>>> What to look at today - 31st of March 2020

Asian stocks traded mixed and U.S. equity futures swung to a loss as a volatile quarter for global financial markets came to an end.
S&P 500 futures erased gains after hitting their highs Tuesday morning on a stronger-than-anticipated China manufacturing index. Shares fell in Japan and Australia, and advances were pared in South Korea and Hong Kong. Crude oil jumped, almost reversing a slump in New York Monday. The yen sank as the end of Japan’s fiscal year brought positioning adjustments. Treasury yields retreated.
US After Hours  RH -10.5% down big on earnings; AMRN down sharply on reports of an unfavorable patent ruling for Vascepa

Nikkei -0.34% Hang Seng +0.95% CSI +0.49% Shanghai +0.30% Shenzen +0.72%

Eur$ 1.1011 CNH 7.1021 CNY 7.0945 JPY 109.33 GBP 1.2336 CHF 0.9603 RUB 79.3129 TRY 6.5842 WTI$ 21.34 +5.72%

S&P -0.20% Nasdaq -0.14% EuroStoxx +0.40% FTSE -0.15% Dax +0.53% SMI

Macro :
- Taleb Says It’s Too Late for Tail-Risk Hedging, Slams Stimulus
- Italy’s Lockdown May Be Extended to May 4: Stampa
- France Considers Doubling ‘Macron’ Bonus to EU2,000: Echos

Keep an eye on :
- AAK SS : AAK Hasn’t Yet Seen Material Business Disruption by Coronavirus
- ADJ GY : ADO Properties Full Year FFO I Per Share Misses Lowest Estimate
- ADL GY : Adler Real Estate Full Year FFO I Per Share EU1.06
- AAPL US : JDI to Sell Some Facilities to Apple for 22b Yen: Nikkan Kogyo
- ATC NA : Altice Europe Unit Ends Talks With Partner Communications
- AML LN : Aston Martin May Tap Funding Amid Working Capital Concern
- BAMNB NA : BAM Group Withdraws Guidance for 2020, Dividend Proposal
- BME SM : Euronext Says it Does Not Intend to Make An Offer for BME
- BP/ LN : BP’s Boss Promises Staff Jobs Are Safe For at Least Three Months
- CLI IM : NEWLAT TO BUY 46.24% OF CENTRALE DEL LATTE, TO PAY EU1 AND 0.33 SHARES PER CENTRALE DEL LATTE SHARE
- EL FP : EssilorLuxottica's Structure Slows Coronavirus Response: React
- FCA IM : Fiat Ceases or Postpones Non-Critical Work, Cuts Management Pay
- FTK GY : Flatex AG Full Year Revenue EU134 Mln
- HMSO LN : Stifel says Hammerson’s reduced price may make it a target
- HFG GY : Hellofresh Sees 1Q Rev., Adj. Ebitda Above Market Estimates
- IIA AV : Austrian Landlords’ Merger Talks Take Back Seat in Virus Crisis
- ILTY IM : Illimity Sees Marginal Hit on 2020 Profitability from Virus
- DEC FP : JCDecaux to Buy Minority Stake in Clear Media
- EDPR PL : EDP Renovaveis Shareholders Approve EU0.08/Shr Dividend Payment
- ESSITYA SS : Essity Dividend Delay Prudent on Covid-19 Uncertainty: React
- EXO IM : Exor Nears $200 Million Investment in Ride-Share Company Via
- FRA GY : Frankfurt Airport Passenger Traffic Down 90.7% March 23-29
- KIN BB : Kinepolis Scraps Dividend, Sees ‘Significant’ Impact
- LBK SM : Liberbank of Spain Cancels Dividend
- LISN SW : Lindt & Spruengli Says Financial Outlook 2020 Is No Longer Valid
- MRO LN : Melrose Saw ‘Significant Deterioration’; Pulls Dividend
- NHY NO : Hydro Says Coronavirus Affecting Extrusion Ops Mainly in Europe
- NEM GY : Nemetschek Sees 2020 Ebitda Margin Above 26%
- NIBEB SS : Nibe Withdraws Dividend Proposal to Await Clarity on Virus
- NIBC NA : NIBC Plans to Pay Out 2019 Dividend in 2H Only If Appropriate
- COX FP : Nicox Announces Zerviate Launch by Partner Eyevance in U.S.
- OR FP : L'Oreal's Light 1Q Sales Drop Shows Flexibility, Prowess: React
- PRY IM : Prysmian Seeks to Halve Initially Proposed Div to €0.25/Shr
- RAL FP : Rallye Announces Cancellation of EP Investment Facility
- SGO FP : Jefferies Likes Building Materials Names With Solid End Markets
- RATOB SS : Ratos Withdraws Revised Proposal of SEK0.3/Share Dividend
- SAS SS : SAS Not Yet Able to Access Funds From Rescue Packages, DN Says
- SLT GY : Schaltbau Sees 2020 Rev. EU460m to EU500m on Coronavirus Impact
- SWON SW : SoftwareOne Confirms Midterm Outlook, Proposes CHF0.21/Share Div
- TLG GY : TLG Immobilien Sees 2020 FFO EU153 Mln To EU157 Mln
- TOD IM : Tod’s Decided to Not Pay Dividend for The Year
- TOM2 NA : TomTom Withdraws 2020 Outlook; Suspends Buyback
- VAR1 GY : Varta Sees 2020 Adjusted Ebitda EU175 Mln To EU185 Mln
- FP FP : Total Says It Won’t Use French State Aid for Workers, Loans
- VEI NO : Veidekke Cancels Dividend; Suspends All Planned Investments
- ZAL GY : Zalando Sees Significantly Lower 1Q EBIT as Consumers Cut Back
- ZAL GY : Zalando Owns Up to Slowdown as Shoppers Change Priorities: React

