to their efforts.”

Priti Patel, the home secretary, praised the “quick and decisive action” of the police and armed forces.

The forces’ action brought to an end an incident that, according to the Hampshire Constabulary, began at 10.04am aboard the vessel. The Andromeda is owned by Athens-based Navios Maritime Acquisition.

The force said concerns had been raised about the welfare of the crew on board the vessel, which had been heading towards Southampton.

“It was reported that a number of stowaways were on board, and they had made verbal threats towards the crew,” the force said.

The force confirmed that it had detained seven people.

“All 22 crew members are safe and well,” the force went on.

The vessel was about six miles off the coast of the Isle of Wight at the time it was stormed.

Navios Tanker Management, which operates the vessel on behalf of the owner, said the ship’s master had advised the UK authorities that seven stowaways had been found on board during the passage from Lagos, in Nigeria. At the time 22 crew were on board.

“The master became concerned at the behaviour of the stowaways and requested that the authorities intervene,” the company said.

Navios and John Thompson, co-founder of Ambrey, a maritime security firm that provided advice to Navios on Sunday, painted a less dramatic picture of the incident than the UK authorities’ announcement.

“It's stowaways who have got a bit rowdy with the crew,” Mr Thompson told the FT.

Mr Thompson said his company had helped to put Navios in touch with the correct authorities in the UK.

Hampshire Police imposed an exclusion zone of three miles around the ship before the incident was concluded.

The force said on Sunday evening it was investigating the incident and had a number of enquiries to carry out to establish the full circumstances.

While piracy in the Gulf of Aden and off west Africa has made tussles over the control of vessels common in some of the world’s busiest shipping lanes, security incidents are extremely rare on board vessels in UK waters.

The Andromeda, capable of carrying half a million barrels of crude oil or refined products, left Lagos on October 4, according to vessel-tracking services.

The vessel’s tracking information indicated it was sitting high out of the water, suggesting it was empty or nearly empty.

ExxonMobil, operator of the Fawley oil refinery near Southampton, originally said the vessel had been scheduled to call there on Monday to collect a cargo of gasoline, but later retracted the statement saying it was a different tanker that had been scheduled to load.

Stowaways are a widespread problem in international shipping, with would-be migrants often able to board ships and hide amid the chaos of some larger developing-world ports.