* Stoxx 600 down 0.6% * Sweden, Denmark, Norway stock markets closed * U.S. stock futures down 0.5% Welcome to the house for real-time protection of European fairness markets delivered to you by Reuters shares reporters. You possibly can share your ideas Joice Alves ([email protected]) and Julien Ponthus ([email protected]) in London and Stefano Rebaudo ([email protected]) in Milan. EUROPEAN BANKS: STILL NO SIGNS OF A REBOUND (1217 GMT) Purchase-the-dip mantra is probably not being utilized to European banks in any respect even after the sector index hit an all-time low final week, whereas different severely battered sectors equivalent to journey & leisure and vitality sectors noticed some aid. Euro zone banking index continues to be near the identical degree because it was in the course of the coronavirus-induced deepest crash on March 16, lacking the supposed bear-market rally that helped the general market to bounce again and lower virus losses by half. Whereas Berenberg says buyers ought to stay cautious and selective on European banks, a Morgan Stanley analysis observe argues that Euro zone lenders are buying and selling on common 27% under their “fair value based on the current level of fixed income markets.” The funding bank up to date valuations towards a regression evaluation based mostly on Bund yields, inflation breakevens and CDS costs, even when “when we compare European banks to those from other countries on the traditional metrics they do not look particularly mispriced,” MS says. However issues will change if the EU restoration fund program agreed by France and Germany will make progress, contemplating that Euro zone fairness valuations “have been positively correlated to BTP spreads over the last decade.” In its base case Morgan Stanley sees Italian bond spreads “tightening to 125 basis points” by finish 2020, due to the EU restoration fund. And this will likely be a lift for European equities, with a doable 10% rise in P/E ratios, however most likely much more for European banks. (Stefano Rebaudo) ***** HOW CORONAVIRUS COULD ACCELERATE SHIFT TO ELECTRIC CARS (1000 GMT) The coronavirus disaster has seen automobile gross sales plummet, with gross sales in China falling by a document 79% in February and drastic drops in new automobile registrations in international locations just like the UK, Italy and Spain, which had been hardest hit by the virus. As one of the vital logistically advanced industries on the planet, with greater than 10,000 suppliers concerned in a car’s value chain, it’s maybe unsurprising that the automotive sector took such successful. For a lot of, the constructive impact on the atmosphere is a small silver lining of coronavirus, as we produce much less, eat much less, and make fewer journeys, if any, by automobile. However for the auto business, the silver lining is the concept that social distancing measures may encourage extra folks to personal their very own automobile, reversing current car-sharing tendencies, in accordance with economists at ING. “We definitely do expect the crisis to leave its mark on mobility behaviour and some of the trends that have been going in the direction of ride-sharing and not owning a car might be reversed somewhat, if only temporarily,” ING’s Senior Economist Joanna Konings stated. “Demand to own a car has increased during the COVID-19 crisis so far. We can’t see that in vehicle sales obviously but we can see it in searches for vehicles and also in survey evidence,” Konings stated. “The evidence from the SARS outbreak was that the fear of risking infection lead to consumers avoiding public transportation and ultimately increased the demand for cars,” she added. When automobile gross sales choose up, auto makers are betting that the disaster will assist them speed up in direction of electrical automobiles, a shift that was already properly underway earlier than the coronavirus took maintain. Decrease oil costs are unlikely to make petrol automobiles extra engaging, not least as a result of oil costs don’t translate immediately into client gas costs, ING stated. Electrical automobiles are constantly enhancing and are reaching price competitiveness, ING stated, and regulatory stress on car emissions has not eased. What’s extra, policymakers may use the disaster as a chance to alter the best way we journey, asserting measures to help electrical automobiles. (Elizabeth Howcroft) ***** PRESSURE ON MARGINS IS GOING TO LAST FOR RETAILERS (1002 GMT) Within the retailing enterprise, some huge unknowns are when gross margins will return to pre-Covid 19 ranges and the way sturdy the stress