* European shares edge up in tight range
* Just Eat plunges on competition worries
* Eyes on central bank policy meetings
* Tech firm Adyen doubles on market debut

June 13 – Welcome to the home for real-time coverage of European equity markets brought to
you by Reuters stocks reporters and anchored today by Helen Reid. Reach her on Messenger to
share your thoughts on market moves: helen.reid.thomsonreuters.com@reuters.net

NINE RULES TO SAIL THROUGH CHOPPY WATERS (1404 GMT)
Even though Credit Suisse has taken a clearly bearish view on continental European equities,
others appear somewhat more constructive on prospects for the region’s stock market.
Among them are strategists at CM-CIC Market Solutions, the markets arm of France’s Credit
Mutuel. They say global economic growth will be high enough in 2018 for the STOXX 600
to end the year above current levels but believe investors need to be picky to navigate choppy
waters, avoiding big country or sector bets.
Here are their top recommendations:
1) Prefer companies exposed to global growth
2) Remain prudent on companies that are too exposed to emerging markets
3) Prefer large caps
4) Avoid companies that have the sole characteristic of a high dividend
5) Prefer German companies that are not exposed to U.S. tariff measures
6) Caution still on Italy, prefer Spain
7) Select geographically diversified UK companies to take advantage of pound weakness
8) Prefer sectors tied to the economic cycle: Chemicals, Industrial Goods & Services,
Technology and Hotels, Tourism & Leisure
9) Remain prudent vis-à-vis Food & Beverage, Retail, Media and Telecom
If you want to read instead what Credit Suisse analysts have to say, click here
.
(Danilo Masoni)
****

TECH FEARS BUBBLE UP AGAIN ON ADYEN IPO (1318 GMT)
A Dutch firm many would not have heard of before, Adyen, which processes
payments for Netflix, Facebook and eBay among others, doubled on its market debut today,
spurring renewed nail-biting over whether the tech sector is getting ahead of itself and
investors too exuberant about disruptors.
The IPO has raised, once again, the spectre of a bubble risk with Europe’s tech sector index
hitting its highest since June 2001 on the boost. Ingenico and Wirecard
are being pulled along in the slipstream, up 5.9 and 3.7 percent respectively.
“I heard it was oversubscribed, but doubling from the IPO price is quite amazing. They
either pitched it at totally wrong levels or something is wrong,” says one London-based trader.
Adyen shares were priced at 240 euros, the top of their indicated range but within the first
hour of trade they hit 480 euros, valuing the company at $17 billion.
“This has happened in Just Eat before,” says another trader. The delivery app also jumped on
its IPO – though not as much as Adyen – in 2014, despite it being priced at the top of its
range.
Here’s our full story on the IPO:
And our colleagues at BreakingViews offer their take:
BREAKINGVIEWS-Adyen’s $17 bln pop flags bipolar IPO market

(Helen Reid)
*****

WHAT TO EXPECT FROM THE ECB? VIEWS FROM THE STREET (1109 GMT)
With no surprises expected from today’s Fed rate decision, European investors are turning
their attention to tomorrow’s ECB meeting which could be somewhat more of a market mover.
Bank of America Merrill Lynch analysts are pretty confident this meeting will mark the “end
of the QE affair”. They see the ECB as likely to announce Quantitative Easing will end in
December after a short taper, with the first deposit rate hike in September 2019.
“There was always a risk that QE would allow ‘free riding’ behaviour. This is materialising
now,” they say, pointing to Italy’s new government’s fiscal policy stance as a likely trigger
for more hawkishness from the central bank.
Goldman Sachs analysts are less certain, expecting no concrete announcements on the asset
purchase programme to be made tomorrow as the ECB keeps its options open.
Goldman’s base case is an extension of the APP (asset purchase programme) to end-2018,
tapering between September and December, with a first hike in the second half of 2019.
“Recent developments regarding Italy (and some weaker macro data) have raised the
probability of an APP extension into 2019, but we think this would require persistent financial
market stress with an area-wide macroeconomic implication,” GS writes.
Angelo Meda, head of equities at Banor SIM, says: “I’m not expecting anything new from
tomorrow’s ECB meeting. Nothing material but maybe the classic word from Draghi saying yes we
can wait for tapering. I think they will take time again and postpone any clear decision to
September.”