Reuters : Oil rebounds from 18-year lows after U.S., Russia agree to talks

Oil rebounds from 18-year lows after U.S., Russia agree to talks

SEOUL (Reuters) - Oil recovered ground on Tuesday after U.S. President Donald Trump and Russian President Vladimir Putin agreed to talks to stabilize energy markets, with benchmarks climbing off 18-year lows hit as the coronavirus outbreak cut fuel demand worldwide.

Brent crude LCOc1 was up by 43 cents, or 1.9%, at $23.19 a barrel by 0406 GMT, after closing on Monday at $22.76, its lowest finish since November 2002.

U.S. crude Clc1 was up by $1.16, or 5.8%, at $21.26 a barrel, after settling in the earlier session at $20.09, lowest since February 2002.

Oil markets have faced a double whammy from the coronavirus outbreak and a price war between Saudi Arabia and Russia after OPEC and other producers failed to agree on deeper cuts to support oil prices in early March.

Trump and Putin agreed during a phone call to have their top energy officials discuss stabilizing oil markets, the Kremlin said on Monday.

“Oil prices are clawing back from a near 18-year low on hopes that oversupply concerns may finally see some relief,” said Edward Moya, senior market analyst at broker OANDA.

“Much of the focus has fallen on a key call between the Presidents of the United States and Russia.”

With a plunge in prices that has knocked around 60% off oil this year, a commissioner with the Texas state energy regulator renewed his call for restrictions on crude production because of the national supply glut.

In a sign of how well the market is supplied, the front-month Brent futures contract for May, is currently at a discount of $13.95 per barrel to the November contract, the widest contango spread ever seen.

A contango market implies traders expect oil to be higher in the future, prompting them to store oil for later sales.

Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), plans to boost its oil exports to 10.6 million barrels per day (bpd) from May on lower domestic consumption, a Saudi energy ministry official said.

Global oil refiners, meanwhile, have cut their throughput because of the slump in demand for transportation fuel, with European refineries slashing output by at least 1.3 million bpd, sources told Reuters.

UBS estimated global oil demand to fall by 1.2 million bpd, or 1.2%, over the whole of 2020, weighed down by the coronavirus pandemic, the Swiss bank said in a note.

Others, including the chief economist for global commodities trader Trafigura, have said that oil demand could fall as much as 30% from the end of last year over coming weeks.

>>> US After Hours Summary: RH -10.5% down big on earnings; AMRN down

After Hours Summary: RH -10.5% down big on earnings; AMRN down sharply on reports of an unfavorable patent ruling for Vascepa

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: CRON +0.8%

Companies trading higher in after hours in reaction to news: CTMX +11.9% (achieves clinical milestone CX-2029 program, triggering a $40 mln payment from AbbVie), CVLT +7.3% (Starboard (Jeffrey Smith) discloses 9.3% active stake), CSPR +2.7% (extends closure of North America retail stores), BA +0.9% (awarded $1.6 bln Navy contract modification), SGMS +0.8% (issues statement on COVID-19 response)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: RH -10.5%

Companies trading lower in after hours in reaction to news: AMRN -68% (reports of an unfavorable patent ruling for Vascepa), RETA -10.5% (provides COVID-19 update in connection with clinical programs; to stop Phase 3 CATALYST study), SVRA -8.5% (terminates enrollment in Phase 3 AVAIL and Phase 2a ENCORE studies due to COVID-19), PLNT -6.1% (withdraws guidance, says stores will remain closed until further notice), DPZ -4.8% (says Q1 comps were +1.6% at US stores, US sales were impacted by many factors), LC -3.5% (provides update on effects of the coronavirus), PZZA -2.6% (founder John H. Schnatter lowers active stake), ADC -2% (commences public offering of 2.5 mln shares), PDM -1.5% (still evaluating impact on the co's earnings projection), HIBB -1.2% (names Robert Volke as CFO), MRSN -0.9% (reports updated data from Phase 1 dose escalation study of XMT-1536)

>>> US Close Dow +3.19% S&P+3.35% Nasdaq +3.62% Russell +2.33%

Closing Stock Market Summary

The S&P 500 climbed 3.4% on Monday, led higher by shares of health care and technology companies, even as the White House extended its social distancing guideline through the end of April. The Dow Jones Industrial Average (+3.2%) and Nasdaq Composite (+3.6%) also rose more than 3.0%, while the Russell 2000 increased 2.3%.  