from stock clearances will likely be within the close to future. UBS answered these questions with a set of information sources that embrace a proprietary model constructed to provide estimates in regards to the markdown required to clear unsold shares. The bank’s analysts estimate EPS will fall by 40% on common in full 12 months one, as demand is decrease than provide on-line and attire retailers are more likely to be left “with outdated stock to clear” in second half of 2020. The influence goes to be much less extreme for corporations with better publicity to the net channels and to beneficial product classes. UBS high picks are AB Meals, Subsequent and Inditex. Gross margins will solely return to pre-pandemic ranges within the third or fourth 12 months after Covid as demand for discounted merchandise by shoppers and extra discounted stock will stay excessive, in accordance with UBS. (Stefano Rebaudo) ***** OPENING SNAPSHOT: RISK-OFF, LUFTHANSA SHINES ON RESCUE PLAN (0734 GMT) Right now is risk-off after a hope rally yesterday, as buyers are nonetheless unsure in regards to the pandemic developments and its longer-term influence over the worldwide economic system. The pan European index is 0.9% decrease, with banks main losses, down greater than 2%. Among the many greatest performers utilities and healthcare, down about 0.8%. Lufthansa among the many winners of the session, with shares up 5%, after the airliner stated it was in superior talks with the federal government over a rescue deal of as much as 9 billion euros. easyJet shares are bucking the pattern too, up 2.3%, after the corporate stated a small variety of flights would restart on June 15. Whitbread slumped 10.4% after asserting a $1.2 billion rights challenge plan. AstraZeneca down 0.8%, in step with the broader index, after first agreements to provide not less than 400 million doses of the COVID-19 vaccine it’s growing with the College of Oxford. (Stefano Rebaudo) ON THE RADAR: PHARMA, LUFTHANSA, GENERALI (0648 GMT) European equities are set for a risk-off session as worries in regards to the financial influence of the coronavirus pandemic proceed to weigh. Buyers are anticipated to swing between hopes for a full reopening of the economic system and nervousness in regards to the longer-term influence of the virus, till the impact of the gradual easing in lockdowns on the an infection charges will likely be clear. On the company entrance AstraZeneca obtained the primary agreements to provide not less than 400 million doses of the COVID-19 vaccine it’s growing with the College of Oxford. GlaxoSmithKline’s client well being unit has tied up with Mammoth Biosciences to develop a take a look at that makes use of a know-how generally utilized in gene enhancing to detect novel coronavirus infections. Then the influence of the pandemic over firm outcomes: Assicurazioni Generali’s first quarter internet revenue fell 85% 12 months on 12 months after 655 million euros of impairments because of the influence of Covid-19 on monetary markets. Aviva’s life new enterprise gross sales rose by 28% to 12.Three billion kilos within the first quarter, and it estimated it could pay 160 million kilos in coronavirus-related claims. Whitbread set out plans to lift 1.01 billion kilos via a rights challenge. The collapse in oil costs has led potential consumers of oil and gasoline fields to renegotiate offers. Lufthansa stated it’s in superior talks with the German authorities over a rescue deal worth as much as 9 billion euros, together with the state taking a 20% stake within the firm, after media studies stated the federal government has agreed on the ultimate particulars of the rescue package deal. Whole has secured $14.Four billion funding for its Mozambique liquefied pure gasoline undertaking in Mozambique. EasyJet stated a small variety of flights would restart on June 15, with obligatory face masks. (Stefano Rebaudo) MORNING CALL: FUTURES BACK IN THE RED (0532 GMT) European futures and their U.S. friends are buying and selling within the pink as buyers stay cautious of the financial influence of the coronavirus outbreak. Wall Avenue’s rise in a single day on hopes of a fast restoration with potential extra stimulus from the Fed is just not sufficient to prop up equities in European morning commerce. Asian shares ended flat forward of a key coverage gathering in China that may yield extra financial stimulus and on worries of doable escalating tensions between U.S. and China. (Stefano Rebaudo) Reporting by Joice Alves, Julien Ponthus and Stefano RebaudoOur Requirements:The Thomson Reuters Belief Rules.