(Helen Reid)
*****

MORNING SNAPSHOT: IT’S MIXED AS BIG CENTRAL BANK WEEK GETS UNDERWAY (0808 GMT)
European shares are struggling for direction today as investors stay on the sidelines in a
big week for central banks’ policymaking. Today we have the Federal Reserve, tomorrow the
European Central Bank and on Friday there’s the Bank of Japan.
Here’s your snapshot and below your must-reads ahead of these three key events:

WRAPUP 2-With rate hike in the bag, focus turns to Fed’s policy language
GRAPHIC-Time to kiss easy money goodbye? Five questions for the ECB
PREVIEW-BOJ to debate factors behind disappointingly weak prices, policy on hold

(Danilo Masoni)
*****

WHAT’S ON THE RADAR FOR THE EUROPEAN OPEN (0652 GMT)
Futures are pointing to modest gains at the open for European shares, while the FTSE 100 is
set to slip as Britain’s parliament entered the second day of debates over a key EU withdrawal
bill.
Trading is likely to be muted as investors anxiously await a Fed meeting widely expected to
result in a rate rise, with an eye to Thursday’s ECB meeting which could shake up euro zone
markets.
On the corporate news front, investors are likely to be relieved by first-quarter results
from Zara owner Inditex, which showed improved profitability despite a stronger euro – proof
that the currency headwind for euro zone exporters can be overcome. Its shares are indicated up
3 to 4 percent in pre-market.
Miner Glencore is also seen rising 1 to 2 percent at the open after its subsidiary Katanga
Mining reached a deal with the DRC state miner Gécamines to cease legal action.
WPP is in focus ahead of a fraught investors’ meeting likely to be dominated by anger over
the circumstances of CEO Martin Sorrell’s departure. As the market contemplates what could be
next for the advertising conglomerate, Goldman Sachs analysts said a full break-up of WPP – a
difficult task given its size – could deliver up to 49 percent upside to WPP’s current share
price.
Also in the spotlight is Dixons Carphone, set for a 3 percent fall at the open, after it
announced a data security breach with 1.2 million records of non-financial personal data
accessed. UK small-cap logistics company Connect Group could sink as much as 30 to 50 percent
after a massive profit warning and its CEO stepping down.
(Helen Reid)
*****

CORPORATE NEWS IN FOCUS: INDITEX, WPP, GLENCORE (0616 GMT)
Futures have opened modestly higher apart from the FTSE 100 whose futures are down 0.2
percent. It’s a relatively busy day on the corporate front with results from Zara owner Inditex,
a fraught WPP shareholder meeting ahead and Glencore’s subsidiary Katanga Mining resolving a
dispute with the DRC state miner Gecamines.

Here’s what to keep an eye on:
Inditex Q1 gross margin improves despite strong euro
Sorrell’s downfall set to dominate WPP investor meeting
Credit Suisse to get $385 mln in Lehman bankruptcy claim
Societe Generale puts Polish unit up for sale -sources
Glencore unit Katanga settles DRC Congo dispute, shares surge
British lawmakers to question Sainsbury’s and Asda CEOs over deal
WTO chief warns of global downturn if trade dispute escalates
France’s Suez launches hazardous waste treatment plant JV in China
Renault-Nissan-Mitsubishi alliance says on track for cost savings goal
(Helen Reid)
*****

CENTRAL BANKS, INFLATION FIGURES AND POLITICS IN FOCUS (0554 GMT)
The Fed’s rate rise should cause little volatility in markets as it’s been widely flagged,
but investors could be more moved by euro area industrial production figures, CPI data due from
the UK, and Brexit developments.
“In the UK, inflation data, where we see scope for a fourth successive downside surprise,
and politics will be the drivers,” Societe Generale analysts write.
The British parliament enters its second day of debate and voting on amendments to the EU
withdrawal bill today, with investors hoping for more clarity on which amendments the House of
Commons will accept.
“With the amendments typically tying the UK closer to the EU the more that are adopted, then
the softer Brexit could look,” write SocGen analysts.
Here’s our look ahead at what’s at stake in the debate:
And our summary of yesterday’s action: UPDATE 8-Britain’s May defuses revolt in parliament
over Brexit plans
(Helen Reid)
*****

EUROPEAN STOCKS TO STALL AS INVESTORS HOLD BREATH AHEAD OF FED, ECB (0535 GMT)
Europe’s major benchmarks are set for a mixed open with investors likely to hold off trading
ahead of an FOMC meeting and the European Central Bank’s meeting tomorrow.
The Fed is widely expected to raise rates for the second time this year, so what’s really
going to be the focus is the outlook for future monetary tightening.
Asian shares slipped back overnight as investors looked to the Federal Reserve policy
decision later in the day and any clues it might give on future rate hikes, shifting focus away
from the historic U.S.-North Korea summit in Singapore.
Spreadbetters call the DAX 13 points higher at 12,856, the CAC 40 down 1 point at 5,453, and
the FTSE 100 1 point higher at 7,705.
(Helen Reid)
*****

(Reporting by Danilo Masoni, Helen Reid, Kit Rees and Julien Ponthus)

(c) Copyright Thomson Reuters 2018. Click For Restrictions – https://agency.reuters.com/en/copyright.html





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