President Trump's original goal to reopen the economy was April 12, but the forward-looking market wasn't bothered by the slight extension amid hope that these measures will further contain the virus, so economic restrictions can later be loosened. 

In addition, quarter-end rebalancing continued to play a factor in trading, while medical breakthroughs from Abbott Lab (ABT 79.34, +4.78, +6.4%) and Johnson & Johnson (JNJ 133.01, +9.85, +8.0%) helped sentiment. Specifically, Abbott Labs is launching a point-of-care test to detect COVID-19 in as little as five minutes, while JNJ said it selected a lead vaccine candidate that it plans to test in clinical trials by September.

Fittingly, the health care sector (+4.7%) was today's leader, followed by the information technology sector (+4.2%) amid strength in Microsoft (MSFT 160.23, +10.53, +7.0%) and the semiconductor stocks. The Philadelphia Semiconductor Index rose 3.8%. The energy sector lagged with a 1.5% gain.

On the downside, shares of Boeing (BA 152.28, -9.72, -6.0%) eased back from last week's 70% surge, while airline stocks like American Airlines (AAL 12.25, -1.79, -12.8%) did get hit by the social distancing guideline extension. 

Separately, oil prices continued to falter with WTI crude settling down 6.6%, or $1.43, to $20.22/bbl, as the market remained plagued by excess supply and crippling demand. On a related note, President Trump said he would call Russian President Putin to discuss the price dispute with Saudi Arabia. 

U.S. Treasuries, particularly longer-dated tenors, rose alongside equities to start the week. The 2-yr yield declined two basis points to 0.21%, and the 10-yr yield declined eight basis points to 0.67%. The U.S. Dollar Index rose 0.7% to 99.01. 

Monday's lone economic report was Pending Home Sales, which increased 2.4% in February following an upwardly revised 5.3% in January (from 5.2%).

Looking ahead, investors will receive the Conference Board's Consumer Confidence Index for March and the S&P Case-Shiller Home Price Index for January on Tuesday.

  • Nasdaq Composite: -13.4%
  • S&P 500: -18.7%
  • Dow Jones Industrial Average: -21.8%
  • Russell 2000: -30.6%

FT : European banks/UBS: servants of the state

European banks/UBS: servants of the state
The real reason lenders should not splash the cash right now is that it looks bad

The multi-layered nightmare of horror movies, where the dreamer “awakes” to fresh ordeals, is a reality for Europe’s lenders. Governments bailed out their sector during the financial crisis, heralding a long era of austerity. Now coronavirus has prompted politicians and central bankers to relax standards — and demand further payback.

Banks must lend to imperilled business and — within the eurozone at least — suspend dividends. The conflicted relationship between lenders and the state will become even more torturous.

The Euro Stoxx banks index dropped 6 per cent, according to S&P Global, after the European Central Bank called for lenders to shelve payout decisions until October. The stock of ING fell almost 8 per cent, followed by the likes of ABN Amro, UniCredit and Intesa Sanpaolo.

That leaves many shares trading on depressed multiples of 0.2-0.5 times tangible book value. But “apparent widespread value is illusory”, according to Berenberg analyst Eoin Mullany. Just before the rout, he calculated that the sector’s consensus earnings multiple would theoretically double to an unrealistic 9 times if likely loan losses were fully discounted.

Lex labelled European banks as bad investments before the pandemic, for reasons the outbreak illustrates. These institutions operate in a risky interzone between the public and private sectors.

No big lender currently needs to withhold dividends to bolster financial strength. There is an argument for conserving liquidity, lest a financial market black swan flaps its wings. But the real reason European banks — including UK ones — should not splash cash right now is that it looks bad.

UBS is going ahead anyway, despite guidance from Switzerland’s government and banking regulator to limit payouts. One argument is that retail and corporate banking contribute less than a quarter of divisional profits dominated by wealth management. Even so, it is a brave move.

Peers who follow official policies will still face recriminations of their own. They bear some of the burden of implementing government loan and guarantee schemes intended to prop up failing businesses. Banks can expect brickbats if bailouts go badly.

Lenders certainly will not make real profits from them. Margins on state-sanctioned loans will be slim and offset by a share of defaults, the greater tranche of which taxpayers will cover.

You cannot be half pregnant. But if you work for a European bank, you can be half civil servant.